Tag: wealth inequality
Big Tax Bills For The Poor, Tiny Ones For The Rich

Big Tax Bills For The Poor, Tiny Ones For The Rich

American politics are dominated by those with money. As such, America’s tax debate is dominated by voices that insist the rich are unduly persecuted by high taxes and that low-income folks are living the high life. Indeed, a new survey by the Pew Research Center recently found that the most financially secure Americans believe “poor people today have it easy.”

The rich are certainly entitled to their own opinions — but, as the old saying goes, nobody is entitled to their own facts. With that in mind, here’s a set of tax facts that’s worth considering: Middle- and low-income Americans are facing far higher state and local tax rates than the wealthy. In all, a comprehensive analysis by the nonpartisan Institute on Taxation and Economic Policy finds that the poorest 20 percent of households pay on average more than twice the effective state and local tax rate (10.9 percent) as the richest 1 percent of taxpayers (5.4 percent).

ITEP researchers say the incongruity derives from state and local governments’ reliance on sales, excise and property taxes rather than on more progressively structured income taxes that increase rates on higher earnings. They argue that the tax disconnect is helping create the largest wealth gap between the rich and middle class in American history.

“In recent years, multiple studies have revealed the growing chasm between the wealthy and everyone else,” Matt Gardner, executive director of ITEP, said. “Upside-down state tax systems didn’t cause the growing income divide, but they certainly exacerbate the problem. State policymakers shouldn’t wring their hands or ignore the problem. They should thoroughly explore and enact tax reform policies that will make their tax systems fairer.”

The 10 states with the largest gap between tax rates on the rich and poor are a politically and geographically diverse group — from traditional Republican bastions such as Texas and Arizona to Democratic strongholds such as Illinois and Washington.

The latter state, reports ITEP, is the most regressive of all. Four years after billionaire moguls such as Amazon’s Jeff Bezos and Microsoft’s Steve Ballmer funded a campaign to defeat an income tax ballot measure, Washington now makes low-income families pay seven times the effective tax rate that the rich pay. That’s right, those in the poorest 20 percent of Washington households pay on average 16.8 percent of their income in state and local taxes, while Washington’s 1-percenters pay just 2.4 percent of their income. Like many of the other regressive tax states, Washington imposes no personal income tax all.

“The problem with our state tax systems is that we are asking far more of those who can afford the least,” concludes ITEM’s state director Wiehe.

By contrast, the states identified as having the smallest gap in effective tax rates are California, Delaware, Minnesota, Oregon and Vermont — all Democratic strongholds and all relying more heavily on progressively structured income taxes. Montana is the only Republican-leaning state ITEP researchers identify among the states with the least regressive tax rates.

Of course, if you aren’t poor, you may be reading this and thinking that these trends have no real-world impact on your life. But think again: In September, Standard & Poor’s released a study showing that increasing economic inequality hurts economic growth and subsequently reduces public revenue. As important, the report found that the correlation between high inequality and low economic growth was highest in states that relied most heavily on regressive levies such as sales taxes.

In other words, regressive state and local tax policies don’t just harm the poor — they end up harming entire economies. So if altruism doesn’t prompt you to care about unfair tax rates and economic inequality, then it seems self-interest should.

David Sirota is a senior writer at the International Business Times and the best-selling author of the books Hostile Takeover, The Uprising and Back to Our Future. Email him at ds@davidsirota.com, follow him on Twitter @davidsirota or visit his website at www.davidsirota.com.

AFP Photo/Paul J. Richards

Chart: Wage Inequality Has Dramatically Increased Over Past Three Decades

Chart: Wage Inequality Has Dramatically Increased Over Past Three Decades

A new report from the Economic Policy Institute, released Tuesday, highlights the increasingly prevalent and disparate effects of wage inequality. With a focus on same-gender wage gaps, the report demonstrates that income inequality affects all Americans, and reminds us that the implications and scope of the widening wage gap are not limited only to the poorest citizens.

The EPI notes that “since the late 1980s . . . the top has pulled away from everyone else.” As the nation’s wealthiest continued to make more money at the turn of the century, the wages of middle- and lower-class Americans remained relatively stagnant — effectively resulting in a decrease when adjusted to meet higher inflation rates — or increased at a rate slower than that by which the wages of the upper class grew.

