“For properties valued between $5 million and $6 million, a 0.5 percent surcharge would be added on the value over $5 million. Fees and a higher surcharge would apply to homes that sold for more than $6 million, topping out at a $370,000 fee and a 4 percent surcharge for homes valued at more than $25 million.”
This would be huge in NYC where so many high end living spaces remain empty for they are just investments.
Would be great for a subway system revamp, and any leftover for remedying the housing crisis there.
I’ve been reading about the minimum-wage increase to $15.00-an-hour in Seattle lately and the most important point made on the issue that I have read is in an op-ed by Will Hutton in The Guardian.
The campaigners had two important replies to the charges that this would make Seattle’s fast food, catering and hotel industries uneconomic. The first was that living on the old minimum wage of $9.10 (£5.41) an hour was scarcely possible; families depended on food stamps, homes were dark and the cheapest of presents for kids was simply unaffordable. Compare that with the profits of the corporations and pay of the fast food bosses: the CEO of McDonald’s is paid more than $9m (£5.3m). Maybe they could be paid less and their workers a fraction more?
The problem with living in the United States in an economic sense is the financial disparity. If you read Thomas Piketty’s Capital in the 21st Century, the numbers are vertiginous (a term Piketty often uses.) The difference between the national income of the top decile (10%), not to mention the top centile (1%) of the population, and the rest of us is simply sickening.
The powers that be want us to think about whether if we believe a low-wage, working citizen deserves that $15.00 an hour. Do they work hard enough? Did they work hard enough in High School? Do they? Did they?
But let me turn that argument on it’s ear: does the CEO at McDonald’s actually earn $9 million dollars a year? What about the Wall Street CEO’s who make $150 million or $180 million in a year? Do they deserve that? Do they work hard enough? I’m sure they get a lot more vacation hours than the people at the bottom of the ladder, with better healthcare and all the perks they could desire.
It’s an issue of fairness and the minimum wage does not provide some of our hardest workers basic human dignity.
But that isn’t the really despicable attack by the Koch brothers group. Take a look at their page at http://www.strongerdetroit.com/ (disgracefully named, as usual). You’ll see this nugget of info:
Per capita state revenue sharing payments are over 3x what other cities receive. In 2010, Detroit received $335 per capita in revenue sharing payments compared to $96, the average amount per capita all other cities over 50,000 in Michigan received.
Clearly, those greedy people in Detroit just upped their piece of the Michigan pie in the years leading up to this bankruptcy until they were all happy, fat cats.
Between 2000 and 2010, inflation adjusted state revenues per capita declined by 13.7 percent in Detroit, while in Buffalo they increased by 45 percent. In the recession period alone (2007 to 2010), state aid to Detroit went down by 8.2 percent, but went up by 7.2 percent in Buffalo. Thus a big difference between these two structurally similar cities is the economic and fiscal environment and fiscal choices made at the state level. Had New York treated Buffalo in the same way fiscally as Michigan dealt with Detroit, Buffalo, which is already teetering on the edge of fiscal crisis, might have been forced to declare bankruptcy as well. (Emphasis added)
But that doesn’t tell the whole story. The per capita spending is still three times higher and some might be angry by this. Unless they realized why.
Detroit’s poverty rate is a whopping 38.1%, according to the Census Bureau, more than double the Michigan state rate of 16.3%. Add on the fact that Detroit is Michigan’s largest city by a lot (more than three times the size of second place) and the picture starts to come together. But just to drive the point home, let’s give an example to further explain the disparity.
Suppose you have two cities in a state and both have a population of ten people. City A has one person (10%) living below the poverty line. City B has three people (30%) living below the poverty line. If the state spends $100 per person in various ways on people below the poverty line (education, unemployment insurance, food stamps, etc.), then City B would be receiving three times more ($300) from the state than City A ($100).
The reason for Michigan’s spending on Detroit is not very difficult to figure out.
The reason the people of Michigan might fall for the Koch brothers heinous attack on the city’s bankruptcy settlement is also easy to figure out: brainwashing.
The Census Bureau released data on income inequality recently and Mother Jones put together some charts showing the results of the research (linking one here but more good ones in the article). It’s very clear how this is continuing to shrink the middle class and, if not for the social safety nets we have had in place since the 1960s and before, the poverty rate would be tremendously higher.
The Atlantic also added a chart to this data that should be noted and I’ll include here.What should be pointed out in this chart is that the S&P was doing just fine in the ’50s, ’60s, and early ’70s when inequality was nowhere near the levels it is at today. This is important since the typical argument from the right as to why we can’t have higher taxes on the wealthy that would lessen income inequality is because of its crushing impact on investment which, in turn, would cut economic growth. Clearly, not true.
