The GOP Tax Bill Does Nothing to Address Our Racial Wealth Divide

home-mortgage-loans

(Photo: Shutterstock)

Wealth is concentrating upwards in this country — we’ve known that for years. But new numbers really drive home just how severely.

According to our new report, Billionaire Bonanza 2017, there’s been a rapid updraft of wealth into the top echelon of multi-billionaires. The wealthiest 400 Americans now have more wealth together than the bottom 64 percent of the population, over 200 million of us.

That’s bad enough. But through the lens of race, these statistics reveal another dimension of the story. Only seven of the 400 wealthiest Americans are black or Latino — the rest are almost entirely white.

It takes barely half of that list to blot out the total wealth of blacks and Latinos alike. The wealthiest 269 billionaires equal the combined wealth of the entire African-American population of 47 million people. For Latinos, it takes just 252 billionaires.

Read the full article on the Hill.

The post The GOP Tax Bill Does Nothing to Address Our Racial Wealth Divide appeared first on Institute for Policy Studies.

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The Racial Wealth Divide in Trump’s America

racial-wealth-gap-divide

(Photo: Ellie / Flickr)

The majority of Black and Latino voters didn’t pull the lever for Donald Trump last November. He is, however, the president — and thus has the power to leave a lasting effect on the trajectory of their lives.

Trump has recently made headlines for making significant reversals in policy positions on issues ranging from immigration to the national debt ceiling. Perhaps, he could change his tune on how he addresses the growing racial wealth divide as well.

Will the already deep racial wealth divide grow wider under Trump, or can we begin to close it?

Recently released figures from the Census Bureau show that Black and Latino families saw a slight uptick in their household income last year. They still lagged far behind White families — with median households earning more than $ 10,000 less than their White counterparts. The racial income gap did get a bit smaller over the very short term.

Unfortunately, the long term trends go in the other direction.

A just released report I co-authored titled “The Road to Zero Wealth” looks at trends in household wealth, which includes the total sum of a families’ assets minus their debts. Wealth, not income, is the better measure of long-term financial stability.

The median Black family today has just $ 1,700 in wealth, with Latino families not far ahead at just $ 2,000. White families, meanwhile, own more than $ 100,000. That gap is staggering.

And it’s getting worse.

The report looks at racial wealth data over the past 30 years to project what we can expect in the future if current trends continue. By 2020, the end of Trump’s first term, median Black and Latino households stand to lose nearly 18 percent and 12 percent of the wealth they held in 2013, respectively.

Median White household wealth, on the other hand, looks set to increase 3 percent.

At that point, White households will own 85 times more wealth than black households, and 68 times more wealth than Latino households. That’s in just three years — let that sink in for a moment.

Looking a bit further into the future, Black families are projected to own no wealth at all by 2053. By that point, our country will be majority non-White, but Whites and non-Whites will be farther apart than ever.

That’s assuming nothing changes. If Trump moves forward with the policies he campaigned on, especially his tax “reform” plan, the gap surely grows.

Trump’s tax plan is heavily skewed toward providing massive tax breaks for the ultra-wealthy. Half of the proposed cuts will go to millionaires, according to the Institute on Taxation and Economic Policy. Less than 5 percent go to families with household incomes below $ 45,000.

Perhaps more insidious is Trump’s plan to eliminate the federal estate tax, also known as the inheritance tax. This levy applies exclusively to the wealthiest 0.2 percent of households and is intended to curtail the growing concentration of wealth in families like, say, the Trumps.

Fortunately, the president has other options. He could choose to expand, rather than abolish, the estate tax.

He could also address the deep disparities in homeownership — and particularly in the mortgage interest deduction in the tax code, which benefits the wealthy and those who already own a house. Thanks to generations of discrimination in housing and credit, black families trail whites in homeownership by a margin of over 30 percent.

Unfortunately, it’s unlikely Trump changes course. While the president is nothing if not mercurial, his commitment to protecting the wealth of the already wealthy has remained steadfast.

