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Are you the 20 percent?

By Farah Stockman This has been the Year of Percentages. It started off with the Occupy movement, which declared, "We are the 99 percent." Then Mitt Romney bad-mouthed the 47 percent who don't pay federal income taxes. Then Romney lost to President Obama, who promised to raise taxes on the top 2 percent and leave the rest of us alone.

By Farah Stockman

This has been the Year of Percentages. It started off with the Occupy movement, which declared, "We are the 99 percent." Then Mitt Romney bad-mouthed the 47 percent who don't pay federal income taxes. Then Romney lost to President Obama, who promised to raise taxes on the top 2 percent and leave the rest of us alone.

As the year draws to a close, Republicans are fighting Obama's plan. If they fail to reach a deal, taxes will go up for everyone. Which brings me to yet another group: the 20 percent.

I hadn't thought much about 20-percenters until a tax-guru friend explained President Obama's predicament to me a few months ago. Obama was campaigning on a platform of taxing the ultrarich, which sounded great to 98 percent of voters.

"But there's a problem," my friend said. "Most of the money in the country is still, thankfully, in hands of the people making ... $100,000 to $300,000. ... You either have to raise taxes on them - the top 20 percent - or address entitlements in a serious way. Or both."

Darn. I wish squeezing more money out of the very rich would solve all our woes, but there just aren't enough of them. Fewer than three million taxpayers are in their lofty ranks. Raising taxes on them would help a lot, but we'd still come up short. Maybe half a trillion dollars short.

Meanwhile, 28 million taxpayers are in the top 20 percent. You could call this group the upper-upper-middle class. The quasi-rich. Or the lower-wealthy. You 20-percenters out there probably don't feel like fat cats, but in a country with a median household income of $50,000, you are.

Taxing the very rich can work for now. But in the long term, it is impossible to envision a solution in which 20-percenters aren't paying more or taking less in Medicare or Social Security.

Maybe that's the beauty of the position Obama is in. He doesn't have to touch the 20 percent, the group that will groan the loudest. If the Republicans continue to reject his plan, all he has to do is sit back and watch all the rates rise on their own.

Republicans, many of whom have signed no-tax pledges, have their own perverse incentive to let tax rates go up. If they agree to raise taxes now, they might suffer some Grover Norquist curse. But if they let the automatic tax hike kick in, they could strike a deal to lower rates.

It would be far better to strike a deal now, before the markets lose faith and our economy heads down Niagara Falls in a barrel. But it will be easier to get a deal later. Maybe the plunge would sober up our leaders enough to forget their campaign promises and come up with a deal that is good for the country.

Most analysts say the ideal plan would minimize pain while the economy is weak but crank up shared sacrifice after it recovers. And when I say shared sacrifice, I do mean shared - not just the very rich or the very poor, but you, too, 20-percenters.