Black Unemployment Rate Slower to Recover
By Ann Belser
Originally published in the Pittsburgh Post-Gazette, Oct. 10, 2010
Photo h/t Pan-African News Wire via Flickr
Think it's hard to get a job?
Try being a young black man with an electronic monitoring bracelet on his ankle for a felony conviction. That's Brian Scott.
But Mr. Scott, 24, of the West End, has some things other young black men with a resume that includes a stint in the Allegheny County Jail don't: He has two suits for interviews, he wears a tie and he has the support of Leroy Hayes and Michael Rogers, co-coordinators of the Young Fathers Program at the Hill House Association in the Hill District.
The two men have taught Mr. Scott a truism he had not heard before: Clothes may not make the man, but they can unmake him.
In this Great Recession, black men have been hit particularly hard. On Friday when the U.S. Bureau of Labor Statistics released the unemployment numbers for September, the overall population was suffering an unemployment rate of 9.6 percent.
Unemployment in the black community was 16.1 percent. And while unemployment for black women dropped from 13.2 percent to 12.6 percent, the rate for black men rose from 17.3 percent in August to 17.6 percent in September. There are now 1.4 million black men out of work nationally.
The numbers look even worse for black teenagers. While the overall teen population had an unemployment rate of 26 percent, the white teen population had 23.4 percent unemployment and black teens had 49 percent, up from 45.4 percent in August. Unemployment rates based on race are not broken out for the Pittsburgh region.
To call economic conditions in the African-American community a crisis is to understate the problem because the situation black men are finding themselves in could follow them for the rest of their careers.
"This high unemployment that blacks are facing is going to go on for years based on the current economic projections," said Algernon Austin, a sociologist with the Economic Policy Institute, a nonpartisan research center in Washington, D.C. "Blacks are going to have double digit unemployment until 2014."
Even as the recovery slowly takes hold, Mr. Austin said none of the projections call for unemployment among blacks to fall much below 10 percent. "It's a dire situation and unfortunately not many people are treating this as a crisis. ... Even college-educated blacks are facing high unemployment."
Some of the reasons for the intractable problems are a function of economics as much as they are the product of generations of discrimination.
For example, Mr. Austin said those living in a black community with high unemployment may have more problems finding new jobs because the people to whom they would naturally turn -- friends, families and neighbors -- are also experiencing high unemployment.
Black members of the middle class and upper middle class may also be hurt by a lack of depth of wealth. A study by United for a Fair Economy, a Boston-based research organization, showed that for every dollar of net worth that white families have, black families have 10 cents. [link and emphasis added]
Dedrick Muhammad, one of the authors of the report and a research associate for The Institute for Policy Studies, said a number of factors go into those numbers.
College-educated African Americans typically have higher levels of student loan debt because their parents don't have as much money to finance their educations; black homeowners in African-American neighborhoods have homes worth 10 percent to 15 percent less than comparable homes in white neighborhoods; and blacks at all levels of the income spectrum were targeted with subprime loans at a higher rate than whites.
"Any type of bump in the road can be really serious just because there is no wealth to back that up," Mr. Muhammad said. "Most people use their social network in times of crisis, but when your whole social network is in crisis, there's no ladder to climb out."
The recovery is also not helping blacks as much as whites. Whites tend to have more of their money in the stock market, which has regained some of its value, while blacks have more of their money in their homes, and the housing market has been slow to rebound. [...]
- My name is (your name) and I’m a constituent from (your city). I’m calling to support a strong estate tax. I’d like the Senator to push for higher estate tax rates for multi-millionaires and billionaires, and vote against unlimited deductions for farms.
- I also urge the Senator to extend tax cuts for middle class families ONLY.
Instead of more tax breaks for the wealthy, Congress should use that
money to put Americans back to work, invest in our kids and pay down our
- Where does the Senator stand on the estate tax and the Bush tax cuts for the wealthy?
Stossel: If America is headed for bankruptcy, what can we do about it? Progressives say they have the answer: tax the rich – people like...me. And, joining us now from Boston is Mike Lapham, Director of...Responsible Wealth, an advocacy group that says, 'tax the rich more.' And, Mike, you include yourself?
Lapham: Indeed, indeed.
Stossel: You're rich?