That the vast majority of the nation’s wealth is, and always has been, held in predominantly white hands at the expense of non-whites hasn’t concerned him. Perhaps, however, he’ll change his mind.

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Black and Latino Families Will Be Broke in a Few Decades if We Don’t Fix the Wealth Divide

Black women equal pay

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Many people see progress on racial equity in the U.S. as a steady march forward, in which people of color become more equal with their White counterparts as the years go by.

Those are people who don’t pay attention to household wealth figures.

A new report I co-authored, “The Road to Zero Wealth,” looks at the past 30 years of wealth accumulation across racial lines, as well as what the future will bring if current trends continue. Our findings were bleak.

The divide between the wealth of a typical Black family and a typical White family today is vast. A median Black family has just $ 1,700 in wealth—total assets minus total debt. Thirty years ago, that same family had $ 6,800 in today’s dollars. Latino families at the median have similarly small assets, just $ 2,000, also seeing a decline over the past three decades.

White median household wealth, meanwhile, is significantly higher: $ 116,800, up from $ 102,000 over the same period.

So Black and Latino families at the middle have seen their wealth slip while white families in the middle saw their wealth rise. What does this look like projected into the future?

By 2053, just 10 years after the country is projected to become majority non-White, Black median families will own zero wealth if current trends continue. Twenty years later, Latino median families will follow suit. White median families will continue to own six figures.

Even those Black and Latino families who’ve achieved the traditional markers of middle class life—a good-paying job and a college degree—still lag far behind their White counterparts in terms of wealth. Black and Latino families with a member holding a four-year degree own just a fifth of the wealth of equivalent White families. In fact, they own less wealth than a White family whose head has just a high school diploma.

These numbers represent a troubling trend in which assets and economic opportunities are channeled away from families of color and toward White families.

The enduring legacy of slavery and the Jim Crow era contribute to this growing divide. For instance, just 2% of the heavily subsidized mortgages made available by the Federal Housing Administration in the 30 years following the Great Depression went to non-White households. Homes are the biggest asset most middle-class families own, so this sort of federally sanctioned discrimination created a huge, inter-generational disadvantage for the Black and Latino families left out.

Modern public policy decisions rooted in expanding inequality also play a significant role. One such policy is America’s complex system of tax expenditures—essentially discounts handed out to certain groups and individuals that together total more than a half a trillion dollars in public spending each year.
One example is the mortgage interest deduction, a tax break designed to promote homeownership. Unfortunately, the deduction is only available to those who itemize their tax returns, which skews the beneficiaries heavily toward the already wealthy—who are disproportionally White.

Changing our priorities around tax incentives, as well as investments in bold new programs like Children’s Savings Accounts (CSA) and a federal jobs guarantee, could reverse the decades-long rise in the racial wealth divide. Had Congress instituted a robust universal CSA program in 1979—seeding small savings and investment accounts for all children that could mature as they grew older—the white-Latino wealth gap would have disappeared by now and the white-black gap would have dropped by 82%.

Policy changes like these would require bold leadership from across the federal government, including Congress and the White House. In today’s political atmosphere, marked most often by scandal and regressive policy decrees as well as congressional gridlock, this does not appear forthcoming.

The good news, however, is that the policies needed to begin to turn the tide on our growing divide are readily at hand. We know what the problem is and how to fix it. Building the political will, and political power, to put such policies in play is the next step.

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Honor Juneteenth by Closing the Racial Wealth Divide

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(Image: Khalil Bendib / OtherWords.org)

On June 19, 1865, Union soldiers arrived in Galveston, Texas. They carried some historic news: Slavery had finally and completely ended, they declared. All of America’s enslaved people were now free, some two and a half years after President Lincoln’s Emancipation Proclamation.

That day in June would soon become “Juneteenth,” a holiday still celebrated in communities across the United States.

