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Tax the Rich, Because Inequality Is Bad for All of Us

JACOBIN, John L. Hammond, April 1, 2023

Economic inequality undermines democracy, hastens environmental destruction, fosters anxiety, and erodes social trust. We can start to solve these problems by taxing the rich.

Inequality is hazardous to your physical and mental health, your community life, and your budget. Wherever you are in the status hierarchy — top, bottom, or middle — it takes its toll on you. And while it is inevitable under capitalism, its effects can be accentuated or mitigated by public policies.

One key policy mechanism to address inequality is taxing the rich. And one place that would benefit from taxing the rich is New York. New York City is the capital of the world financial system, and New York State is the most unequal state in the nation: 1 percent of households take home 31 percent of all income in the state, whereas the top 1 percent of households nationally capture 21 percent of all income. That is because the very wealthy in the state are exceptionally wealthy. While the top 1 percent in the United States has an average annual income of $1.3 million, New York’s top 1 percent makes $2.2 million.

The Invest in Our New York (IONY) coalition — made up of New York City Democratic Socialists of America (NYC-DSA), the Working Families Party (WFP), New York Communities for Change, and local community and political organizations across the state — is proposing to challenge this obscene inequality by raising taxes on the superrich and investing in housing, public transportation, education, and the environment.

Taxing the rich would allow us to publicly fund these desperately needed goods and services. But it has another benefit: it would chip away at the corrosive effects of inequality in our lives. Such inequality has massive impacts across our society, including in some surprising areas you might assume have little to do with the rising concentration of wealth. The effort to raise taxes on the wealthy in New York will not erase these social problems, but it can address some of inequality’s worst impacts.

Inequality Is Out of Control

Inequality has escalated out of control in the United States since the 1970s, as an increasing share of national income has gone to corporations in the form of profits. The numbers are familiar to us by this point but they bear repeating: CEO pay in the three hundred fifty largest US corporations increased by 1,460 percent between 1978 and 2021, while the average worker’s pay grew during the same period by only 18.1 percent. In 2021, the average CEO was paid 399 times as much as the average worker (compared to 59.1 times as much in 1959).

The already rich are walking away with most of the gains of our growing economy. In the boom following the financial crisis of 2007–8, the top 1 percent in New York State took 51.4 percent of the income gains between 2009 and 2015, and the rise in the number of billionaires since the pandemic shows that the trend has continued. At the same time, many working people are not seeing their pay keep up with inflation.

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