Stossel: What do you mean by 'Responsible Wealth'? What's 'responsible'?
Lapham: Our members are people who are in the top 5% in terms of their wealth or income in the US. And, they are people who get that they don't need another tax break, that we should have an estate tax, that we need more corp. accountability, things like that.
Stossel: Alright, you don't think, though, that there is a risk that that will kill jobs? I think higher taxes make people work less. [...]
[video clip played]
Stossel: That's the risk...that more people will 'ride horses' instead of start businesses and create jobs.
Lapham: Well, that's the myth, anyway. That certainly sounds good, but the reality is – this has been proven over and over; United for a Fair Economy did a report on this a few years back – there is no real link between tax cuts and job growth. [...]
Meet the millionaire cofounder of Seventh Generation who is part of a growing movement of wealthy Americans urging Congress to let the Bush tax cuts expire.
Although Congress has decided to hold off on voting on the fate of the Bush-era tax cuts until after the November election, the delay has not slowed down the efforts of some wealthy millionaires. The 700 or so members of a Massachusetts-based group called the Responsible Wealth Project have spent the last several months courting politicians to make their case, arguing that the country simply cannot afford to keep tax cuts for the wealthiest Americans and that, as billionaires and millionaires, they hardly need that cash. NEWSWEEK’s Nancy Cook recently spoke with one of the group’s members, the cofounder of Seventh Generation, Jeffrey Hollender. Hollender talked about his disdain for the current tax code, the need for more compassion among the wealthy, and the way being rich often seems relative.
NEWSWEEK: So why do you oppose extending the tax cuts for families that make more than $250,000 a year?
Hollender: This is a time when the wealthiest Americans need to give back to the country. I know this well, as someone who has been financially successful, the vast array of benefits available to me that are not available to other people. It’s a moral question, but it’s also equally economic, because I don’t necessarily need everyone to agree with my morals and my perspectives. We can agree that the country can’t afford the tax cuts. This is the absolute wrong time, because where is that money going to be made up from? It’s going to come from social services. The government will have to reduce expenses, probably by providing fewer benefits for less affluent Americans. I can’t remember the government dealing with economic problems in a way that has inflicted pain on me, but that’s the not the case if you’re living below the poverty level.
Photo h/t Business Innovation Factory via Flickr
Tax Me, Please
Originally posted in The Best Revenge blog, Forbes.com, Oct. 6, 2010
More than 2,000 wealthy Americans who have paid or expect to owe estate taxes have signed a call to preserve the estate tax that was put out by United for a Fair Economy’s Responsible Wealth project. The signers include professors, farmers, small business owners, and lawyers, says Lee Farris, the estate tax policy coordinator for UFE. Some signers have a few million dollars, others tens of millions, but they are united in the words of the call: “We believe that permanent repeal of the estate tax would be bad for our democracy, our economy, and our society.”
The signers of the Responsible Wealth estate tax call are not just outliers, and some are billionaires. They include Forbes 400 members David E. Shaw, Julian Robertson, Jr., George Soros, John Sperling, and Ted Turner. All six children of David Rockefeller, the oldest Forbes 400 member, have signed too.
For more about how billionaires are duking it out over taxes, check out the story, Billionaire Tax Battle, that Janet Novack and I co-wrote in the October 25th issue of Forbes.
A consequence of the Bush tax cuts, the estate tax has lapsed for 2010, and it’s set to come back on Jan. 1, 2011, with a $1 million per person exemption and a top rate of 55%. In 2009, the exemption was $3.5 million per person and the top rate was 45%.
The Responsible Wealth groupies want to see an estate tax reinstated at 2009 levels, or with an even lower exemption and higher top rate. It’s unclear whether Congress will come to a decision on the estate tax in the lame duck session following the elections.
For the Responsible Wealth folks, the estate tax is only one tax fairness fight. They advocate progressive taxation at the state level. In what they see as their most urgent business recently, they have been calling on members of Congress with local business people in tow, arguing that the Bush tax cuts shouldn’t get extended.
