Race And American Inequality

This is Black History Month, but rather than a post on black history, I think it may be useful to share some depressing information about the current status of African-Americans vis a vis the White Americans who have occupied a privileged social position in this country even after most of the legal disabilities targeting people of color were repealed.

The Institute for Policy Studies recently issued a report on the wealth gap between whites, Latinos and blacks in the United States.The report looked at trends in household wealth among Black, Latino and White households over the past three decades.

Since the early 1980s, median wealth among Black and Latino families has been stuck at less than ten thousand dollars, while the median wealth of White households, adjusted for inflation, grew from $105,300 to $140,500. The median White family has 41 times more wealth than the median Black family and 22 times more wealth than the median Latino family.

The wealth gap has gotten wider as wealth in America has become extremely concentrated.The median American family of any color has seen its wealth drop 3 percent between 1983 and 2016–a period of time in which the richest 0.1 percent have seen their wealth jump 133 percent. The three wealthiest families–the Waltons, the Kochs and the Mars–have seen their wealth increase by nearly 6,000 percent.

Wealth held by members of the Forbes 400 equals that of all Blacks plus a quarter of Latinos.

The  report takes issue with analyses that treat the racial wealth divide and the growth of economic inequality as two separate issues; instead, it finds that they are mutually reinforcing outcomes of larger economic issues–issues that result from public policies that have favored–and continue to favor–both White Americans and the very wealthy.

Just one example: As this is being written, Mitch McConnell and the Senate GOP are proposing to eliminate what they like to call the “death tax,” and the rest of us call the estate tax.

The estate tax raises $20 billion dollars a year, which is a lot of money, but a pretty insignificant part of the federal budget. It applies only to estates worth more than $5.5 million dollars, and people with lots of money can pretty easily structure their wills to avoid it.

As the Atlantic points out, however, there’s more than money involved in this debate.

The tax code is more than a ledger. It is a national statement of values. And so this little law inspires a great commotion during each tax debate. To its opponents, it is the ultimate (literally) punishment on success and an affront to the family legacy that each striving individual hopes to leave. To its supporters, it is a necessary bulwark against inherited plutocracy, which offends the national virtue of merit over privilege.

The article goes through the arguments advanced in favor of repeal and in favor of retention of the estate tax, and is worth reading for a quick review of the debate. But the argument for retention most relevant to policy’s role in worsening inequality is that, in a period defined by the rising gap between rich and poor, we need to recognize the enormous role played by inheritance.

According to analysis byMatt Bruenig, a writer and the founder of the advocacy group People’s Policy Project, four out of 10 members of the wealthiest 1 percent inherited some money, with an average inheritance in the millions of dollars….

In the last half century, the average wealth of the bottom half has gone from about nothing to about $1,000 in debt. Meanwhile, the returns at the top have accelerated. In the 1960s, families in the top 1 percent were six times wealthier than families in the middle, according to the Urban Institute. By 2016, the 1 percent was 12 times wealthier than the typical family. As wealth inequality has soared, the estate tax has been diminished, with the number of estate tax returns declining by 76 percent between 2006 and 2015. There is little doubt that 21st-century tax policy has assisted the concentration of wealth.

When ostensibly color-blind tax policy benefits “haves,” that policy inevitably benefits Whites.

And let’s face facts: money is power.

34 thoughts on “Race And American Inequality

  1. recent article,EPI.org philantropy, is a small reward,to help a few. wages will be the king. until we all have a living wage,we will see poverty,and its deliberate message by the well to do,and wall street. I grew up in inner city life,Newark,nj. 60s,white,in a growing dark neighborhood. the gradual change was taken in,and lived with. until you actully live in a minority neighborhood,and see and feel,what white American delibertly does to minorities,you havent a clue. you can read someone elses message,report,or hear what ever,its a fact, its people kicked to the curb,marginalized beyond belief. we drive around it,we avoid it,we critcize it.but you never lived it. we are a century behind what should have been done. we can make this
    a place for all, if all would make a place for,anyone..