According to the EPI, in 1979, the wages of those in the top 95th percentile were 2.2 times higher than the wages of the “typical worker,” or those considered “middle-wage earners,” at the 50th percentile. This “95/50 gap” applied to both men and women.

Over time, however, the disparity has widened.

As shown in the chart below, by 1999, men in the 95th percentile were making 2.7 times more than men in the 50th percentile. The same gap existed among women. Ten years later, in 2009, the wage gap among men had dramatically widened: The top earners were making 3.1 times more than middle-wage earners. The wage gap among women also grew wider, but not as dramatically. The top female earners made 2.8 times more than their middle-wage counterparts.

By 2013, the typical 95th percentile man’s wage was 3.3 times higher than the typical 50th percentile man’s. The same year, the typical 95th percentile woman’s wage was three times higher than the average 50th percentile woman’s wage.

The EPI’s most obvious finding is that inequality is increasing at a quicker pace among male earners than it is among female earners. But other concerns arise from the data. If men and women are disproportionately impacted by income inequality, can one assume that income inequality facilitates more general, societal inequality? Is it possible that the slower rate of income inequality experienced by women is a result of female earners making less than their male counterparts? The notion is alarming because it would prove a direct correlation between the gender pay gap, income inequality and the other forms of inequality that result directly from income inequality.

Today, the data at least prove one thing: The wage gap is widening, and both men and women are feeling it — including those who are in a better position than the nation’s lowest-wage earners.

“The enormous increase in inequality among both men and women over the last 35 years is a testament to the fact that skewed wage growth has become a core economic challenge of our time,” writes economist Heidi Shierholz in the EPI report.

High-wage inequality is, as Shierholz states, the “key wedge between a successful economy … and an unsuccessful economy,” and it is also one of the greatest threats to America’s middle class.

Photo: Brad_crooks via Flickr
Chart via Economic Policy Institute
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White House: Obama To Meet Pope Francis In March

White House: Obama To Meet Pope Francis In March

Washington (AFP) – President Barack Obama will visit Vatican City in March to meet Pope Francis, whom he has praised as an “eloquent” spokesman on the scourge of inequality — a key issue in his own political agenda.

The White House said Obama would travel to see the pontiff on March 27, following stops in the Netherlands for a nuclear security summit and talks with European Union leaders in Brussels.

“The President looks forward to discussing with Pope Francis their shared commitment to fighting poverty and growing inequality,” the White House said in a statement Tuesday.

A meeting between Obama and the pontiff, who has refashioned the image of the Roman Catholic Church since his installation last year, has long been rumored following the president’s approving comments about Francis.

In a speech in December, Obama praised an argument advanced by Pope Francis on rising inequality in societies split between the very poor and the super rich.

Obama referred to the pontiff’s remarks in his first Apostolic Exhortation as part of his own prolonged meditation on poverty in a speech on inequality and politics in America.

“The pope himself spoke about this at eloquent length,” Obama said at the time. “How could it be, he wrote, that it’s not a news item when an elderly homeless person dies of exposure, but it is news when the stock market loses two points?”

Pope Francis argued in the exhortation, that such conflicted values marked a “case of exclusion” in an unequal society and wrote that “masses of people find themselves excluded and marginalized: without work, without possibilities, without any means of escape.”

It was not the first time that Obama had praised Pope Francis, who was elected last March and has caused a stir with his austere style and pronouncements on poverty.

In October, the president told CNBC that he was “hugely impressed” with the pope’s humility and empathy to the poor.

Obama was last in Vatican City in 2009, when he met Pope Benedict.

Obama has made rising inequality and the struggles of America’s middle classes the signature domestic issue of his second term.

The theme is likely to underpin his State of the Union address next week.

The president’s trip to the Netherlands, for the nuclear security summit in the Hague, did not come as a surprise as the event is his brainchild.

He has been the leading figure in the previous two nuclear security summits in Washington D.C. and Seoul.

The White House statement said the meeting would “highlight progress made to secure nuclear materials and commit to future steps to prevent nuclear terrorism.”

Obama will also meet Dutch officials during his trip.

European Union sources first said last week that the president would also attend an EU-U.S. summit in Brussels.

