Newspaper logo  
Print view: It's time to end "wealthfare"

It’s time to end “wealthfare”

by Gerald E. Scorse

The estimated annual revenue losses from special exclusions, exemptions, deductions, credits, deferrals, and preferential tax rates in federal income tax law stand at over $1.5 trillion.

In 1996, making good on a shrewd political promise, President Clinton ended "welfare as we know it." In 2017, battered by election losses, the Democratic Party should double down on a far bigger reform: ending ”wealthfare” as we know it.

The mission couldn't begin at a worse time, or a better time. The triumphant GOP, trifecta in hand, is off in its usual direction. The party is giddy at the prospect of handing another huge tax cut to the rich, including the elimination of an estate tax that affects less than one-third of one percent of all Americans.

If the idea of making the rich richer sticks in your craw, you're not alone. Americans of all political stripes have had it up to here with a rigged system, and nothing says rigged louder than ”wealthfare.”

"Welfare as we know it" met its end because Everybody Just Knew the money went to people who didn't deserve it. ”Wealthfare” has reached its apotheosis because Everybody Just Knows the money goes to people who do deserve it. They're all supposed masters of the universe, hardworking, hard-driving job creators; the rest of us, awestruck, can only properly show our gratitude by showering them with more money. We do this in myriad ways, most blatantly with tax expenditures.

The Tax Policy Center (TPC) defines tax expenditures (a.k.a. tax breaks) as "the estimated revenue losses from special exclusions, exemptions, deductions, credits, deferrals, and preferential tax rates in federal income tax law." For fiscal 2018, the Office of Management and Budget estimates those losses at more than $1.5 trillion, slightly more than the amount paid in individual income taxes in 2015. Putting it another way, the Treasury will lose more revenue in fiscal 2018 from tax breaks than it took in from personal income taxes in 2015.

All Americans love tax breaks and benefit at least minimally (e.g., anybody who files a tax return is entitled to an exemption and a standard deduction). Small potatoes aside, ”wealthfare” flows overwhelmingly to the top.

According to a TPC analysis, the top 1 percent of the income hierarchy receive 32 percent of all benefits from itemized deductions; even more, the same 1 percent receive over 62 percent of the benefits from preferential rates on capital gains, dividends and related preferences.

Lower rates on capital income than labor income are the biggest single driver of income inequality.

Lower rates on capital income than labor income are the biggest single driver of income inequality. Modest moves by President Obama to raise capital-gains taxes for those making upwards of $200,000 were enough by themselves to reduce such inequality for the first time in years. Now, of course, a GOP-controlled Congress could well do away with Obama's actions (all in the supremely ironic, "alternative fact" name of "tax reform").

These few paragraphs barely scratched the surface of “wealthfare." Here are two books that dig far deeper, without ever mentioning the word:

Dean Baker, Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer; James Kwak, Economism: Bad Economics and the Rise of Inequality.

Baker's book speaks to "an enormous upward redistribution of income in the United States in the last four decades... [This] was not the result of globalization and the natural workings of the market. Rather it was the result of conscious policies that were designed to put downward pressure on the wages of ordinary workers while protecting and enhancing the incomes of those at the top."

Kwak writes that bright-eyed collegians, hungry for answers, too often take as gospel the elegant graphs and theorems of Economics 101. They become easy prey for a central belief of supply-side economics: the virtue of "reducing the tax burden for the very wealthy." That's no problem at all, given "the particular zeal politicians have for reducing or eliminating taxes on investment income--money you earn by sitting around and watching your assets grow."

Taken together, the books make a compelling case for pulling back from individual-centered ”wealthfare” and putting the money instead toward the common good (infrastructure, for instance).

At this point I'm proud to introduce Sheryl J. Grana, a professor at the University of Minnesota and a fierce "wealthfare” critic . You'll meet her at the end of the following comments thread to a recent article on the website Truthout.

Barry: It is well-known that great wealth [and the trans-generational passing of such wealth] undermines democracy. It really is about time to demand that the rich, who have benefited most by our economic system, pay [their fair share]. Re-asserting inheritance taxes on estates over $5MM and increasing long-term capital gains rates to at least that of ordinary income would be a good start....

Gerald: Re: estate taxes, the phrase "death taxes" has unfortunately turned the majority of Americans against them; this has been a huge framing victory for the right, especially of course for the rich...

Josh: Framing of the "death tax" is akin to the framing of welfare. If only equivalent statistics of ”wealthfare” could be exposed. About 10 years ago, my freshman sociology professor drilled into the class that "wealthfare” costs 7 times that of welfare. I can only imagine that the difference has increased.

Gerald: Love the term "wealthfare,” kudos to your sociology professor. I've heard "welfare for the rich" before, but not ”wealthfare”: much catchier.

Josh: A professor each and every incoming freshmen, let alone upperclassman, would duly benefit from, Dr. Sheryl J. Grana relentlessly seizes your attention with subject matter, perspective, and the skills of a seasoned orator...

