Income Inequality, Recommended Reading for May 2007

Over the weekend I found two good posts on income inequality: One from Amy Traub at DMI on progressive taxes and the other from Nancy Scola at MyDD on excessive executive pay. Give 'em both a read.

WFP on ABC

A little late, but good for a Friday afternoon: ABC News did a piece last week on New York's shrinking middle class that featured the WFP.

Watch the ABC News clip.

If you want to read more, a good place to start is the newly released Drum Major Institute study entitled Saving Our Middle Class.

Are Ford's Executives Looting the Company?

Is there a better example of corporate greed - and a better argument for taxing the superrich - than Ford CEO Alan Mulally? Ford posted a record $12.7 billion net loss in 2006. But Mulally was just paid $28 million for four months of work.

Actually, former Ford Executive Chairman Bill Ford Jr might be a better example. Billy said in May 2005 that he wouldn't accept any pay, bonus or stock until the company started making money again. But now it turns out he got $10.5 million in 2006 and $13.3 million in 2005.

And who pays when executives loot the company till? You guessed it. Ford wants to cut 30,000 jobs and is demanding more concessions from their unionized workers. What do you think the chances are that they'll cut Mulally's pay?

Tell Governor Spitzer that we need a statewide discussion about progressive taxation.

WFP on the New York State Budget

This year's state budget battle is over. The final budget increases education spending and reduces the health care cuts - both good outcomes.

The flaw in the budget debate – and it's a serious one – was on the revenue side. New York continues to have not just high taxes, but highly unfair taxes.

The wealthier you are in New York State, the less you pay in taxes as a percentage of your income. Look at all the taxes a person pays – income, payroll, sales, property, capital gains – and you find that the middle class and working class pay higher percentages of their overall income in taxes than the wealthy. Here's a chart of the effective tax rate in New York State from the Institute on Taxation and Economic Policy (via the Fiscal Policy Institute) that illustrates this point:



Sooner or later, we have to face this. New York State government has the good fortune to be rolling in money, and so they increased spending and cut property taxes at the same time. We may not be so lucky in next year's budget.

A responsible government – like a responsible household – must inventory its needs for both the short and long term, and then make decisions. We didn't really do that in Albany this year. The passion for an on-time budget got in the way of a more serious exploration of the state's fiscal situation.

The Working Families Party remains committed to just such an exploration. We live in a rich state, but the distribution of income, security, opportunity, and peace of mind is truly screwed up. It's a topic that deserves the attention of our elected leaders.

Tell Governor Spitzer that you think we need a statewide discussion about progressive taxation.

Budget Deadline Draws Near

New York is still headed toward a late budget after a weekend of negotiations. From Newsday:

With the state budget due in a week, negotiators for Gov. Eliot Spitzer and the Assembly and Senate majorities failed to reach critical agreements Sunday.

Closed-door talks will continue Monday. All sides agreed a deal will have to be struck early in the week to leave enough time to print budget bills and approve them in both chambers to pass an on-time budget. The budget is due Sunday, April 1.

Education and health care are the main sticking points. Instead of forcing a choice between these two top priorities, we need to expand the debate. 44,000 New York taxpayers have yearly incomes over $1 million. Together, they take in more than New York's entire middle class. It's time for a sane discussion of taxes.

Maria Lisella is one of the people helping start that discussion, with a letter printed in the Sunday "Voice of the People" section of the Daily News:

New York is a wealthy state, but you'd never know it to listen to debates over the state budget. Instead of arguing over education vs. health care, both essential services, there's a better way: For every $500,000 you earn, you're taxed one day's pay (about .4% of your income). Make $1 million, be taxed two days' pay. Lucky enough to make $2.5 million per year? You're taxed a week's salary. We could put in a cap when salary reached $10 million. This plan would let Spitzer make good on property tax reductions and increased school funding and do health care reform right by covering everyone with no exceptions.

Right on.

Write your own letter.

Technorati tags: Working Families Party, Income Inequality

Pew Study Finds Income Inequality Rising

A major study by the Pew Research Center looking at "political values and core attitudes" over the past 20 years finds that working families are having a hard time making ends meet (via Working For Us PAC). From the summary:

More broadly, the poll finds that money worries are rising. More than four-in-ten (44%) say they "don't have enough money to make ends meet," up from 35% in 2002. While a majority continues to say they are "pretty well satisfied" with their personal financial situation, that number is lower than it has been in more than a decade.

The stark difference between people who can't make ends meet and people who are pretty well satisfied shows the growing income inequality in our society. More on that:

In addition, an increasing number of Americans subscribe to the sentiment "today it's really true that the rich just get richer while the poor get poorer." Currently, 73% concur with that sentiment, up from 65% five years ago. Growing concerns about income inequality are most apparent among affluent Americans; large percentages of lower-income people have long held this opinion.

This issue is playing out in the state budget fight going on in Albany. Our elected officials are fighting over essential services like schools and health care, but left out of the equation are the superrich. As long as that's the case, they are the ones who will keep winning the debate.

Read our solution.

Technorati tags: Working Families Party, Income Inequality

New York's State Budget

April 1st is not just for fools. It's also the day the New York State budget is due.

