I understand your angle and I didn't downvote your other comment in this thread but your perspective emphasizes the math of income brackets and percentiles. However, people don't use that criteria when self-identifying their income class.
A lot of white-collar professionals making $200k simple don't consider themselves "upper class". It's not a matter of denial. I would bet that if you surveyed software engineers earning $200k, most would not use the label "upper class" to describe themselves because to do so would be strangely pretentious.
If a tiny 1000 sq ft Palo Alto house costs $1.5 million, a $200k salary does not feel "rich & wealthy". Therefore, reminding them they are in the top 5% of the income percentile doesn't change the self-identification of "middle class". From their perspective, it feels like middle class.
Yes, and that's a moral failing. Worse than being "pretentious" is failing to realize that you are blessed. Because that starts you down the road of thinking "since I'm middle class, other people should shoulder the burden of providing for the country's most vulnerable people, not me." That's the self-deception that results in even Bernie Sanders' "progressive" tax policy being identical to Donald Trump's until you get over $250,000.
Don't get me wrong I actually mostly agree with your point, I say that as a guy literally dying of cancer, but lucky enough to be in the best place in the world to have a chance. It's just that cost of living should factor into any estimation of class status. If you throw that out literally every American has a moral failing, even those living below the poverty line, which isn't a sensible way to look at it. Class needs to be defined as the purchasing power relative to the area that the person is in. Taxation status/rates doesn't need to take that into account.
The distinction, historically, was not about capital versus labor. It was about white collar work that allowed a lifestyle where you could have most ordinary things without worrying about money.