The European Union again proved they are willing to take much more aggressive action than the United States when it comes to putting the burden of financial crises on the backs of the wealthy instead of on the people at the bottom of the economic ladder. They announced today part of the responsibility for bailing out banks when they fail will be placed on large depositors. From the article:
The plan stipulates that shareholders, bondholders and depositors with more than 100,000 euros ($132,000) should share the burden of saving a bank…The rules break a taboo in Europe that savers should never lose their deposits, although countries will have some flexibility to decide when and how to impose losses on a failing bank’s creditors.
This seems to be a little bit of a check on banks acting badly since big investors will be watching their actions more closely in the interest of not losing their money. And as the piece further illustrates, some bankers just didn’t care when it came to dealing with the crisis and what was done with taxpayer money:
Earlier this week, Ireland’s deputy prime minister attacked “arrogant” executives at a failed bank who had mocked government efforts to tackle the country’s banking crisis.
In the tapes published by an Irish newspaper, the collapsed Anglo Irish Bank’s then-head of capital markets was asked how he had come up with a figure of 7 billion euros for a bank rescue, responding that he had “picked it out of my arse.”
I could see some flaws with the policy in that it could lead investors to put their money elsewhere or create a problem for an individual bank when a wealthy investor gets nervous and starts a run taking money out of a bank. But the pro seems to outweigh the con here and this policy is a step in the right direction of a more stable economy in times to come.
It would be nice to see the U.S. actually take some steps like the EU when it comes to income inequality. As we previously noted, the EU sees the problems that come with too much imbalance in income and they are taking action to remedy the situation. Here’s hoping the U.S. can eventually follow in their footsteps in the interest of long-term economic stability.
I didn’t believe this one when I saw it but former Enron criminal Jeffrey Skilling received a decade off his sentence for surrendering assets the government had already seized. From the article:
Enron’s collapse wiped out more than $2bn in employee pensions, $60bn in Enron stock and cost thousands their jobs. The $40m seized by the government will be distributed to victims of Enron’s fraud.
Yet another case showing the huge difference between when a rich person deals with the justice system and when the rest of us deal with it. I wonder if a person convicted for possessing, say, $100 worth of illegal drugs on them could just pay a small portion of that and receive a reduced sentence? No? Didn’t think so.
And let’s do some quick math here. $62 billion in damage caused to thousands, and maybe tens of thousands, of people. He pays $40 million back. That’s roughly .06% of the damage caused. I wonder if I can pay that percentage of my next traffic ticket and the government will accept that as basically all square?
The one positive from this was the simple fact he did go to prison over the massive fraud he committed and will serve a good chuck of time. Still waiting for the folks responsible for the bigger financial crisis to see some prison time…
Two articles appeared recently in the Washington Post that deserve rebuttals as to their slanted positions on certain issues. The first is an op-ed by Robert J. Samuelson titled “The End of Entitlement”. He argues we have reached a point where we are no longer entitled to the things in life we previously believed we deserved if we worked hard for them, such as a peace of mind about job security and retirement. He sums the idea up in one sentence:
We’re not entitled to many things: not to a dynamic economy; not to secure jobs; not to homeownership; not to ever-more protective government; not to fixed tax burdens; not to a college education.
It’s not that he is wrong about this current reality of life. It’s that his attempt at trying to decipher why this is the now case is weak and misleading.
He gives four points that we assumed would work but failed us. The first:
economists knew enough to moderate the business cycle, guaranteeing jobs for most people who wanted them…The Great Recession revealed the limits of economic management. (Emphasis added.)
This is an incredibly misleading statement. If the Great Recession revealed anything it was that there was (and is) far too little oversight of the financial sector and, when it is allowed to run wild and commit fraud without consequences to the people committing the crimes, most of us get hurt in the end. This isn’t to suggest a communistic approach to the economy but a check and balance on the financial sector’s power (similar to our system of government’s checks on each branch) is clearly what was missing in the housing sector and the derivatives market and what got us to where we are now.
And before anyone tries to make the case Fannie Mae and Freddie Mac were government-run programs that were policing the industry, they were not. Here’s how you figure that out. If it has a person called its CEO, kind of like Freddie and Fannie, it’s not government run. Period. They made their decisions without enough oversight and they screwed us in the interest of making a short term profit with painful long term consequences, just like other corporations.
His second point is that the “safety net” provided by large corporations has “shrunk” and does not provide what they once promised. One of the factors he strangely blames considering his first point: “deregulation”. In other words, economists failed at “managing” the economy but the economy failed because of deregulation. Samuelson counters himself here and apparently doesn’t notice it. If deregulation occurs at a level where it becomes problematic, then economists and the government are not actually “managing” anything. They are just observing what is happening without intervening where needed, which is what caused the crash.