I chatted with 82-year-old Edward Anderson, a retired managing partner of Tweedy Brown, who lives in San Diego and pegs his wealth in the low 8 figures. He remembers when the top federal income tax rate was 90%. “Now we’re told the world will come to an end [if taxes go up to 40%],” he says. Anderson is in favor of letting the Bush tax cuts expire (the top income tax rate would increase from 35% to 39.6%). And he has signed the Responsible Wealth call to preserve the estate tax, although an estate tax would mean less for his two sons and five grandkids at his death.
Anderson’s message to his peers is this: “It’s an amazing thing when people say, ‘You support the estate tax! Won’t that affect you?’ and the answer is ‘Yes and Yes.’ I don’t understand where people’s heads are. There’s a moral obligation of returning your wealth to society.”
To read the “call” (and sign it if you’re so inclined), click here.
How Billionaires Are Fighting Over Taxes
By Janet Novack & Ashlea Ebeling
This column appeared on Forbes.com, Oct. 7, 2010; printed Oct. 25, 2010
Has there ever been a time when so many Forbes 400 members have been involved in so many tax fights--on both sides? And not just in Washington, D.C., where epic battles rage over the future of the federal estate tax, income tax rates for the rich and whether the earnings of private equity and hedge fund managers should be taxed at 15% or 35%.
In Washington State, for example, Microsoft Chief Executive Steve Ballmer and Amazon founder Jeff Bezos have given $100,000 each to defeat ballot initiative 1098, which would slap a 5% tax on income over $400,000 per couple and a 9% levy on income over $1 million. On the other side is the nation's richest man, Microsoft cofounder Bill Gates--not surprising, since his dad is promoting the new tax, which would fund education, health care and other tax cuts. Gates Sr., 84, has given $500,000 to the 1098 campaign and even filmed a comic "soak the rich" ad for it, which ends with him dropped into a dunk tank.
Gates Sr. readily concedes he's in the minority among the highly affluent. "It's quite natural for people who are well-to-do to resist paying more taxes. In fact, it's quite natural for every person, everywhere, of whatever means, to resist paying more taxes," he says. "The interesting side," he adds, "is the number of people who are well-to-do who feel that this is something that should happen and that taxation should be progressive." (Washington State now relies on real estate and sales taxes, which hit the less wealthy harder.)
In California, too, The Forbes 400 vote is split. Rich lister and former eBay chief Meg Whitman is running for governor on a platform that includes killing the state's capital gains tax, now as high as 10.55%. That could save a bundle for those of her rich list backers who live in-state, including Scott Cook, Craig McCaw, Charles Munger, A. Jerrold Perenchio, Thomas Siebel and Jerry Yang. Yet California's richest man, Oracle Chief Larry Ellison, backs Democrat Jerry Brown, who supports the tax.
Then there's the epic battle over the future of the estate tax, which (thanks to the Bush tax cuts) is defunct for 2010 but comes roaring back in 2011. Some rich listers, including Charles and David Koch and the Mars family, have long bankrolled lobbyists and/or organizations advocating an end to the "death" tax.
Meanwhile, the list of rich folks openly supporting the tax has grown. Warren Buffett told Congress that a progressive estate tax is needed to keep the nation from moving "toward a plutocracy." Hedge fund billionaire Julian Robertson recently opined that the fairest way to get more deficit-closing revenue is "to tax the least deserving recipients of wealth, which are the inheritors." He and rich listers David Shaw, George Soros, John Sperling and Ted Turner have signed a "Responsible Wealth" project statement calling for the tax to be preserved. So have the six children of David Rockefeller, the oldest member of the 400. "If there weren't estate taxes, we might be in a position to inherit a great deal more, and I don't think any of us wishes that was the case," says daughter Neva Rockefeller Goodwin, a Tufts economist. "I recognize the danger of fortunes piling up and creating huge concentrations of wealth,'' she adds. [emphasis & links added]
Splits among the rich on taxing the rich aren't new. "Some rich folks have always advocated positions against their own economic interests,'' says Clint Stretch, managing principal for tax policy at Deloitte Tax. In an 1889 essay Andrew Carnegie argued estate taxes are needed to prevent spoiled heirs and to put wealth to use for the common good.
Still, Gates Sr. says, the redistributionists (though a small minority) are more organized and seem more numerous than when the current estate tax debate got rolling in the mid-1990s. He notes, too, the recent campaign by his son and Warren Buffett to persuade other billionaires to pledge half their wealth to charity. "That's brand-new, to have a halfway-organized effort,'' he adds.