  2. What is the limit on the inherited amount to be taxed? The small amount I have been hanging onto for my children has already been taxed; the interest monthly from CDs goes into my piddly savings account and grand total of all is far below the federal taxable amount. Where is the line drawn? Will maintaining “estate tax” on the super wealthy finally tax their vast fortunes above their current Trump “tax reform” level when inherited by their offspring? Except for those off shore bank accounts where they have hidden money to avoid paying taxes. I’m sure the majority of those affected either way are primarily white.

    We are seeing raging “Race And American Inequality” in the state of Virginia on two fronts. Inequality between the races is much, much more than economics. Gov. Natham’s blatantly racist page in his medical school yearbook (which he says he has never seen) are part of his issue. What has his record in his medical and political career shown since 1984″ Is anyone investigating that issue? The sex abuse charges against Lt. Gov. Fairfax are obviously to keep a Black man from becoming governor of the state. Both are racial issues coming out at a time when distractions from this country’s highest level racist are vital to keep him in the 2020 presidential race.

    Who in this entire country, including all races, has not made a racist comment or action on some level? How many of the Blacks demanding Natham’s resignation have never in their lives spoken racially against whites and Hispanics? How many Hispanics have never spoken racially against whites and Blacks? The same question applies to Republicans and Democrats alike.

    If we are going to face “Race And American Inequality”; then let us face it on both sides and on all levels. It is not going to go away; racism is our past, our present and our future and, like politics and religion, is an issue we must learn to “reach across the aisle” to find enough common ground to resolve problems and move forward if we expect to survive this current chaos driven level of fear in this country.

    I have a simple wish; it is that my Black and Hispanic neighbors will come out from behind their closed doors so I may speak to them, if only to say “hello”. The same is true of the whites; they all seem to be hiding from one another; we are obviously all in the same economic situation or we wouldn’t all be living in this low-middle income area.

  3. I constantly complain about wage inequality, but the problem of wealth economy, protected as it is by the internal revenue code and the myth of merit, also deserves legislative attention. Thomas Piketty in his blockbuster book Capital in the Twenty First Century treats inherited wealth and merit extensively and is far ahead of Bernie and AOC with his proposal of an international wealth tax, though admitting it would be difficult to enforce due to mobility of certain forms of wealth (though not fixed assets).

    I have been in favor of a wealth tax for years, and to the hues and cries of the superrich, I note that we already have a wealth tax – one on our real estate – and that the wealth tax envisioned by Piketty merely extends the breadth of assets to be taxed, and why not? All represent or can be converted to money or its equivalent. Revenues from such a tax could be employed to balance current budgets, reduce our long term debt (and mounting interest thereon), reduce the costs of education, renew our infrastructure, afford decent and universal healthcare etc., and all without any undue charge to the rich. Socialism? Soaking the rich? Hardly, they have been on the gravy train long enough. Just look at the numbers which show a worsening of wealth equality, and at an accelerated rate. The rich can well afford it, and it’s time.

  4. Robert > With such a tax and its benefits spread out over all the people, philanthropy would be far less necessary as it would bring us a measure of socioeconomic equilibrium.

  5. What can we do about “Race and American Inequality” in America? The only sane thing would be, an attempt, to understand the logical fallout from all of that, which was forecasted by Carl Rowan, many years ago.

    Although it is, probably, too late, I would still, strongly, suggest reading “The Coming Race War in America: A wake-up call” by Carl T. Rowan (Little, Brown & Company, Toronto, 1996).

    In the early ’60s, Rowan served as ambassador to Finland; later, as director of the U.S.I.A., he became the first black American to serve in the cabinet and on the National Security Council.

  6. Gerald, you expressed my thoughts exactly! Would we have been able to go to the moon with our current tax structure? Would the highway system we have (and now in real need of refurbishment) now been feasible? Changes in taxes for the wealthy have had wide ranging effects.

  7. im paying in again,zero deduction,and my cpa said i had a deffered tax. in otherwords,unknown to my employer,and myself,the tax app she uses,took out,not enough,because the republicans scamed us again,making us feel warm and fuzzy by not taxing in the full amount 2018. seems we will now all,payback that deffered tax. gee,just what i needed,another republican scam to tax me.and try to hidde it under my pillow..seriously,did we really elect these a,,wipes?

