What is essential? The COVID-19 pandemic has been clarifying in that regard. Health care, food, housing, income support, education, water, and energy surely are among the items that top the list. But in a system where so many essential human needs are commodified, this point is so often hidden from view.
Instead, we are told that we must risk our health to populate non-essential jobs and activities because the earnings are necessary to buy our fundamental needs. It’s not that easy. In our service-sector economy, hotels, restaurants, and arenas are now risky spaces, as are the jobs in them.
On a brighter note, the pandemic has also awakened among many of us our better selves. Mutual aid networks have been filling the gaps in our safety nets and supply chains. Volunteers have been assisting health care workers struggling to find childcare. “Check in” networks have been developed for vulnerable neighbors.
This connection between fundamental needs and mutual dependence is why we formed governments in the first place. We cannot meet our needs alone.
That message may be lost on the Trump administration, but at the state and local level, we can reboot to these fundamentals and insist on democratic, not technocratic, solutions to meet our challenges. Our budgets must reflect our values.
We know we have enough resources for everyone in our country, but we also know the money and wealth are not shared, taxed, or spent in equitable ways—regardless of the level of government.
For example, Pew Research Center observes that, “From 2007 to 2016, the median net worth of the richest 20-percent increased 13 percent, to $1.2 million….In contrast, the net worth of families in lower tiers of wealth decreased by at least 20 percent from 2007 to 2016. The greatest loss—39 percent—was experienced by the families in the second quintile of wealth, whose wealth fell from $32,100 in 2007 to $19,500 in 2016.”
Unequal access to resources buys power. Since 2000, federal tax cuts, which includes the 2017 Tax Cuts and Jobs Act, have disproportionately benefited the top 20 percent of households, who received nearly two-thirds the value of all tax changes. Not surprisingly, tucked into the federal CARES bill passed in March was a “pass through income” tax cut benefitting those with incomes over $1 million.
State and local taxes also favor the elite. The majority of state and local taxes take a greater share of income from low- and middle-income families than from wealthy ones. The effective average state and local tax rate nationwide for the lowest fifth is 11.4 percent, while the top one percent pay only 7.4 percent. The middle fifth is taxed at a 9.9-percent rate. Put another way, were these payroll taxes on hourly wages, the rich would be netting 25 to 30 cents more per hour than the rest of us for the same work.
States and localities rely on sales, property, and excise taxes, which take a greater share of income from those with less and are thus “regressive” taxes. Forty-three states have income taxes, which generally are more “progressive,” taking a greater share as income increases. But state income tax rates vary widely, and more than a dozen states cut their income taxes since 2010 in vain hopes to spur job creation.
So, instead of requiring everyone to pay what they can in taxes, we require those who have less to pay more, in relative terms. This is ludicrous.
Then there is the question of balanced budget requirements, which, unlike the federal government, most states have in one form or another. With COVID-19, of course, state expenses have gone up and revenues have gone down. A bill passed last Friday in the US House of Representatives would direct $500 billion to reduce state budget shortfalls, but it faces considerable opposition in the US Senate. Moreover, even if further federal support is forthcoming, state revenue shortfalls might still exist.
In such a case, technocrats tend to eschew tax changes and instead commonly advocate austerity measures, such as laying off teachers, cutting rates for attendant care, and eliminating state cash assistance programs. All of this has been done in prior recessions, despite clear evidence it