Then, too, tax battles are center stage these days, raising the profiles of participants and the temperature of the rhetoric on both sides. In August Blackstone Group Chairman Stephen Schwarzman had to issue an apology for comparing the Obama Administration's attempts to increase taxes on private-equity managers with "a war . . . like when Hitler invaded Poland in 1939."
Have the nation's dire fiscal situation, the current historically low tax rates on the rich and the growing concentration of wealth also influenced some rich folks? Perhaps.
Peter G. Peterson, another Blackstone billionaire, has been funding efforts to bring the federal deficit threat to the fore. Some liberal bloggers claim he's simply out to savage Social Security. But in a statement to FORBES Peterson said he believes tax hikes for the rich must be part of the solution, too. "Fortunate Americans like me have more than enough and should be willing to take on higher income tax rates, a progressive consumption tax and reduced benefits." He added that the "large and growing" disparity of wealth "threatens the basic ideals of fairness."
Then there's Tom Golisano, the billionaire founder of Paychex and antitax gadfly who ran for New York governor three times. After New York raised its top income tax rate last year, he moved his legal residence to income-tax-free Florida. He fought the tax assessment on his Mendon, N.Y. estate, won in court and last month held a seminar for 650 of his Rochester, N.Y.-area neighbors on how to challenge tax assessments.
Golisano doesn't think the estate tax is a good thing. "Philosophically, I don't believe in the concept of the estate tax. I call it the 'grave robbery tax,'" he says. Still, he seems weary of this particular war. "If we have to have it,'' he says, "I wish we'd come up with a set of rules and stay with it." He adds: "How do you do estate planning when you're constantly concerned about changing rules?"
As the tax policy debates come to a head in Congress, many folks want to know how the proposed changes will boil down to their bank accounts. A new tool created by the Tax Policy Center takes the debate out of abstraction and brings it into reality, allowing you to see how the numbers would play out for your household.
Simply enter your information by family status (single, married, over 65, etc.) and your household income. You can use your actual information or borrow a pre-created hypothetical household situation. Either way, the calculator outlines what different families would pay if the current Bush-era tax cuts are all extended, extended only for families earning over $250,000, or all allowed to expire.
This will arm you with the information you need to jump in the ring and join the debate on tax policy. Look out, world!
Image by Phillip on Flickr.
But, while we're on the enthusiasm gap, let's sidebar. The American political system hasn't given us much to be enthusiastic about in recent years. While voting and other forms of democratic participation are critical to the future of our economy, we should also be considering what it's going to take to build a more engaged electorate. One answer is organizing. But, to build a base that's in it for the long haul, we'll need more education.
Noah wrote about the gap between what Americans think versus the reality of wealth inequality in the US. He recounts a time when the top 1% of American earners were taking home 18% of the nation's total income. That was in the early 20th century, and an insurrection of the working class seemed near. That figure has risen by 33% in the past eight decades, with the top 1% accounting for nearly a quarter of all US income, and we've not yet witnessed an uprising. On the contrary, many of us seem to be sleepwalking.
Noah cites a survey in which participants were asked to share their best guesses about wealth distribution across quintiles (fifths of the population) in the US. When surveyed about the holdings of the wealthiest quintile, participants on average undershot their estimates by 31 percent. (The top quintile accounts for 84% of all wealth in the US.)
U.S. Wealth Distribution: Actual vs. Estimated vs. Ideal
Source: Michael Norton and Dan Ariely, "Building A Better America–One Wealth Quintile At A Time" (pdf)
The outcomes of this study may offer a glimpse into why we've not yet seen that uprising: we're not fully aware of the severity of inequality in the US.
There is a silver lining here though – one that gives us hope for what could be. When asked to select an ideal wealth distribution among three options, 90% of respondents chose more equitable distributions (see below) than we have in the US today.
Wealth Distribution Preferences: US vs. Sweden vs. Equal
Source: Michael Norton and Dan Ariely, "Building A Better America–One Wealth Quintile At A Time" (pdf)
One part of UFE's mission is to raise awareness of the dangers of concentrated wealth and power. These findings suggest that we've got our work cut out for us, because, evidently, too many Americans are still in the dark about how truly unequal our country has become. But, as more light is cast on the truths behind inequality, our movement for justice will grow stronger.
