Better rich than poor

It’s wrong to receive public welfare benefits to which one is not entitled. The legal consequences of taking such benefits from the society’s safety-net provisions are quite severe. The crime is fraud, a felony charge. 

The home page of the Ulster County executive does not normally feature criminal arrests. A glaring exception is arrests for welfare fraud, which have been posted regularly for many years. Public assistance is intended to help those in our community who are most in need, explains the website. Law-enforcement officials are committed to protecting the benefits for those who truly require them, and Ulster County does that by actively enforcing a zero-tolerance anti-fraud program. 

Why would this form of crime receive so much more governmental recognition than even more serious transgressions of other kinds? I have no answer for this, other than having to share the uncomfortable conclusion that many others have drawn: In the American criminal justice system, wealth — not culpability — shapes outcomes. Indigent people are unfairly disadvantaged at every step in the system. The already advantaged are treated far more leniently than the disadvantaged. 

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That’s unjust. Growing economic inequality is having an increasingly corrosive influence on American society. 

Is it therefore time for another approach, higher taxes on the wealthy in the United States? Most people would favor more progressive taxation only if it doesn’t have a detrimental effect on economic growth. Would a hike in the taxes of those at the top of the income pyramid have that effect? 

The recently released annual IRS treasure trove of statistics on New York State income-tax filings by local area (county and zip code) showed that the 14,880 Ulster County filers with incomes over $100,000 in 2016 earned more than half the total adjusted gross income (AGI), or net income before taxes reported by everyone living in the county in 2016. All Ulster County filers had total adjusted gross incomes of $5.22 billion, and those almost 15,000 filers with AGIs of $100,000 or over had gross incomes of $2.74 billion. 

That left the remaining 71,660 filers, four-fifths of the total number, with $2.48 billion, less than half the county’s total reported income. The top fifth of the universe of Ulster County filers had more income than the remaining four-fifths. 

Is that equitable?

Like folks elsewhere, most Ulster County residents would have a ready answer — probably based on their political beliefs. But this is not a question that should be answered too quickly. Does the surge in the past four decades or so of top incomes align with a similar increase in economic activity? Do incomes reflect the value of what people produce or otherwise contribute to the economic system? If so, the inequality in society might be perceived as more defensible.

Some people are too ready, it seems to me, to pull out a longtime bugaboo like the word “socialism” to describe policies remediating inequality. Raising taxes on the rich in a capitalist society is not socialism. 

Safety-net measures extended mostly to those at the lowest rungs of the economic order are an important contributor to decreasing social inequality (“the poorest hee hath as much right as the richest hee,” as was said in the Putney Debates in England in 1647). But the progressive tax system, the amount taken out of income by government in the form of taxes, is easily the largest social influence on income redistribution.

For additional perspective, let’s compare the Ulster County statistics to the statewide ones. According to the same IRS data base, 1.8 million filers statewide with incomes $100,000 or over earned roughly $520 billion in aggregate. The 7.8 million filers with adjusted gross incomes below $100,000 earned a total of $250 billion.

According to these statistics, Ulster County is less income-unequal than the state average — more equal than the New York City suburbs but less equal than the impoverished areas of upstate.

On February 28, four felony arrests were announced in Ulster County in the latest public shaming after arraignment of accused abusers of the county safety net. The alleged perpetrators were accused of stealing $9409 in all.

Jasmine Veillette of Olivebridge was accused of failing to disclose cash resources she had from August 2018 through December 2018. This resulted in Veillette receiving $2058 in temporary assistance benefits to which she was not entitled.

Michael-Ann Goodrich of Round Top in Greene County was arrested by the Ulster County sheriff’s department for failing to report her income from February 2018 through January 2019. Claiming to live in Ulster County, she received $1648 in Supplemental Nutrition Assistance Program (SNAP) benefits to which she was not entitled.

Franc Libihoul of West Hurley filed several applications for Home Energy Assistance Program (HEAP) benefits and failed to report his income between 2015 and 2018. Libihoul was charged with receiving $3075 in HEAP benefits to which he was not entitled.

Lisbeth Quiles of Beacon failed to report income while residing in Ulster County from August 2018 through February 2019 and received $2628 in SNAP benefits to which she was not entitled.

Because a lot of people don’t have any wealth at all, wealth inequality is always much higher than income inequality. Wages and salaries provide about three-quarters of total income, capital income the rest. It’s the top tenth that has easily the lion’s share of capital income (interest, dividends, pensions, tax refunds, etc.).

Advanced economies tax incomes at from 30 percent to 50 percent, with the United States and Japan at the lower level and the European welfare states at about 50 percent. That’s a lot of income redistribution, concedes economist Emmanuel Saez of Berkeley, who favors it. He thinks that means societies care about income distribution. “We find it fair to have the community do substantial amounts of distribution through its government,” he writes. Taxation is used to ameliorate the inequality which has been increasing every year.