  8. This legislative battle over the estate tax is just one of many political battles being waged over “national values”, because it is “values” over which this country is divided so strongly these days.

    Do we value diversity or not?
    Do we welcome all to our shores or not?
    Do we put profits ahead of people, count corporations as people, demand privacy for those corporations but deny it for consumers? Or do we put human beings first and demand transparency?
    Do we continue to suck the life out of the planet, or do we learn to live without dominance?
    Do we share or do we hoard?
    Do we continue to use religion to excuse our lust for power and money, or do we give up delusion in favor of reality?

    Our values divide us. Will the value of unity bring us together?

  9. We have been giving lip service to equality since our founding. In fact, the only men who were deemed to be created equal at that time were white men of property. We all got the vote, but we never got equality. It’s not really much progress in 243 years.

  10. A serious question – does the estate tax even matter?

    It seems to me that as technology has made moving your assets around the globe easier, fewer and fewer people are caught up in it. It’s still there, but apparently has reduced in use by 76 percent between 2006 and 2016.

    I’m not sure “statement” legislation is that useful. Perhaps the democrats should trade the estate tax (it seems largely symbolic currently, since almost no one pays it) for something more tangible. The estate tax goes away, but we get medicare for all? Done deal, I say.

  11. No Marv, we are all just out here trying to restrain ourselves from telling you to take that hockey puck and put it where the sun don’t shine.

  12. Correct Peggy! I’d say we had very good marketers back during our founding because I don’t see anything that resembles, “We the people.”.

    In fact, it looks more like an Oligarchy from our inception. Not to mention when the government was giving away free land to settlers, how much was given to freed slaves?

    Nothing.

    Our government said they could no longer be held captive and work for free, but very little else.

    Women didn’t have a place at the table either. White male eurocentrism.

    I know rich people who get Medicaid to pay for their stay in the nursing home so they can maintain their estates for their heirs. Lawyers write the laws in Indianapolis for lawyers in the field to take advantage of. The only people getting screwed by Estate Taxes are people who don’t utilize or cannot afford a lawyer specializing in estates.

    Now, amplify that by 1,000 times and you can imagine what the richest families can avert with good lawyers. Although, since most of them just lend their lawyers to politicians to write the laws, a real sharp lawyer isn’t needed.

    The problem is systemic and widespread corruption. The rich get richer under this system and the poor fight over table scraps.

    As for voting (a democracy’s only recourse), you should spend time reading what NBC News just did to the progressive presidential candidate, Tulsi Gabbard, this past week. Even if they write a retraction, the damage is done. All because she is a military vet speaking out against regime change excursions which the Democratic Party dislikes.

    https://theintercept.com/2019/02/03/nbc-news-to-claim-russia-supports-tulsi-gabbard-relies-on-firm-just-caught-fabricating-russia-data-for-the-democratic-party/

  13. Marv; add my agreement and thanks to Theresa’s comment; it is long overdue. We all know the origin of that quote about the hockey puck and Don Rickles found a great way to make use of the term. Ditto, Don!

    Are there any Black hockey players; or are they unofficially banned from chasing white men around waving a long stick? Why are there almost no Black race car drivers; white men’s fear of road rage with no exit ramps?

  14. From various sources:

    Sen. Elizabeth Warren has proposed a federal wealth tax—2% annually on assets above $50 million and 3% on assets above $1 billion. Nobody whose net worth is less than $50 million would be affected by the tax.

    She wants to dramatically beef up funding for Internal Revenue Service enforcement. She’s proposing a new requirement that a minimum number of very wealthy taxpayers face an audit annually, aiming to ensure they are not hiding assets from the tax collector.

    Most aggressively, Warren’s plan would create a new “exit tax” requiring anyone who renounces their U.S. citizenship to fork over 40 percent of their assets exceeding $50 million of their net worth to the federal government.
    ======================================================================

    The reaction has been typical, no coverage by the McMega-Media on Warren’s Plan. Warren’s approach on issues is popular everywhere except Wall Street and in the McMega-Media.