If you'd like to help counter this pandemic of unawareness, check out UFE's workshop, "The Growing Divide: The Roots of Economic Insecurity," or our book, Teaching Economics As If People Mattered, and consider hosting an educational event for folks in your neighborhood.
If you work with a community-based organization and would be interested in attending or co-hosting a future UFE Training of Trainers Institute (ToT), send a note to firstname.lastname@example.org mentioning "ToT inquiry" in the subject line.
Also, join our mailing list, tell your friends, family and colleagues to do the same, and we'll keep you up-to-date with the latest news on economic justice.
Photo above by PhotoJohnny on Flickr.
What do coal mining and tax cuts for the wealthy have in common? Both are economic injustices that favor the wealthy, burden low-income people, and add to the imbalance of our economy.
Last week, nearly 2,000 protesters traveled from Appalachia to Washington, D.C. to demand an end to the mountaintop removal, including Kentuckians for the Commonwealth (KFTC), a member of UFE’s Tax Fairness Organizing Collaborative.
For years, state and federal policies have allowed wealthy coal companies to use explosives to remove the tops of mountains to extract coal. In Appalachia, wealthy coal companies are literally moving mountains to access the precious resources beneath them, leaving life-long residents of the surrounding communities with barren fields and dried up streams.
In response to these unjust practices, citizens of the Appalachian region descended upon Washington, D.C. to demand an end to the harmful mountaintop removal practices that are irreversibly destructing their natural resources. Although the protest was peaceful -- a celebration of Appalachian culture and natural resources -- over 100 protesters were arrested in front of the White House for civil disobedience.
Mountaintop removal is an all-too-common example of how, when a low-income community and a wealthy corporation go head-to-head, the corporation with the biggest bank account wins almost every time. Just as our tax policies have been designed to favor the wealthy, our environmental policies are too often crafted with little concern for the well being of low-income communities.
Does this sound eerily familiar to the slash-and-burn approach of our big banks?
Our economic and environmental issues cannot be dealt with in a vacuum. Creating a fair economy means taking a holistic approach to designing policies that allow all people to flourish, despite the size of their bank account. This means being able to make ends meet and trusting that the natural beauty of ones’ local environment will not be destroyed in the name of short-sighted corporate greed.
Just as mountaintop removal causes devastation to our natural resources, an imbalanced economy means our that our schools suffer, local infrastructures crumble, and the middle class struggles while the wealthy minority sit atop bloated bank accounts. Like the people of Appalachia, we must feel empowered to demand better from our policymakers.
As the battle in Congress over the estate tax heats up, it is critical to make your voice heard. The estate tax doesn’t just impact wealthy billionaires. Policies that favor the rich affect everyone.
That's right -- if you rely on your paycheck each month to make rent, you have a stake in the estate tax.
Over the past decade, we have seen a massive transfer of wealth from hard-working middle class people to the rich. Today, the richest one percent of Americans own a whopping 36 percent of the wealth in this country. That’s more than the combined wealth of the bottom 90 percent of American households.
Our economy is no accident; it’s not like a hurricane or tornado that just occurs naturally. Our economy is the direct result of deliberate policy decisions made in favor of the rich and at the expense of the middle class. And if you think that’s unfair, it’s time to make your voice heard.
So get mad, grab a computer, and start writing! Compose a letter to the editor to tell your neighbors, friends, and community why a strong estate tax is both a common sense solution for addressing our nation’s budget woes and a critical part of a fair and equitable tax system.
Here are a few talking points, phrases, and tips to help you write a zinger of a letter.
First, a few need-to-know points about the estate tax:
affects those who can afford it
In 2009, you only had to pay the estate tax if your individual estate was more than $3.5 million or $7 million for a couple. Only 1 in 500 estates were expected to pay the tax in 2009 (that’s just 5,500 per year). This overwhelmingly does not include family farms and small businesses (only 110 each year in the entire nation would qualify).
encourages charitable donations
Getting rid of the estate tax would devastate our non-profit sector by removing the tax incentive to give. Experts predict that charitable donations would decrease between 23 and 40 percent.
afford NOT to tax millionaires and billionaires
Talk about irresponsible financial management -- permanent repeal of the estate tax would cost over $1 trillion dollars in the first decade, which includes lost revenue and interest payments on our ballooning national debt.
