TAX OVERHAUL

WASHINGTON — After years of helping folks at all income levels get their budgets in order, Dallas financial adviser Tom Murphy has developed a hard and fast rule for how your average taxpayer defines wealth.

“Rich people make twice as much as you make,” he said, explaining how most people make the calculation in relation to their own standing.

That kind of perception — Who is rich? Who is middle class? Who is poor? — may rival any single statistic as GOP leaders prepare this week to unveil their much-anticipated legislation to overhaul the nation’s tax code for the first time in three decades.

The proposal will be full of rates, brackets and other essential metrics.

It will also be wrapped in powerful rhetoric that can be vague to the point of meaningless.

Republicans, despite skepticism from Democrats, promise tax relief focused on the middle class.

But it’s unclear who fits that bill.

President Donald Trump has made the probably unrealistic vow that he and other wealthy Americans won’t get a boost. But that financial line is murky at best.

And top GOP lawmakers are reluctant to provide a definition.

“I can’t,” said Texas Rep. Kevin Brady, the Republican chairman of the House Ways and Means Committee. “Because it really depends on the cost of living.”

The task is, no doubt, a challenge. But the open-ended approach could cut both ways.

The tax Rorschach test doesn’t pin the GOP down, while it also allows Americans to fill in their own visions of success. But some self-identified middle-class taxpayers might end up disappointed, particularly since some outside groups predict that not everyone will benefit.

Here are five takes on what it means to be middle class or wealthy in America:

Sen. John Cornyn

The Senate’s No. 2 Republican figures most Americans consider themselves middle class.

“My perception is it’s in the eye of the beholder,” the Texan said. “It’s a little subjective, I admit.”

But Cornyn, who serves on the Senate Finance Committee, suggested that there is enough information available to make decisions on how to overhaul the tax code. He offered, for instance, that “we know who the wealthy are, people who are millionaires and billionaires.”

“There is no crystal clear delineation between who is middle class and who is the poor and who is the rich,” Cornyn said, touting the GOP plan as one that would create jobs, increase wages and make the U.S. more competitive globally. “But I think we all have a general idea.”

The polls

Rich means earning $150,000 a year.

That’s the median response that Gallup received in 2011 — so take into account the survey’s proximity to the Great Recession — when it asked Americans “how much money per year would you need to make in order to consider yourself rich.”

“That seems to differ a bit from the federal government’s definition of rich,” the pollster noted.

The Gallup data also seems to back up Murphy, the Dallas financial adviser, on his “rich” rule of thumb. Those with an annual household income of less than $50,000 said they would need a median of $100,000 to consider themselves rich; those above $50,000 pegged it at $200,000.

Gallup last year also provided another data point: 58 percent of Americans identify themselves as upper-middle or middle class.

The White House

Kevin Hassett is chairman of Trump’s Council of Economic Advisers.

The economist said the definitions of “middle class” and “wealthy” often depend “on what the specific economic thinking you are analyzing is.” He pointed to data, for instance, that shows the middle quintile for annual household income goes from about $40,000 to about $70,000.

But he went on the defensive when pressed about whether that range is the White House’s definition, saying again that “what middle class is depends on what the question is.”

“I have not been in discussions with the White House about what the definition of middle class is,” he said.

The statistics

Household income. Adjusted gross income. The tax brackets.

Those sources — along with others — could produce any number of figures that could stand in for “middle class” or “wealthy.” The middle quintile for household income in 2015, for instance, did indeed range from $43,512 to $72,001, according to U.S. Census Bureau data.

Even solid numbers, however, can get complicated.

An adjusted gross income of about $118,000 would put a household comfortably in the top 20 percent of taxpayers.

But that amount was also about the average adjusted gross income for a married couple filing jointly, according to the Internal Revenue Service.

Given those variables, the Pew Research Center last year settled on defining “middleincome”

Americans as adults whose annual household income is from two-thirds of to double the national median, after adjustment for household size.

“Being middle class can connote more than income, be it a college education, whitecollar work, economic security, homeownership, or having certain social and political values,” Pew said.

Rep. Kevin Brady

The Texan’s grandest tax promise avoids the class labels altogether.

“I can guarantee that every American will be better off,” he said recently.

But the Republican from The Woodlands said lawmakers should take into account the fact that middle class could mean different things to different people. He said the cost of living in Texas is different than in New York and other states with state income taxes.

“It is difficult to just pick numbers for that, and the tax code should recognize there are variances there,” he said.

“So we are driving strong reform into a broad area of the tax code.”

Twitter: @tombenning