In his analysis, Saez particularly targets the richest one percent in various advanced societies. He concludes that the economies in countries with more progressive taxation like Sweden and France haven’t grown at a slower rate than those with less progressive taxation. They might or might not In the future, of course.

From the New Deal in the early 1930s through the 1970s, when tax rates on American incomes at the top were high, the incomes at the top grew more slowly than incomes at the bottom. Since the tax rates came down in the 1980s, the pattern has been reversed. Higher incomes have been increasing at a much faster rate, while in terms of income the lower rungs have been stagnating. And the statistics show that the incomes of those at the very top, in particular the top tenth of the 99th percentile of the income pyramid, have been increasing fastest of all.

There are 9 comments

  1. John Galt

    The safety net, whether governmental or private, exists because most of us care about other people. But that doesn’t mean that those who don’t need assistance with paying rent, utilities or food are somehow stealing a decent life from those who do need assistance. All this dialog about “the rich” getting away with something is bizarre and wrong. Hatred and jealousy of others that have done you no wrong is as sick as those that do harm others.

    1. Steven L. Fornal

      John Galt: You believe in the Ayn Randian fiction of producers and users? Funny how in her book “Atlas Shrugged” the Rand protag roofs a cabin all by her lonesome in a day. That included carrying all materials up a steep, long incline through the woods. Proof that she didn’t know what the hell she was writing about.

      By the way, Rand collected Social Security at the end. What about former Speaker of the House Paul Ryan? He received Social Security Survivor Benefits in his youth, then went on to attempt to decimate that very program.

      Does the word hypocrite come to mind?

  2. Napoleon from Manor Farm

    I covet my neighbors wealth, therefore I am entitled to have the armed power of the state remove as much funds from him as I determine and distribute as I see fit.

  3. Joe

    I completely agree that income inequality is a big problem in our society and one that is getting worse. a few points to consider.
    How many of those in Ulster County making more than $100K/year are in county government?
    What is our county government doing to correct the situation?
    We look at the low unemployment rate which is the case across the country but we need to look at how many residents are earning their salaries outside the county.
    Our county government needs to let up on all the tourism focus and the low paying jobs that go with that industry and focus their efforts on bringing in high-paying employers so better jobs are available. Our county government also needs to focus more on helping the existing businesses expand by making it attractive for them to stay here and grow here.
    One of the problems is that its very difficult to find good people to work here. It is my opinion that there are several reasons for that. People qualified for those job openings are either 1) already working, 2) already work outside the county 3) have left and now live elsewhere because they gave up trying to find a decent wage here.
    Businesses spur growth in all sectors. I am all for the tourism industry. We live in a beautiful area of the country but we have built tourism at the expense of ignoring other businesses. Our county government needs to look internally and ask why businesses aren’t moving to Ulster County. We always hear that a lot of companies look at Ulster County but we also hear about them choosing another location for their expansion. Yes, there are some exceptions to that but not enough. We counted on IBM for way too long so once they closed their Kingston facility they took thousands of good paying jobs with them.
    Let’s hope our next county executive is interested in this county enough to pull together a task force to examine why businesses are not choosing Ulster County and what needs to be done to change that.

    1. Steven L. Fornal

      Joe — too often I hear the same statement that local governments need to “focus their efforts on bringing in high-paying employers so better jobs are available.”

      Please, name them. It’s become a mantra “We need better paying jobs, so why isn’t government doing something about it?” But, I never hear what those jobs are.

      Also, since this is a capitalistic country, why is government always having its feet held to fire over lack of jobs? And more so the lack of good paying jobs with living wage and benefits? Isn’t that the job of the capitalists?

  4. Jimmy McPhee

    Another rambling about the “evil rich.” Here’s some statistics you left out of your rant, sweetheart: the top 1% of earners pay 40% of the tax revenues. The top 10% of earners account for 70% of tax revenues collected. They don’t need to live here. They don’t need to live in New York, Ulster County, or the United States, while we’re at it. There are plenty of other nice, safe places to live where they are not ostracized for their success.

    1. TheSamePersonIWas

      Yet another glib comment based on reckless eyeballing of a complex issue/story.

      Reading comprehension is so last century…

  5. Steven L. Fornal

    Well, sweetheart McPhee, here’s something to think about: The top 10 percent own 76 percent of the wealth and the top twenty percent own 91.3 percent of financial wealth. So, you can see they’re getting a nice break (rather than being overtaxed).

    We hear how the “left” wants to redistribute the wealth when it’s been the top percents that have done so since Ronald Reagan; trillions of dollars has been hoisted upon the bottom 80 percent of earners vis-a-vis taxation. The rich pay less and we all pay more. Corporations are paying less so we pay more. Trump’s tax plan will have the bottom three quintiles (60 percent) of earners paying more in taxes while in the final year of that plan the top one percent will be getting 83 percent of the tax benefit.

    Any system that allows for such gross inequity needs to be rethought.

    Have a look at the facts: https://whorulesamerica.ucsc.edu/power/wealth.html

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