His third point is that productivity gains did not translate into expected tax receipts and greater income inequality has compounded the problem of paying for government programs. This ignores two important factors causing this outcome. One, that the attack by the right on workers rights and unions has led to lower wage growth and more money going to the top earners, which is not in any way regulated but could be as Europe is doing. Two, that tax cuts, such as the Bush era cuts that went heavily to the top earners who are earning more of the money, have made tax revenues lower than previously expected when these programs were created. In other words, it was a boosting of right wing economic legislation that made this problem what it is now.
His last point is that broken families and children raised by single parents have helped take away the idea of entitlement. This idea is so ludicrous it’s hardly worth addressing. In other words, his argument is that a child in a household with two parents that fight all the time (or worse) and no longer want to be together is healthier for the child. Argue away on that point. Also, this ignores the fact stagnant wages have led to more hours worked for less pay which will have an obvious effect on the parent rearing the child, whether single or not.
The other article in the Post was a piece by Zachary Goldfarb about “liberals” (as if the government is filled with them) now dealing with the fact the defense cuts they called for are hurting the economy. The article focuses on military spending and is presented as if there is virtually no other alternative in how the government could use its funds. This suggests liberals only want cuts in defense spending and do not want the money diverted to shore up or improve other programs, such as Social Security or education.
He does spend some time on the idea money could go toward other expenditures. 2 whole paragraphs…out of 27. If this article was even a remote presentation of more liberal beliefs about where the government could spend its money, it would give far more time to this aspect and show how the defense budget dwarfs other areas that could produce jobs and help the economy like infrastructure and education. Pointing out that the federal defense budget is roughly $850 billion while federal education spending is just below $100 billion would be a start.
Which brings us to one last element that should be addressed here: what does this mean for the believers of the failed theory of trickle-down economics? The rich having the bulk of the money and wealth is a good thing for the believers of this ridiculous theory because everything will trickle on down to the lower classes and everybody will be living in a utopia. Except it hasn’t and the inequality only continues to get worse. But the argument always goes further by saying if the rich had to pay less taxes, they would give more money to charity and that would make its way down. Also not true as the article states:
Of the 50 largest individual gifts to public charities in 2012, 34 went to educational institutions, the vast majority of them colleges and universities, like Harvard, Columbia, and Berkeley, that cater to the nation’s and the world’s elite. Museums and arts organizations such as the Metropolitan Museum of Art received nine of these major gifts, with the remaining donations spread among medical facilities and fashionable charities like the Central Park Conservancy. Not a single one of them went to a social-service organization or to a charity that principally serves the poor and the dispossessed.
In other words, when given the chance to give away their money, the wealthy are doing it in a way that only breeds more inequality by giving it to institutions that do not actually help the poor.
We claim to be a Christian nation and some even argue we should have a Christian government. But the way we would do that is by actually taking care of the poor and making sure they have the resources they need to truly pull themselves up, such as a livable minimum wage, better childcare programs, and better access to a college education.
And it is clear by the actions of the wealthy in how they donate their money these needed changes will not happen by talk of cutting social spending (or foreign aid, because that’s not what Jesus would do, is it?). The government is also at fault by not providing assistance on a level truly needed by the poor. But it is very capable of doing just that and we should be pushing for improvements in this area.
We can claim all we want to be a nation shaped and driven by Christ. But our actions do not reflect that and every call for a cut to the poor is a scream of hypocrisy by the alleged followers of Jesus.
An article on the Atlantic’s site this week is summed up in one simple line: “The wealthiest Americans donate 1.3 percent of their income; the poorest, 3.2 percent.” The percentage difference is relatively small but certainly significant enough to warrant examination and the implications growing out of this are rather interesting when considering these facts along with some typical debate points.
Three key factors should be addressed:
Why is there such a difference?
What does this mean in relation to how the U.S. government gives in foreign aid?
What does this mean in relation to social policy and economic arguments?
Two of the key reasons for the difference are pointed out in the article. The first is no surprise: the rich are greedy and prefer to hold on to more of their money. But the second reason is a little more significant and should be considered further: economic segregation. From the article:
Notably, though, when both groups were exposed to a sympathy-eliciting video on child poverty, the compassion of the wealthier group began to rise, and the groups’ willingness to help others became almost identical…greater exposure to and identification with the challenges of meeting basic needs may create “higher empathy” among lower-income donors…researchers analyzed giving habits across all American ZIP codes. Consistent with previous studies, they found that less affluent ZIP codes gave relatively more.
The fact that ZIP codes can determine how generous an area can be is a big part of many problems arising in political debates. For example, many people on the right (usually wealthy pundits and politicians) make the argument social services aren’t needed and the poor just need to pick themselves up by their own boot straps. This argument sounds reasonable until you realize the rich likely have no idea what the poor are truly up against in their areas of town and in their personal lives since they generally spend little to no time in poorer areas.