African Americans have now been free from slavery for over 150 years. Over the course of those years, the United States has made some appreciable and even impressive progress. In 1964, passage of the Civil Rights Act toppled Jim Crow. A year later, the Voting Rights Act challenged discriminatory voting laws.

We’ve even seen the election — and re-election — of the nation’s first black president.

So why, amid all this progress, does the Juneteenth holiday still resonate so powerfully for so many Americans?

Because Juneteenth reminds us how far we have yet to go. Racial inequality remains one of the top issues of our time. Black households, research shows, continue to lag economically behind their white counterparts, in both income and wealth.

Last summer, the Institute for Policy Studies and the Corporation for Enterprise Development explored that inequality in a report called the The Ever-Growing Gap, which focused on the essential role wealth plays in achieving financial security and opportunity.

Over the past 30 years, the report found, the average wealth of white families grew at three times the rate of growth for black families. If those trends continue, black families would have to work another 228 years to amass the amount of wealth white families already hold today.

That’s almost as long as the 245 years that legal slavery stained colonial America.

Over the course of those years, slave labor built the backbone of America’s economy — and gave white families a 245-year head start on building household wealth and overcoming economic insecurity.

Juneteenth helps us remember this history — and we need to remember.

The conventional narrative around wealth building in America simply ignores slavery and its aftermath. Those with more than ample wealth, the narrative goes, fully merit what they have. And others merit less.

“Most people look at the story of inequality through the lens of deservedness: People get what they deserve,” writes my colleague Chuck Collins in his book Born on Third Base.

The standard narrative, he says, implies “that people are poor because they don’t try as hard, have made mistakes, or lack wit and wisdom.” And the rich, the same story goes, have worked “harder, smarter, or more creatively.”

This “deservedness” narrative never acknowledges the discrimination and other barriers that have blocked black economic progress, or the public policies that have kept these barriers intact — things like housing and employment discrimination, mass incarceration, and tax policies that favor the wealthy over poor people of all colors.

It’s time to take a close look at federal policies and the role they play in keeping the growth of black wealth stagnant. This Juneteenth, let’s rededicate ourselves to closing the racial wealth divide.

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Retirement Divide: 100 CEOs v. the Rest of Us

Media Contacts:

(Washington, D.C. ) – The presidential election put a spotlight on the economic insecurity millions of voters are feeling as the result of the loss of millions of unionized factory jobs that were once a major source of both decent pay and retirement benefits.

While white working class families have been the focus of much of this attention, a new Institute for Policy Studies report shows that the real retirement security divide lies between those at the top of corporate America and nearly all the rest of us.

Report and related graphics are available here.

KEY FINDINGS:

Just 100 CEOs have company retirement funds worth $ 4.7 billion — a sum equal to the entire retirement savings of the 41 percent of U.S. families with the smallest nest eggs.

This $ 4.7 billion total is also equal to the entire retirement savings of the bottom:

  • 59 percent of African-American families
  • 75 percent of Latino families
  • 55 percent of female-headed households
  • 44 percent of white working class households

On average, the top 100 CEO nest eggs are large enough to generate for each of these executives a $ 253,088 monthly retirement check for the rest of their lives.

  • Among ordinary workers, those lucky enough to have 401(k) plans had a median balance at the end of 2013 of $ 18,433, enough for a monthly retirement check of just $ 101.
  • Of workers 56-61 years old, 39 percent have no employer-sponsored retirement plan whatsoever and will likely depend entirely on Social Security, which pays an average benefit of $ 1,239 per month.

With nearly $ 3 billion in special tax-deferred accounts, Fortune 500 CEOs stand to gain enormously from Trump’s proposed tax cuts on top earners.