Second, a few phrases to help you drive the point home:
- Millionaires and billionaires should be giving to charity, not getting it.
- We should be making a down payment on our national debt rather than taxing our children to create tax giveaways for the wealthy.
- Politicians who think the rich aren’t rich enough have been spending too much time with lobbyists, bankers, and CEOs – or getting too much campaign money from them.
- More economic demand is what creates jobs, not tax breaks. More tax breaks for dead multi-millionaires do not create jobs.
Finally, a few writing tips:
- KISS your letters (keep it simple, stupid). A concise, clear letter is easier for your readers to comprehend. Crank it out and send it off.
- Refer to something specific that was printed in the paper the past few days. Explain why you agree or disagree with the writer.
- Give your letter a local flavor by including how many estates in your state paid the tax. Find out here (pdf).
- Tell your story; make it personal. How do tax cuts for the wealthy like the estate tax impact your life?
Once you’re done, zip it off to your local paper (you can find the email here) and email it to United for a Fair Economy at email@example.com. And then keep the pressure on. After all, tax policies won’t change themselves.
Image by c. cich on Flickr.
This October, tens of thousands of Americans will gather at the Lincoln Memorial in Washington, DC for a mass expression of solidarity for the progressive social change all of our communities desperately need.
One Nation Working Together is a call for people from all walks of life to march as one – to put our workforce back in good jobs, for quality and affordable education and healthcare, and for equality of opportunity for all.
Now that Glenn Beck's disgusting misappropriation of the anniversary of the March on Washington, led by Martin Luther King, Jr., has come and gone, it's our turn.
We hope you will participate in this inspiring and historic event!
Click here for details and transportation options for the One Nation march.
If you'd like to march alongside other UFE supporters, please contact Kathy Lique at firstname.lastname@example.org for details on where to meet in advance of the march.
‘Tax Me More’ Says Wealthy Entrepreneur
By Robert Frank - WSJ Blog - Sept. 20, 2010
As Congress and President Obama fight over the Bush tax cuts, a small number of left-leaning rich people have come out in support of paying higher taxes. The most famous are the members of the Responsible Wealth Project, who say they pay too little in taxes and want to address inequality.
They may be an eccentric minority, or (in the view of conservatives) a lunatic fringe. But a Quinnipiac University poll this year showed nearly two-thirds of those with household incomes of more than $250,000 a year support raising their own taxes to reduce the federal deficit.
So not all of the wealthy are angry about tax hikes. But that doesn’t mean they just want bigger government. What they want is better government – and investment in growth.
An op-ed piece in the Los Angeles Times by Garrett Gruener, an entrepreneur and venture capitalist, makes two important points about taxing the rich. (Mr. Gruener founded Ask.com and is the CEO of Nanomix and is a co-founder of Alta Partners, so he’s got street cred.)
First, he says tax rates don’t make or break the success of an entrepreneur – or the jobs he creates. He says he’s paying the lowest rates of his working life. But “if you want the simple, honest truth, from my perspective as an entrepreneur, the fluctuation didn’t affect what I did with my money. None of my investments has ever been motivated by the rate at which I would have to pay personal income tax,” Mr. Gruener writes.
History, he says, shows that “modest changes in the tax rate for wealthy taxpayers don’t make much of a difference if the goal is to build new companies, drive technological development and stimulate new industries.”
Second, an economy built only on the rich – who account for the lion’s share of income and spending – is unsustainable.
“What American businesspeople know, and have known since Henry Ford insisted that his employees be able to afford to buy the cars they made, is that a thriving economy doesn’t just need investors; it needs people who can buy the goods and services businesses create.”
He says the tax hikes for the rich should be invested by government in infrastructure and research. Preserving his tax rates won’t lead him to start new companies in the U.S.
“What will change my investment decisions is if I see an economy doing better, one in which there is demand for the goods and services my investments produce. I am far more likely to invest if I see a country laying the foundation for future growth.”
Do you think entrepreneurs make their start-up decisions based on tax rates?