    As Glenn Greenwald has written:
    That’s because the playbook used by the axis of the Democratic Party, NBC,MSNBC, neocons, and the intelligence community has been, is, and will continue to be a very simple one: to smear any adversary of the establishment wing of the Democratic Party — whether on the left or the right — as a stooge or asset of the Kremlin (a key target will undoubtedly be, and indeed already is, Bernie Sanders).
    https://theintercept.com/2019/02/03/nbc-news-to-claim-russia-supports-tulsi-gabbard-relies-on-firm-just-caught-fabricating-russia-data-for-the-democratic-party/

  15. Todd, here is another article form The Intercept:
    Top Nancy Pelosi Aide Privately Tells Insurance Executives Not to Worry About Democrats Pushing “Medicare for All”

    Pelosi adviser Wendell Primus, met with Blue Cross Blue Shield executives. Pelosi adviser Wendell Primus detailed five objections to Medicare for All and said that Democrats would be allies to the insurance industry in the fight against single-payer health care. Primus pitched the insurers on supporting Democrats on efforts to shrink drug prices, specifically by backing a number of measures that the pharmaceutical lobby is opposing.

    “Speaker Pelosi has ensured that Medicare for All will have hearings in the House and tapped Congressman Brian Higgins to take the lead on Medicare buy-in legislation. For the first time, House committees will be seriously examining and tackling some of the questions and possible solutions raised by Medicare for All legislation,” said Connelly.
    ====================================================================
    There maybe nothing more unequal in the USA than our for Profit Health Care system. Bottom line if and only if you can afford it you can have superior health care.

    I am not surprised Pelosi is against Single Payer, or Medicare for All, she would not co-sponsor Hr 676 Expanded & Improved Medicare For All Act the last time around.

  16. This is all venting of hot air, hockey pucks and speculation. No elected official has the guts or the morality to slap the rich with the taxes they should pay. Hell, most of the 1% are struggling greatly trying to make $25,000 per week stretch across their lifestyles. And with all those necessary political donations, where do they have room to pay more taxes?

    Who cares if our infrastructure and institutions crumble and fail? The 1% MUST have their money to roll around in and pretend they’re actually powerful. Marx was right.

  17. JoAnn @ 7:07am:
    No worries!
    The Federal Estate Tax Exemption for 2018 is $11.18 MILLION! Let me repeat that: $11.18 MILLION. Thus, unless what you’re leaving to your heirs is over $11.18 MILLION, no Fed. “DEATH” tax whatsoever (Some state estate taxes might apply).

    Oh, and anything over that $11.18 MILLION is taxed at the exceedingly exorbitant high rate of 40%.

  18. ML- Warren’s proposed wealth tax is excellent but will require refinement in committee (if it reaches or ever comes out of committee). If it or its reasonable facsimile should ever see the light of day as law it will be a bear to enforce, given the characteristic deviousness of the rich. Its early look is one that tries to blunt the Piketty negative of mobility of assets to other jurisdictions and while that is a good idea I think there had ought to be some positive provisions in the bill which encourage retention of assets in this country with some good tax treatment for those working and productive assets in return for their owners’ keeping them here for employment of local people (all without reference to AI and roboty, which may require a new or adjusted formula as we go along, since Silicon Valley will be showing us new electronic efficiencies). It will be an interesting time for economic historians as they chronicle our move from an industrial to an information society.

  19. We only taxed “earned income” not “passive income”. If we want to even the scales between the 1% and all the rest of us then tax all income. What the rich are earning on the stock and bond markets as well as what the minimum wage employee brings home

  20. Estate taxes or wealth taxes stem from the envy of those who have no inherited wealth. Great Wealth is either earned or inherited. If it is earned, then it has already been subjected to income taxes, property taxes, and sales taxes. If it is inherited, then a forebear earned it and- freely of his own accord- passed it along to an heir. Either way, other unrelated people assume no greater claim on that wealth just because it becomes increasingly remote from its original source over time. It is ethically wrong for government to frustrate the last bequests of a father or mother to the progeny of either or both. Liberal political thinkers ask only one one question: Is there a need? Logical thinkers ask two questions: (1) Is there a need, and (2) does the proposed involuntary giver have an obligation? It is upon the latter question that the socialist ooze from the Warrens, the Sanders, and the Waters of the world founder hopelessly. It is both historically indefensible and flat-out wrong to assert that white people owe black people anything just because of the melanin disparity. Only 14% of antebellum southerners owned slaves, and whites who immigrated to the USA after 1865 bore NO responsibility, even vicariously, for slavery. Certainly the 300,000 white males who died on the Union side in the Civil War owe no “reparations”, nor do any other white people. The fact that two-thirds of black children who get reared in one-parent homes may have more to do with black social problems than racism.