His visit, his first to EU institutions as president, will be seen as an effort to mend relations with Europe, following revelations by Edward Snowden about National Security Agency spying which soured relations with Washington.

The president will also be keen to push talks on a Transatlantic Trade and Investment Partnership (TTIP) designed to create the world’s largest free trade area.

Obama will also meet Belgian government officials and NATO’s top brass.

The European tour will take place between March 24-27.

AFP Photo/Filippo Monteforte

For U.S. Kids, The Rich Get Thinner And The Poor Get Fatter

For U.S. Kids, The Rich Get Thinner And The Poor Get Fatter

Los Angeles Times

From many corners of the United States — Los Angeles, Philadelphia, Mississippi — recent years have brought heartening news about the relentless rise in obesity among American children: Several years into a campaign to get kids to eat better and exercise more, child obesity rates have appeared to stabilize, and might reverse.

But a study published this week in the journal PNAS suggests that among adolescents, the hopeful signs are limited to those from better-educated, more affluent families. Among teenagers from poorer, less well-educated families, obesity has continued to rise.

Nationally, rates of obesity among adolescents ages 12 to 19 did not rise between from 2003 to 2004 and 2009 to 2010. But during those times, obesity rates among adolescents whose parents have no more than high-school educations rose from about 20 percent to 25 percent. At the same time, the obesity rates for teenage children of parents with four-year college degrees or more fell from 14 percent to about 7 percent.

“The overall trend in youth obesity rates masks a significant and growing class gap between youth from upper and lower socioeconomic status backgrounds,” the authors of the latest research wrote.
That class gap was not evident in younger children _ those from ages 2 to 1, the researchers said. But as children neared the cusp of adulthood, the class differences became increasingly stark.
Disparities between rich and poor in obesity rates are not new, and they are only one of many health gaps that make poor patients sicker and more likely to die prematurely than richer ones. But if the public health message on obesity “has not diffused evenly across the population,” as the authors of Monday’s report suggest, this disparity could stymie efforts to stem a costly obesity-related diseases in the years ahead.

In a detailed accounting of youth consumption and exercise patterns, researchers from Harvard University’s Kennedy School of Government found that physical activity may account largely for the divergent trend in obesity between rich and poor.

In 2003, 86.6 percent of adolescents living with parents who had college degrees told survey-takers that they had exercised or played a sport for at least 20 minutes continuously sometime in the last seven days. By 2011, 90.1 percent said they had done so.

In contrast, 79.8 percent of adolescent children with parents who did not go beyond high school said in 2003 that they had exercised or played a sport for at least 20 minutes in the previous week. By 2011, the numbers of those adolescents who had done so had barely budged, at 80.4 percent.

Asked whether they had engaged in at least 10 minutes of continuous physical activity in the last 30 days, 94.7 percent of adolescents with college-educated parents said yes. But among teens with parents with high school educations or less, 82.1 percent of teens said they had engaged in even that minimal level of exercise.

Kids across the socioeconomic spectrum got the message that they should reduce their intake _ and less advantaged kids took in fewer calories to begin with. From 1998 to 2010, the teenage children of parents with college degrees reduced their average calorie intake from 2,487 calories per day to 2,150. In the same period, less advantaged adolescents went from averaging 2,271 calories per day down to 2,105.

While genetics, metabolism, cultural and environmental factors all influence weight, the foundation lies in the energy-balance calculation: If calories consumed outstrip energy expended in physical activity, we will gain weight. In a group where almost 1 in 5 adolescents is completely sedentary, obesity is simply a likelier prospect when average calorie intake is about the same.

If public health experts are to prevent childhood obesity and thereby drive down future obesity among adults, they’ll have to figure out why less advantaged kids don’t get as much exercise, the authors of the latest study say. Lack of recreation centers, playgrounds, and streets and sidewalks that encourage walking, biking and playing are important, they wrote.

But, they added, “this is not the whole story.” In research presented in New York this summer to the annual confab of the American Sociological Association, the same researchers found that, among children with parents who ranked high on the socioeconomic scale, participation in high school sports and clubs has increased. But among their peers from families of lower educational attainment and income, such participation has declined.

Photo: Wader via Flickr