  • If President-elect Donald Trump succeeds in cutting the top marginal tax rate from 39.6 percent to 33 percent, Fortune 500 CEOs would save $ 196 million on the income taxes they would owe if they withdrew their tax-deferred funds.
  • Unlike ordinary 401(k) holders, most top CEOs have no limits on annual contributions to their tax-deferred accounts. In 2015 alone, Fortune 500 CEOs saved $ 92 million on their taxes by putting $ 238 million more in these accounts than they could have if they were subject to the same rules as other workers.
  • Michael Neidorff, the CEO of Centene, a provider of health plans to Medicaid recipients and other low-income Americans, has nearly $ 140 million in his deferred compensation account, up 658 percent since the 2010 launch of Obamacare.

The retirement asset gap between CEOs mirrors the racial and gender divides among ordinary Americans.

  • The 10 white male CEOs with the largest retirement funds hold a combined $ 1.4 billion, more than eight times more than the 10 CEOs of color with the largest retirement assets and nearly five times as much as the top 10 female CEOs.

“While slashing jobs and benefits for ordinary workers, CEOs of large companies have been feathering their own nests,” says Sarah Anderson, report co-author and director of the IPS Global Economy Project. “It’s no wonder so many American workers are concerned about whether their golden years will be tarnished by financial stress.”

This is the Institute’s second report on the CEO-worker retirement gap. Last year’s edition received coverage in BloombergUSA TODAYReutersCNN MoneyThe GuardianCBS Moneywatch, and Fortune, among other outlets.

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‘Free Trade’ Deals Like Obama’s TPP Only Widen the Economic Divide

(Photo: Backbone Campaign/flickr CC 2.0)

(Photo: Backbone Campaign/flickr CC 2.0)

After the November election, all eyes will be on President Obama to see if he will follow through on his vow to push for a vote during a lame-duck session of Congress on the wildly unpopular Trans-Pacific Partnership.

In a previous interview with Inequality.org, AFL-CIO deputy chief of staff, Thea Lee, explained why the U.S. labor movement strongly opposes the trade pact. She described the TPP as yet one more deal that would put downward pressure on U.S. labor conditions by further opening up the U.S. market and giving additional protections for U.S. corporations looking to move jobs offshore. Lee has been a leader in building international solidarity against such corporate-driven trade agreements.

To bring a developing world perspective to this issue, we turned to Institute for Policy Studies associate fellow Manuel Pérez-Rocha, who has spent more than two decades working with social movements for an alternative approach to trade that would put the interests of people and the environment first. His home country of Mexico is one of the 12 nations negotiating the Trans-Pacific deal, despite more than 20 years of experience with the failed blueprint for the TPP — the North American Free Trade Agreement.

NAFTA promoters claimed it would make life much better in Mexico and would reduce the pressure to immigrate to the United States. What has happened since the agreement went into effect in 1994? 

Pérez-Rocha: Mexico’s poverty has increased, wages have been slashed, and the country now has to import 45 percent of its food (Back in 1994, it imported only 15 percent). By lowering trade barriers and cutting subsidies for small producers, the Mexican government abandoned national food production to favor imports. This has meant declining production, employment, and income, and increasing inequality, poverty, and migration pressures.

The vacuum left behind has been occupied by organized crime. The increase in violence and public insecurity in the countryside, and really in all of Mexico, has a clear link to NAFTA. Mexico has lost more than 100,000 lives, and tens of thousands of people have “disappeared” under the so-called war on drugs.

Some claim NAFTA created jobs in the border factories. Is that not true? 

Pérez-Rocha: The jobs that were created were low-road jobs, without basic labor protections and with low wages and often dangerous working conditions. And because NAFTA prohibited governments from requiring that foreign investors use domestic suppliers, the ripple effects of this investment plummeted. When unions and other groups turned to the NAFTA labor side agreement to try to get some recourse for rights violations, it was a huge waste of time. Compared to NAFTA’s investment agreement rules, under which U.S. and Canadian corporations have successfully sued Mexico for hundreds of millions of dollars, the labor side agreement has no teeth. And when workers struggled to push up wages, many of the companies simply moved to China or other lower-wage areas.

Who has profited from NAFTA?

