Friday, February 27, 2015

The War On The Poor

One leading cause of being poor is being born poor. Even in America. Some of the barriers are unintentional. Like limited job opportunities and higher expenses. A person in an inner city neighborhood probably lacks a Costco card, or a way to get there. He has no choice but to pay the inflated prices at the Bodega. He probably lacks a realistic role model, and unfortunately is exposed to gang influence that the better off seldom have to contend with. This can expose him to extra attention from law enforcement. Sure some poor have worked hard and succeed in spite of the disadvantage of starting out poor, but there are some barriers that look suspiciously intentional as if the slave owner mentality has not left us.

Minimized minimum wage
Business owners oppose increasing minimum wage for obviously selfish reasons that often sound a lot like slave owners opposition to freeing slaves. Many employers argue that increasing minimum wage would make them less competitive, even though their competitors would bear the same burden. Direct labor is seldom more than 10% of total business cost. Rent, capitalization, cost of goods, energy, insurance, and taxes are usually more significant factors. A Hundred years ago Henry Ford realized that well paid workers show up, don't quit, reduce training expense and can buy the product. He more than doubled factory wage from $2 a day to $5 and created the modern middle class based economy.

Funny thing about that is that increased minimum wage would increase the GDP and benefit everyone. (See Minimum Wage blog)  see:

Regressive tax structure
People pay Social Security on the first dollar earned, but not the millionth. Some investment income dollars not taxed for SSI at all. Some financial transactions are taxed the same amount whether the transaction is $10, $10,000 or$10,000,000. For example car registration fees are usually the same for a $500 beater as a $500,000 Bugatti. Some car license fees are based on weight, so the owner of a beat-up  '92 Station wagon pays twice as much as the owner of a 2015 Mini Cooper. License fees based on value, as they mostly are in California, would not be as regressive.

Sales tax, if it exempts food, sounds reasonably progressive, but what food is exempt, lobster, caviar? What food is taxed, potato chips, dollar menu take out?

Flat taxes: Head tax, poll tax; Everyone pays the same amount. Punitive to the poor, insignificant to the well off. Even so called Flat Income Tax. Everyone pays 15%, of what? Total income, Federal adjusted gross income. Fifteen percent of $20,000 a year is punitive. Fifteen percent of $200,000 a year is merely annoying, you still can live very well and vacation in Aruba.

If a person is fined for an offense it should be equally painful no matter who the offender is, but it's not. If the immigrant laborer is fined $55 for a parking violation that is a days take home pay. His kids might not eat. To the Wall Street trader, that's just one less imported cigar, in the humidor, no big deal. If traffic fines were based on value of the vehicle it would more closely resemble ability to pay, be less onerous on the poor and be more effective against some well funded abusers. What if a fine was "An hours income". "Thirty dollars or thirty days" Catastrophic to the dish washer, insignificant to the trader.

Courts treat failure-to-appear very severely. The poor unschooled in the details of the court system are more likely to get caught up in this inadvertently and subjected to fines they cannot pay, resulting in more fines for failure to pay the first one. Lawyers and Judges are accustomed to arcane language with sesquipedalian words that leave the unrepresented baffled and likely to offend without malice. The laborer faced with losing a day's pay or not making a court date may not be aware of the potential consequences.

Mandatory minimum sentencing laws are far more likely to impact those who cannot afford legal representation. This makes it more difficult to comply and get out from under the legal albatross. Once convicted of  even the most inconsequential of procedural offenses the victim is stigmatized for life.

Progressive Income Tax
In theory, but the tax filing system is so complex that only those who can afford professional help get to pay the legal minimum for their income level. Oh yes there is the Earned Income Tax Credit: It exists, but the application, like everything from the IRS, is convoluted, ambiguous and just plain tricky. If you are poor enough to qualify you are not likely to be educated enough to fill out the damned form.

Then there are tax loopholes, specific deductions and credits that a few well to do people can take advantage of to reduce their effective tax rate to virtually zero.

Justice system abuse
Efforts to combat drug dealing and violent gangs often sweep up the poor who just happen to be in the path of a juggernaut. Guilt implied by association often works against the defendant. Overzealous prosecutors and judges wanting to be known as ''tough on crime" often victimize these people to improve their own statistics. The inner city teenager caught with a joint gets prosecuted. The preppy with the same quantity gets taken home to Mama. Prosecutors have been known to arrest poor people at random and shake them down for convictions. The statistic is good for one performance review period, but the arrest stigma is for life. DWB: Driving While Black.

Discriminatory laws, like 10 times the jail time for crack vs powder cocaine.

State lotteries
A tax on the mathematically challenged. If you bought every single ticket, you would be guaranteed a 50% loss. The levy is justified in most states by saying the money goes to education, then the school budget from other sources is cut by that same amount. Who buys the tickets? The working class because it gives them hope. Who benefits, Scientific Games inc. and politicians who can claim they lowered taxes. Who loses, the working poor who depend on  public education that gets short changed.

School Vouchers
Always promoted as a benefit for the poor, but mostly a subsidy for those who already have  their children in private schools that lose funding to pay for the vouchers. It cost much less to educate a child for 14 years than to imprison the adult for one.

Miscellaneous flat fees
OK tolls and parking would be hard to make progressive, but why does it cost less per square foot to park a $40 million personal jet at the airport than a family car. (I did not make this up)

Banks charge ten cents a check, and a monthly fee if the bank balance is below the required minimum for free checking. This can cause an accidental overdraft, and a penalty that can be a days minimum wage, or one cigar. Credit cards often have annual fixed fees that represent a days hard work for some, a minutes income for others, for whom they are often waived altogether.

Can we fix all of these?
Probably not, but some are obviously not in the best interest of us collectively. Raising minimum wage circulates money and boosts the economy for everyone. Universal preschool creates better student, who become better workers. Truly progressive taxes make entry level work more attractive. Filling up the jails is expensive and creates and underclass that cannot get gainful employment. Fines need to be adjusted to be equally painful therefore proportional to ability to pay, or they are discriminatory.
Prosecutors and Judges need to remember their job is not filling jails, it is to DO JUSTICE.