Those LAZY, poor people! Pull yourselves up by bootstraps! (Ignore the fact that we took yr shoes)

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The state's tax system redistributes wealth well, to the detriment of a great many Alabamians

If Obama wants lessons in redistributing, he should come to Alabama, where the state tax code has been redistributing wealth for a long, long time. The only problem, at least for a great many Alabamians, is that the state's tax policy redistributes the wealth upward.

Poorer people in Alabama pay a much higher percentage of their incomes in state and local taxes than do the very wealthy. Families whose incomes are in the lowest 20 percent (less than $16,000 a year) pay more than 11 percent of those incomes in state and local taxes, according to a report earlier this year from the Institute on Taxation and Economic Policy. Yet the families in the top 1 percent of incomes (more than $316,000 a year) pay just 4.3 percent, the Washington, D.C.-based institute reported.

A report released last week underscores just how badly Alabama treats its poorer taxpayers.

Alabamians who earn at the federal poverty level pay the nation's highest state income tax bill, the report by the Center on Budget and Policy Priorities said. In 2007, the poverty level was $21,203 for two-parent families of four. Such a family owed $423 in Alabama income tax last year, according to the report. The same family of four would pay $184 in Georgia income taxes; $179 in Louisiana; $63 in Arkansas; and $48 in Mississippi.

Think about that last number: Alabama demands that its families at the poverty level pay almost nine times more income tax than those in more income tax than those in "Thank God for Mississippi." MORE


State of the Dream 2009" & How 30 Years of Conservative Economics Has Stiffled Black Progress

On Thursday, Dedrick Muhammad, co-author of the new report "State of the Dream 2009: The Silent Depression", from United for a Fair Economy, appeared on Democracy Now. Right off the top, he said:

I think one of the most important findings is that-the idea that the African American community never emerged out of the 2001 recession. As the country was talking about things were going well in 2005, 2006, we saw that African Americans were actually having a decline in the employment rate, a decline in per capita income.

Prompted by Juan Gonzales on the issue of the wealth gap, Muhammad continued:

The overwhelming majority of African Americans and Latinos do not even have a savings enough that would keep them going for three months. And as you see growing unemployment and, what's not talked enough about, underemployment, there is not that safety cushion to help you get through hard times. African Americans only have about 15 percent of the wealth of white Americans. And so, again, African American community, Latino communities, and also just working-class communities as a whole, are in a much more dire situation than I think is truly recognized. And we need some political courage to deal with these issues adequately.

In covering this report, I want to do two things. First, present an overview of the scope of the main findings of the report. That's what I'm going to so in this diary. Second, in a follow-up diary, I want focus in on the confluence of several driving dynamics: (1) The pre-existing racial disparities in wealth and income dating back to the pre-Civil Rights Era. (2) The sharp break between pre-1975 liberal economics and post-1975 conservative economics, after which economic advancement was sharply concentrated amongst the more affluent, and particularly the super-rich. (3) The concentration of wealth-promoting policies on those who need it least-those who are already among the most affluent of all Americans. What this combination of factors shows is that there is a very real, hard-core economic explanation for why blacks (as well as Latinos) have been mired in struggle economically, despite the fact of tremendous efforts over the last four decades. Those explanations also tie back into conservative ideology, which is directly responsible for closing off opportunities for a poor people in general, and blacks and Latinos in particular.MORE

The "State of the Dream" & The 30-Years Conservative Nightmare

As if it weren't bad enough that income growth slowed to a crawl for the bottom 60-80% of the population, the government made matters even worse by targeting the substantial majority of it's help for income mobility--money that helps people grow richer, rather than simply making up for lack of adequate income--on the most affluent members of society. "The State of the Dream" discusses this in some detail, but it relies on data from a report issued last year by the Urban Institute and the Pew Trusts, "How Much Does the Federal Government Spend to Promote Economic Mobility - and for Whom?" This was a typically impressive product of liberal think tanks that was totally unsupported by the sort of media blitz that the right routinely mounts on behalf of totally garbage reports. So if you never heard of it, join the club.
I had no idea that anyone had done this sort of analysis. What the study did was look at programs designed to build wealth or wealth-generating capacity, as opposed to programs that merely maintain or supplement income. Such programs can be generally regarded as enhancing income mobility. While income maintenance programs tend to be skewed toward lower income Americans, income mobility programs have precisely the opposite skew, they are dramatically skewed toward the more affluent. This is, quite naturally, the exact opposite of what conservatives have forever claimed that liberal big government does. Surprise, surprise! Once again, conservatives have been lying to us!
In the introductory section, the authors wrote:

Our findings are as follows:

• A considerable slice of federal funds has been aimed toward programs promoting mobility at some level. In 2006 alone, about $212 billion or 1.6 percent of gross domestic product (GDP) in direct spending and another $534 billion or 4.1 percent of GDP in tax subsidies went to programs aimed at promoting mobility, for a rough total of $746 billion. (The measure itself is rough because of the inevitable issues of categorization, and because one cannot strictly sum tax expenditures together.)
• Roughly 72 percent of this $746 billion in mobility expenditures, or $540 billion, is delivered mainly through employer-provided work subsidies, aids in asset accumulation, and savings incentives. This spending flows mainly to middle- and higher-income households and often excludes lower-income households or provides them comparably little in benefits.
• The remaining 28 percent, or $205 billion, of the mobility budget is channeled through programs that favor lower- to moderate-income individuals.

Got that? Roughly 72 percent of mobility expenditures--or $540 billion--"flows mainly to middle- and higher-income households and often excludes lower-income households", while a measly 28 percent--or $205 billion--is channeled through programs that favor lower- to moderate-income individuals.MORE