Pérez-Rocha: Mexico now has 12 billionaires. We didn’t have a single one in 1987, before our government started selling off public enterprises at a discount to cronies and introducing other free market reforms to lay the groundwork for NAFTA. Carlos Slim, with $ 50 billion, is the 4th wealthiest person in the world. Slim made his fortune from the privatization of the formerly state-owned Telefonos de Mexico company. Ricardo Salinas Pliego made his billions through the privatization of a national TV company (now Televisión Azteca). Others, like German Larrea and Alberto Bailleres, became extremely wealthy off industries that benefited from lower trade barriers, like mining, while causing terrible environmental impacts.

What other new privileges have gone to the top 1% under NAFTA? 

Wealthy foreign investors got the completely unprecedented power to sue governments in obscure, unaccountable, and private tribunals, like the World Bank’s International Center for the Settlement of Investment Disputes. Under the investor-state dispute settlement system, they can sue in international tribunals for millions and even billions of dollars over government actions that might reduce their profits. Canada and Mexico have lost many cases under NAFTA’s investment rules.

I’ve spent much of my time in recent years working in solidarity with people who are trying to fight these cases. In El Salvador, for example, we’ve been supporting activists who’ve been working for six years against a case brought by the Canadian Pacific Rim company (owned by the Australian Oceana Gold). The company is demanding $ 250 million, simply because the government is acting to protect the country’s primary watershed from poisonous gold mining.

A ruling in this case is expected soon and if it goes against El Salvador, it should be a huge wake-up call about the TPP. Even if the tribunal “favors” El Salvador, this small country should not have had to go through all of the emotional pain and financial suffering related to this case, including having to pay millions for its legal defense. The TPP would allow corporations to file the same kinds of investor-state lawsuits.

After working on these bad trade deals for so long, what gives you hope? 

Social movements have defeated corporate schemes like the TPP several times in the past. For example, in 1998 the proposed Multilateral Agreement on Investment failed after France and other countries withdrew from the negotiations in response to civil society demands. In 2005, negotiators gave up on the U.S.-led Free Trade Area of the Americas, a trade pact that was to include 32 countries in the Western Hemisphere.

Today, the TPP and the proposed U.S.-European Union trade deal (Transatlantic Trade and Investment Partnership) are at an impasse and in deep peril because of the power of social movements. In the United States it becomes clear before every election that so called “free trade” is very unpopular. Obama said during his presidential campaign that he would renegotiate flawed deals like NAFTA. Today both Hillary Clinton and Donald Trump claim to be against the TPP. This demonstrates that free trade agreements can be obtained only through anti-democratic means.

What gives me hope is that citizens around the world know very well how damaging the free trade agenda is for people and the planet and that we are as ready as ever to take action.

The post ‘Free Trade’ Deals Like Obama’s TPP Only Widen the Economic Divide appeared first on Institute for Policy Studies.

Manuel Pérez-Rocha is an associate fellow at the Institute for Policy Studies.

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Seven Substantive Issues That Divide the Democratic Candidates

(Image: CNN)

(Image: CNN)

The first Democratic presidential debate differed immensely in substance and tone from the two Republican debates held thus far as candidates acknowledged, as Bernie Sanders put it, that they were “sick and tired of hearing about [Hillary’s] damn emails” and ready to dig into the serious issues of our time.

While the candidates agreed on many mainstay Democratic policies ranging from the need to address skyrocketing student debt and climate change to their support for guaranteed maternity leave, they did vary in their positions on some very key issues.  Here are the top seven issues that split the candidates.

Capitalism

After confirming that Bernie Sanders was indeed serious about not being a capitalist, CNN moderator Anderson Cooper clarified if any other candidate would like to take a stance against capitalism. No one budged.  Sanders clarified his views saying, “Do I consider myself part of the casino capitalist process by which so few have so much and so many have so little by which Wall Street’s greed and recklessness wrecked this economy? No, I don’t.”