The reality is they do not see the conditions and do not understand the obstacles as our cities become more and more segregated along economic lines. And if they do not get this part of the debate, what does their argument even mean other than useless rhetoric? What are they backing this “boots straps” idea up with? The answer is: nothing, other than their own experiences which does not typically mimic that of the poor given the lack of economic mobility in the U.S.
Another argument that rages on, especially now as the government looks for ways to shrink the budget, is foreign aid. The wealthy giving less than the poor in terms of percent given is similar to the reality the U.S. gives less than many other countries around the world as a percent in foreign aid. Whether it’s calculated with percent of GDP or GNI, the United States gives fives times or more less thanthe most generous countries around the world.
An analogy should be used when showing this difference. Pretend you have two people who go to church each week, Patriot Jesus and Actual Jesus. Actual Jesus brings home $100 a week and gives $10 to the church (the usual expectation of Christians in terms of percentage, by the way). Patriot brings home $1000 a week and gives $20. Who is more generous? The guy who gives ten percent of what he makes or the guy who gives two percent? The answer should be obvious.
Guess which one the United States is in this scenario.
Another article appeared on CNN Money today telling the same story that has been told repeatedly for quite a few years now: the rich pay the biggest share of taxes to the federal government. The article does point out there is more to the story than meets the eye but it doesn’t even begin to try to tell it all. Some points to note:
In fact, the Tax Policy Center found last year that there about 4,000 households with incomes over $1 million that were not paying anything at all…When factoring in state and local taxes, the top 10% pay just under half the tab. And when calculating tax burden as a percent of income, the tax code is even less progressive. The top 10% paid an average of 30% of their income in local, state, and federal taxes in 2011, said McIntyre. That’s not much different than the 25% percent paid by the middle class.
There are two key reasons people should be angry about the idea of the rich paying a higher share of the tax burden. The first is the simple fact they are paying a higher share because income inequality has exploded over the past three decades. There is a graph showing the share in taxes paid in the CNN article since 1986. The graph may be a nice point for the right wing argument on this debate, just so long as you don’t show another graph beside it portraying the increase in income inequality over the same period. Kind of like the one I’m including.
If you don’t understand what is happening, your math skills may need some sharpening. Let’s say you have two people, we’ll call them Smonald Frump and Everyday Dude. Frump makes $250 in 1986 and pays $55 in taxes. Dude makes $200 and pays $45. In 2013, Frump makes $30000 and pays $70 in taxes. Dude still makes $200 and pays $30. Yes, Dude’s taxes have gone down but so has Frump’s and they have gone down by a bigger percentage (which is what has happened in this time frame). Dude’s income has also stayed level while Frump’s has skyrocketed (which has also happened when adjusted for inflation, graph included). Who makes out better in this scenario?
The second reason for anger is the fact that even if rich people are paying their taxes, corporations are not always playing along and performing their patriotic duty. There are plenty of articles covering this reality, such as this one giving this fact:
CTJ (Citizens for Tax Justice) calculates that if the companies had paid the full 35 percent corporate tax rate, they would have put more than $78 billion into government coffers.
(You will also see this article notes campaign donations by these companies to politicians. Plenty of R’s and D’s by those names to go around for everyone. And by everyone I, of course, only mean the top %1 since that is what matters to them.)
Total corporate federal taxes paid fell to 12.1% of profits earned from activities within the U.S. in fiscal 2011, which ended Sept. 30, according to the Congressional Budget Office. That’s the lowest level since at least 1972. And well below the 25.6% companies paid on average from 1987 to 2008…Companies paid just $181 billion in federal corporate taxes in fiscal 2011, about 8% of the $2.3 trillion in total revenue collected by the federal government. That’s down from 15% of the total in 2007. Individuals, meanwhile, paid $1.1 trillion in income taxes last year.
Delicious! One more with this example and a pretty slideshow:
The 10 most profitable U.S. companies paid an average federal tax rate of just 9 percent last year…Some of these companies paid more than 9 percent — JPMorgan earned $26.7 billion in 2011, for example, and paid $3.7 billion of it, or 14 percent, to the federal government — and some paid less, like Exxon Mobil, which only sent 2 percent of its $73.3 billion earnings to the IRS.
The argument that the rich pay a higher share of the tax burden now than they did 30 years ago should not make the people on the lower rungs of the economic ladder happy. It should be infuriating, particularly when the reasons for the change are noted.
But hey, Wall Street is hitting record highs and that will not expand the problem of wealth inequality at all so we are all doing well and the job market is back to normal, right?…Right?