45 of 50 States Tax the Poor at Higher Rates Than the Rich or How Conservatives Have Perverted Economics

Why do we need a transformative presidency, and overall politics, rather than a merely restorative one in 2020? Duh!  The continuing, long lasting damage that Reaganomics wrought on the poor and middle class must be recognized and addressed.  Too many members of the political class believe that the current state of things where the rich get richer and everybody else struggles is normal. They’ve come to see that inequality is an issue, but can’t really comprehend how bad it’s got because (1) the current economic status quo is all they’ve known, and (2) they don’t actually know anybody working 3 jobs and juggling bills to get by.

NY Times notes that State and Local Taxes are Worsening Inequality.  Illinois, now under complete Democratic control is moving to make their taxes more progressive, reversing a 40 year trend.

That gap between the poor and the wealthy in Illinois is one of the largest in any state, but the poor pay taxes at higher rates in 45 of the 50 states, according to a 2018 study by the Institute on Taxation and Economic Policy.

Yeah, even in blue states. And again, look back to those 1980s Reagan tax cuts that so drastically cut federal coffers, resulting in massive cuts to state aid and subsequent higher state and local taxes and service fees to make up for the federal cut backs. Because of the tried and true American way of government by the privileged, for the wealthy, of the powerful, those higher local taxes and fees were often hella regressive. Blue states should honor their citizens and reverse these bad economics (while red states continue to screw their people).

In 1961, Americans with the highest incomes paid an average of 51.5 percent of that income in federal, state and local taxes. Half a century later, in 2011, Americans with the highest incomes paid just 33.2 percent of their income in taxes, according to a study by Thomas Piketty, Emmanuel Saez and Gabriel Zucman published last year. Over that same period, the bottom 90 percent of Americans, ranked by income, saw their tax burden increase from 22.3 percent of income to 26 percent of income.

Also, too, as well, in addition, check out Jared Bernstein’s piece in Vox:  What economists have gotten wrong for decades: four economic ideas disproven by reality.

Starting with the supposed connection between inflation and “the natural rate of unemployment” (the people on Twitter who want to believe that AOC is dumb should not see her questioning the Fed Chair unless they want to be disabused) Bernstein notes a few economic shibboleths that need to be ignored for our economic sanity.

  • that globalization is a win-win proposition for all, an idea that has deservedly taken a battering in recent years;
  • that federal budget deficits “crowd out” private investments; and
  • that the minimum wage will only have negative effects on jobs and workers.

Over 40 years we’ve had low unemployment and high unemployment but the inflation rate has been steadily low and oh so friendly for the wealthy (who predominantly care about inflation, not unemployment, for obvious reasons.) Nevertheless, anytime anyone agitates for higher labor costs the specter of not just inflation but RUNAWAY inflation (OMG!) is invoked.

Globalization is the word we can use to explain how Wall Street and Main Street got so disconnected.

Bottom line for Bernstein on all of these economic fails:

In every case, the costs fall on the vulnerable: people who depend on full employment to get ahead; blue-collar production workers and communities built around factories; families who suffer from austerity-induced weak recoveries and under-funded safety nets, and who depend on a living wage to make ends meet. These groups are the casualties of faulty economics.

In contrast, the benefits in every case accrue to the wealthy: highly educated workers largely insulated from slack labor markets, executives of outsourcing corporations, the beneficiaries of revenue-losing tax cuts that allegedly require austere budgets, and employers of low-wage workers.

The wealthy get the benefit of the errors. Go figure. Funny how that happens 100% of the time.