Wall Street

Martin O’Malley and Bernie Sanders laid out firm plans for dismantling the “casino, speculative, mega-bank gambling” that takes place on Wall Street, as O’Malley put it.  Hillary claimed to have a tougher plan to regulate the banks, but stopped short of calling for breaking up the Too Big To Fail banks.  It’s hard to ignore the fact that the bulk of Clinton’s lifetime campaign funding comes directly from Wall Street.  None of the other four candidates made this point on stage, but Sanders hit a major applause line saying, “Congress does not regulate Wall Street, Wall Street regulates Congress.”

The Greatest National Security Threat to the U.S.

When asked what the greatest threat to national security is, Lincoln Chafee cited the chaos in the Middle East, Jim Webb cited China and the Middle East, both Martin O’Malley and Hillary Clinton cited the spread of nuclear weapons in Iran and elsewhere.  Bernie Sanders distinguished himself from the pack citing climate change as our greatest threat, saying unless we act, “the planet that we’re going to be leaving our kids and our grandchildren may well not be habitable.”

Gun Control

The focus of the gun control portion of the debate was on Senator Sanders’ record, having voted against the Brady Bill. He defended his record as a leader from a rural gun owning state who’s taken a strong stance on gun control in recent years. Somewhat awkwardly, he asserted in the third person, “Bernie Sanders has a D-minus rating from the NRA.”  While all the candidates agreed on the need for instant background checks and closing the gun-show loophole, Secretary Clinton made clear that she thought Sanders was not strong enough on guns.

Iraq War

Bernie Sanders called the war in Iraq “the worst foreign policy blunder in the history of the United States,” a point Lincoln Chaffee echoed in his remarks.  Hillary Clinton, who voted in favor of the war, attempted to show her good judgment as shown by her appointment to Secretary of State, but did not explain why she supported the war in the first place.  The candidates also split on the prospect of enforcing a no-fly zone in Syria, an idea Clinton supports and Sanders does not.

Mass Surveillance

Lincoln Chafee defended his support for the PATRIOT Act, the legislation that led to the creation of the modern surveillance state, saying it was a 99 to 1 vote.  Sanders was quick to point out that he was only candidate on stage to vote against the legislation, although he was in the House of Representatives at the time, not the Senate.  He went on to say that he would shut down the mass surveillance program at the NSA. When asked about NSA whistleblower Edward Snowden, Sanders and Chafee were the only candidates to support varying levels of leniency.  O’Malley and Clinton both called for criminal proceedings as Clinton stated Snowden must “face the music.” Jim Webb chose not to take a position, claiming it was an issue for the courts.

Legalizing Marijuana

The two top candidates split on their views about legalizing marijuana as Sanders said he would support legalization while Clinton said she would not.  Both candidates clarified they did not want to see non-violent drug offenders in prison, but Clinton did not specify how she would reduce this without changing federal drug laws.  The three other candidates did not weigh in on this issue.

 

We can look forward to hearing more about where the candidates’ positions differ on issues in the upcoming debates, where the focus will likely shift more towards taxes, a topic barely discussed during this debate. While the candidates overlap on many issues, clear differences in policy and politics divide them, giving voters a clearer picture of who most closely represents their views entering into the campaign season ahead.

The post Seven Substantive Issues That Divide the Democratic Candidates appeared first on Institute for Policy Studies.

Josh Hoxie directs the Project on Opportunity and Taxation at the Institute for Policy Studies.

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Bridging the immigration divide – Phys.Org

Bridging the immigration divide
Phys.Org
Recent immigrants and people descended from earlier immigrants – whether voluntary or forced – often eye each other warily, sometimes finding themselves at odds. Making a connection can be as While working in Mississippi, Stuesse was a founding

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Bridging the Immigration Divide – University of South Florida

Bridging the Immigration Divide
University of South Florida
17, 2013) – Recent immigrants and people descended from earlier immigrants – whether voluntary or forced – often eye each other warily, sometimes finding themselves at odds. Making a connection can While working in Mississippi, Stuesse was a

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