  21. Here’s the good news. The opportunities to become a more stable, productive, and satisfying country for all we the people are endless. We just have to do it. We have some mess to clean up first and we have Mueller and Pelosi and Schummer on the job. Good folks with actual experience at doing what they have to to.

    We have to get used to the fact that the noise and incompetence and corruption from Agent Orange and his wrecking crew will not stop. The will do every trick in the book to remain center stage and we have to add to the necessary skills in today’s world ignoring fake and non news. Let him dance and sing and tweet and talk and ignore it all because it’s irrelevant.

    Who can we elect who will be most able to lead America through recovery and into adapted to the inevitable future? Who will best unite Democrats? It’s draft time not game time yet.

    Who are the next Demcrat Brady/Edelmann’s among the contenders?

  22. Schumer? Multimillionaire Nancy Pelosi? Didn’t Mueller claim that Iraq had WMD’s?

    These are your heroes? These toadies of the 1% are your only hope? Because of them,you have Trump.

    The Democrats have become the Party of The Davos Crowd!

    The Democrats will accuse Tulsi Gabbard,et al of being Russian spies and will subsequently offer up a privileged white-guy as the candidate.

  23. ML,this is exactly why reasonable people have decided to stay away from voting. Or have voted 3rd party. Less than a month after Democrats — many of them running on ‘Medicare for All’ — won back control of the House of Representatives in November, Pelosi meets with insurance executives to assure them Medicare for All is nothing more than political rhetoric.

    Democrats are RepublicanLite.

  24. Other inconvenient news you may have missed:
    Trump approval rating now 48%. Millionaires fleeing New York due to taxes leaving a budget deficit of over 2 billion, Cuomo quote: “On the flip side, tax the rich, tax the rich,tax the rich. The rich leave, now what do you do? “
    , VA governor says he will not resign, Matt Walsh states “ If you’re more upset by an inappropriate costume a guy wore 30 years ago than the fact that he advocated for infanticide 3 days ago, you are morally deranged and possibly psychotic”,
    And the S & P posted it’s best month (January) in 30 years and stocks are in their 5th straight day of gains.
    NOW, why all the doom and gloom ?

  25. Betty,

    “I’m here, Marv!” I know. You’ve been there for me all along these past few years. I’ve needed to improve my writing, and you’ve given me the inspiration to do so. Many, many thanks!

    I believe you have my E-mail. You can see the opportunity we have right now. Let’s keep in touch.

  26. Folks, we are talking about turning the Titanic, your silver bullets are daydreams. How about thinking out of the box a bit?

    – Financial transactions tax: a few mils on the $, most transactions are “of/for/by” the wealthy. They won’t even wimper.

    – Go to the best biz schools and promote working for the government to write tax legislation that can’t be easily “worked around”. There must be some smart kids who don’t want to spend their lives enabling country robber.

    – Make all income subject to Social Security deduction
    – Make all income subject to income tax

    I am sure this smart bunch can think of other things that would make sense, even to those with a sixth grade education that our schools currently graduate…

    There – I feel better now!

  27. Gerald,

    Real Estate tax is not a wealth tax because most people are paying taxes on the full value of real estate wealth when they own only a fraction of its value (their equity). And people who pay rent pay it as a direct pass thru in their monthly rent payments to the landlord. Thus it is highly regressive, and disproportionately affects the young and people of color.

    I’m sure you know this but thought I should add this note as the use of it as an analogy is becoming ubiquitous.

  28. Yes, John, I am familiar with the anomaly of value taxation for tax purposes in mortgage situations and yes, Lester, to your Tobin Tax on financial transactions, which in addition to raising revenue would have the additional benefit of putting a lid on day traders. I have long advocated the Tobin for other reasons, like ease of collection at point of sale, and I think it resembles a sales tax rather than a wealth or excise tax.

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