Middle-Class Income Expected to Drop

MIDDLE-income people will earn less in 1992 than they did in 1980 even if the economy stages a strong recovery, according to a Congressional Budget Office (CBO) letter released yesterday.In addition, while middle-income people are expected to pay roughly the same taxes they paid in 1980, the top 1 percent of the population is paying about $16,400 less. Senate Finance Committee chairman Lloyd Bentsen (D) of Texas released the letter from CBO chief Robert Reischauer in answer to questions Senator Bentsen had posed. "This study confirms my belief that middle America was victimized by the economic policies of the '80s and reaffirms my conviction that these families are entitled to tax relief denied them in the decade just past," said Bentsen, whose committee will hold hearings on middle-income tax relief today and tomorrow. Appearing before the committee today will be Treasury Secretary Nicholas Brady, White House budget director Richard Darman, and Michael Boskin, chairman of the president's Council of Economic Advisers. A number of proposes are being considered. "One of the most disheartening conclusions in the Congressional Budget Office analysis is that middle-income American families with children will be worse off in 1992 than they were in 1980, even if we have a surge of economic growth next year," said Bentsen. Bentsen noted that a family with an income of $37,300 will pay $100 more in taxes than it would have in 1980. The $16,400 tax break would go to a family earning $567,000 or more in 1992. The study found that a middle-income family will earn on average $37,500 before federal taxes and $29,500 after all federal taxes in 1992 - if the economy suddenly gets better. But CBO does not expect that. "Because of the recent slowdown in the economic recovery, these estimates are likely to be revised downward," Mr. Reischauer said.