The state budget is likely to be late because of the Governor's decision to force a choice between health care and education.

We shouldn't have to choose between these two top priorities. 44,000 New York taxpayers have yearly incomes over $1 million - that's over $20,000 a week. Instead of fighting over a shrinking pool of resources, the wealthiest among us must pay their fair share in taxes.

Here's our idea: One day's pay for every half-million.

For every $500,000 you earn, you pay one day's pay in taxes (about 0.4 percent of your income). Make $1 million, that's two days pay. Lucky enough to make $2.5 million per year? That's five days' pay, or a week's salary. And you still have another 51 weeks at $50,000 per week to get that $2.5 million. We can cap the number of days when we get to $10 million.

This proposal would let us reduce property taxes for working families, increase school funding, and provide everyone - no exceptions! - with health care.

Help put this idea in the papers by writing a Letter to the Editor on the state budget.

And be sure to let us know if your Letter to the Editor gets published.

Technorati tags: Working Families Party, Income Inequality

To Do Health Care Right, Rich Must Be Taxed

I want to share an op-ed in today's Albany Times-Union from Working Families State Co-Chair Bob Master and Executive Director Dan Cantor:

A lot of things happen in Albany, but the most central is the state budget. It's through the budget that our elected leaders discuss and decide what's important. What do we favor, and who should pay for it? That's the real meaning of the budget document.

Gov. Spitzer's budget proposal has a lot of good stuff in it: Education funding. Better allocation of economic development funds. Expansion of health care programs for children and the poor.

But there are two big problems. The first is the health care cuts. And the second is an unwillingness to raise taxes on the superrich.

On the health care side, there is cause for praise as well as blame. The new governor's commitment to clear away the bureaucratic obstacles that keep hundreds of thousands of eligible New Yorkers off Medicaid is a major step forward. Unfortunately, while Spitzer is extending health coverage with one hand, he is yanking away a lifeline from the state's hospitals and nursing homes with the other.

No one denies that New York's health care system is in need of reform. No doubt, some of New York's aging hospitals have not kept pace with social and technological change. But fixing a system as vital and complex as New York's health care system takes the delicate tools of a surgeon. The governor's budget proposal applies a sledgehammer.

The second problem with the budget is closely connected to the first. New York is a state of fabulous wealth, but you wouldn't know it to listen to our budget debates.

Every year, we are whipsawed between the need for public goods and essential services -- that's what schools and health care are, after all -- and the equally powerful want for reduced taxes. In an age of stagnant wages for the middle and working class, a tax cut is one of the few ways people can get a little more money.

Left out of the equation are the rich. They are the ones who actually keep winning this debate, because they depend less on the public goods and services that go underfunded, and make out like bandits from counterproductive tax cuts at the state and federal level.

Take a breath and consider this: There are approximately 44,000 New York taxpayers with incomes more than $1 million a year -- that means they earn more than $20,000 per week. They claim an astonishing $225 billion each year, a full quarter of all income in the state. In other words, this elite club takes in more than New York's entire middle class, the 2.5 million households earning between $50,000 and $150,000 a year. The inequality in wealth that results is even more astonishing.

Some people may say this is the natural result of a vibrant free-market economy. But others know it is the result of political and social choices -- specifically, the retreat from fair taxes, and the retreat from any sense that enough is enough when it comes to the rich. Unfortunately, the case for fair taxes is seldom a political winner, so the extremely wealthy become the eternally wealthy, and we are forced to choose between funding education or funding health care.

It's time for a sane discussion of taxes. Here's an idea to start that discussion: One day's pay for every half-million.

For every $500,000 you earn, you give back to New York -- because that's all taxes are -- one day's pay (about 0.4 percent of your income). Make $1 million, give back two days pay. Lucky enough to make $2.5 million per year? That's five days' pay, or a week's salary. But remember, you still have another 51 weeks at $50,000 per week to get that $2.5 million. We can cap the number of days when we get to $10 million.

This proposal would produce more than $11 billion in revenue. That would let us do health care reform right (cover everyone, no exceptions), pay off some bonds and still let the governor make good on property tax reduction and school funding.

Spitzer's first budget proposal suggests he'll be a good governor. If he backs off his misguided health spending cuts and his unwise no-new-taxes commitment, he'll be a great one.

Share your thoughts in the comments.

Technorati tags: Working Families Party | Income Inequality

Charlie Rangel Takes On Income Inequality

The gap between wealthy families and working families is growing. Real median income is falling, poverty is rising, and fewer workers have health insurance. The price of college is shooting up, leaving new college graduates saddled with loans for years. And while this is happening, Bush tax cuts go to benefit Wall Street stockbrokers who took home $24 billion in bonuses last December.

So credit Representative Rangel for taking testimony on wealth inequality in his new position as Chair of the House Ways and Means Committee to see what can be done to help working families make ends meet (via the Daily Politics). Raising the minimum wage will help, but that's only a first step. Rep. Rangel is looking at what to do next.

The AFL-CIO has weighed in, you can read more here, here, here, here, and here's the full list of Ways and Means Committee hearings.

Technorati tags: Working Families Party | Income Inequality