Do you consider yourself middle class? News Limited papers are proud of igniting this “debate” — based on the very flimsy fact that the government has extended the existing pause on indexation of the thresholds at which middle-class welfare cuts out. Let’s repeat that: they have not actually reduced the thresholds – indeed, as Swan has clearly stated, he supports the idea of “family payments”.

This, from blogger Matt Cowgill at We Are All Dead:

We all tend to judge what’s normal, or typical, with reference to those we work and socialise with. This leads the poor to underestimate the wealth of the rich, and leads the rich to overestimate the wealth of the poor. It also means that a lot of us tend to think we’re “middle class” when we’re not.

Andrew Leigh (before he was an MP) wrote a great little paper on the effect that this mis-perception has on our public debate, called The Political Economy of Tax Reform in Australia. In it, he argued that:

“opinion leaders [do] not properly appreciate the distribution of income in Australia. For the most part, the taxation rates applying to most politicians, journalists, business executives and think-tank staffers (and indeed, to academic economists) are not those that apply to the average voter. In all these professions, six-figure salaries are common. Yet only 4.5 per cent of Australian adults have an income that exceeds $100,000 per year, and only 1.5 per cent have an income that exceeds $150,000 per year.”

This, from Peter Martin in The Sydney Morning Herald today:

Around 1.9 million families receive family tax benefit A. Treasury believes that in 2012-13 31,000 will lose the benefit.

Around 1.6 million families receive family tax benefit B. Treasury believes 9000 of them will lose the benefit.

Some 700 families will lose the baby bonus and just 17 families will lose paid parental leave.

And as Bernard Keane explains today:

“FTBs are now Labor’s as much as they are Howard’s, which makes the “war on the middle class” rhetoric from News Limited and its journalists even more risible. Howard might have carefully nurtured a sense of entitlement amongst Australians, but Labor has, rather than tackling it, adopted it. One of the strongest defenders of middle class welfare — or family payments, as he calls it — this week has been Wayne Swan himself, despite the witless illustrations to be found in the pages of The Daily Telegraph.”

At least some commentators are counteracting a false argument based on the thinnest of assertions. There’s plenty to quibble with in the budget — this isn’t it.

Peter Fray

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