The shape of the income distribution is not itself a subject of legislation, but Members of Congress appear to consider it in their decision-making process concerning a number of policy issues such as taxes, means-tested benefits, and social insurance programs. It then attempts to put the term middle class into greater perspective: first, by applying results from public opinion surveys on social class to the Census Bureau's data on the income distribution in 2012 and, second, by reviewing findings from empirical studies on the contribution of relative (as opposed to absolute) income to the identity of the middle class. (The Census Bureau does not disaggregate income within the group of households with incomes of $250,000 or more.) Another often-used way to describe the distribution of income is the share of total money income going to different household groups in order of increasing income. In 2012, there were a total of 122.459 million households with income, so each quintile (fifth) in the distribution represents 24.492 million households. As shown in Table 2 , the top 5% of households accounted for 22.3% of all income in 2012. Major sources of difference in CBO's estimate of household income are the inclusion of capital gains and the value of noncash benefits (such as food stamps, Medicare and Medicaid, and employer-paid health insurance premiums). The Middle Class

Although Congress often considers legislation specifically in the name of the middle class, there is no official government definition of the group, and it is not the aim of this report to develop one. What constitutes the middle class is subjective and comparative, meaning different things to different people. The term may refer to a group of people with a common point of view or similar incomes. A narrow view of the middle class might include only those in the middle (third) quintile, that is, those households with money income between $39,736 and $64,553 in 2012 (see Table 2 ). A still broader definition of middle class can be constructed by adding that part of the top quintile up to the point at which the top 5% of households begins. A few surveys asked people to indicate their social class. The surveys' results further suggest that the middle class extends into the top (fifth) quintile of the income distribution (households with income of $104,087 or more)—perhaps including households with income somewhat over $200,000. Relative Income

The satisfaction (utility) that households derive from their income appears to be associated with both their absolute level of income and how that income level compares with the incomes of others. In other words, whatever else they may have in common, those who may constitute the middle class seemingly have similar sentiments with regard to their economic situation. Specifically, having incomes far above those at the lower end of the income distribution generally correlates with satisfaction to members of the middle class, but when those at the upper end of the distribution fare much better than they do, the level of middle-class satisfaction is generally lessened.
Although not itself a subject of legislation, the shape of the income distribution enters Congress's decision-making process concerning such policy issues as taxes, means-tested benefits, and social insurance programs. Congress also considers legislation specifically in the name of those in the middle class, which is variously defined as some income level or income range within the distribution of U.S. households with income. After briefly analyzing the distribution of household money income in 2012, this report attempts to put the term middle class into greater perspective.
The first key point of the report is that, although there are a variety of ways to describe the income distribution, all show that income is concentrated among high-income households. Of the 122.459 million U.S. households with income in 2012, 2.3% had incomes of at least $250,000. (The Census Bureau does not disaggregate income within the $250,000-or-more income class.) In addition, a large share of total money income accrues to those at the upper end of the distribution. In 2012, the top 5% of U.S. households with income accounted for 22.3% of total income, and the top 20% of households (which includes the top 5%) had 51.0% of all money income. A broader definition of household income, incorporating capital gains and the value of noncash benefits (e.g., food stamps, Medicare and Medicaid, and employer-paid health insurance) and subtracting estimates of federal taxes, tends to make the income distribution slightly more equal.
The second major point is that there is no official government definition of who belongs to the middle class, and the term means different things to different people. The middle class may refer to a group with a common point of view or to those having similar incomes, for example.
Third, absolute income appears to partly determine who belongs to the middle class. Combining money income data from the latest Annual Social and Economic Supplement to the Current Population Survey (CPS) with results from surveys that asked people to identify their social class indicates that the middle class may refer to households with income levels in 2012 that ranged from $39,736 (the bottom of the middle quintile, or 20%, of households) and extended into the top quintile (households with incomes of $104,087 or more)—perhaps including households with incomes somewhat over $200,000.
Last, relative income may also be a defining characteristic of the middle class. In other words, the middle class appears to identify itself relative to the income of a reference group (e.g., neighbors or coworkers). According to studies of self-reported well-being, those who constitute the middle class seemingly are of like minds with regard to their economic situation. Specifically, having incomes far above those at the lower end of the income distribution generally correlates with satisfaction to members of the middle class, but when those at the upper end of the distribution fare much better than they do, the level of middle-class satisfaction is generally lessened.