Copyright 2017 Gerald E. Scorse. Gerald E. Scorse helped pass the bill requiring basis reporting for capital gains. He writes on taxes..

Copyright © 2017 The Baltimore News Network. All rights reserved.

Republication or redistribution of Baltimore Chronicle content is expressly prohibited without their prior written consent.

Baltimore News Network, Inc., sponsor of this web site, is a nonprofit organization and does not make political endorsements. The opinions expressed in stories posted on this web site are the authors' own.

This story was published on February 14, 2017.

Local Stories, Events

Ref. : Civic Events

Ref. : Arts & Education Events

Ref. : Public Service Notices

Books, Films, Arts & Education

Ref. : Letters to the editor

Health Care & Environment

03.17 China's 'war against pollution' shows promising results, study finds [U.S. doesn't care]

03.17 China's 'war against pollution' shows promising results, study finds

03.17 In Latest 'Alarming' Attack on Science, Pruitt Reportedly Moving to Restrict Use of Research in EPA Policy [“Stupid is as stupid does.” –Forrest Gump]

03.17 Global energy giants forced to adapt to rise of renewables [the Middle-East's wars may be stupid given looming drop in oil and gas prices]

03.16 The Guardian view on air pollution: moral pusillanimity, political ineptitude

03.16 Pollutionwatch: Cold snap worsens particle load of air

03.16 Energy sector must use new tech to ensure the vulnerable aren't left behind

03.16 Pollution, illness, threats and murder: is this Amazon factory the link?

03.16 It's 50 years since climate change was first seen. Now time is running out

03.15 WHO launches health review after microplastics found in 90% of bottled water [health risks are being assessed]

03.14 World’s great forests could lose half of all wildlife as planet warms – report [ho-hum...]

03.14 Sky-high prices of everything make US healthcare the world's most expensive [legal corruption of government Makes America Less Great Again, and more of a mafia-state]

News Media Matters

03.17 The corporate media ignores the rise of oligarchy. The rest of us shouldn't

Daily: FAIR Blog
The Daily Howler

US Politics, Policy & 'Culture'

03.18 The War on the Post Office

03.18 Donald Trump and the Craven Firing of Andrew McCabe

03.18 Mueller Wants Trump’s Business Records. What’s the Russia Connection? [real estate deals with money laundering for higher profits...]

03.18 Paul Ryan sold shares on same day as private briefing of banking crisis [offense in 2008 became a story in 2012, which now in 2018 is hot news...]

03.18 The Cambridge Analytica Files: ‘I made Steve Bannon’s psychological warfare tool’: meet the data war whistleblower

03.17 Russia investigation may turn to Ivanka Trump as Mueller examines empire

03.17 Conditioning Through Contempt: They Are Calling Us Their Base to Demean Us

03.17 Andrew McCabe, ex-FBI deputy and Trump target, fired days before retiring

03.16 Package Bombs Are Killing People in Texas but Donald Trump Hasn’t Said a Thing. There’s a Reason for That.

03.16 N.R.A. Proposes Having Second Armed Teacher in Every Classroom to Stop First Armed Teacher from Misfiring

03.16 Cash in: the rich guys in Trump's cabinet who can't resist public money [morals and rules for behavior are for little people]

03.16 Mueller subpoenas Trump Organization for documents related to Russia – report

Justice Matters

03.14 Manafort could face ‘rest of life in prison,’ judge says

High Crimes?


Economics, Crony Capitalism

03.17 The Radical Reformist

International & Futurism

03.18 Marielle Franco: Brazil’s favelas mourn the death of a champion

03.17 Sergei Skripal: Russia expels 23 British diplomats as row deepens

03.17 Turkey claims to have encircled Afrin, besieging up to 200,000 [Kurds are the new Armenians. Is ethnic purity—that DNA testing cannot discern—so important that Turkey and Syria must kill minority ethnic populations?]

03.16 The long read: Vladimir Putin’s politics of eternity

03.16 Australian man who raped Indian orphans released immediately after conviction

03.15 Finland is the happiest country in the world, says UN report

03.15 Busting the Myth of ‘Welfare Makes People Lazy’ [Are all conservative economic theories based on anecdotal gossip of ill-informed, often-biased people? There does seem to be a pattern...]

03.15 Donald Trump admits making up 'facts' in trade meeting with Justin Trudeau [“Stupid is as stupid does.” –Forrest Gump]

03.15 Can we fix it? The repair cafes waging war on throwaway culture

03.15 Spy poisoning: allies back UK and blast Russia at UN security council [videos]

We are a non-profit Internet-only newspaper publication founded in 1973. Your donation is essential to our survival.

You can also mail a check to:
Baltimore News Network, Inc.
P.O. Box 42581
Baltimore, MD 21284-2581
This site Web

Public Service Ads: