Oct 06, 2010 | By Marge Clark, BVM
In 2007 – 2008, everyone was hurt by the recession. In 2008 – 2009 the pain continued, except for the highest earning quintile of households. Their income increased by 3%, and accounts for 50% of all income in 2009. The highest-earning top five percent exceeded that with increased earnings, on average, $1800 in that year.
The eighty percent of households in the lower four quintiles ALL continued to lose ground. The entire lowest quintile accounted for only 3.4% of all earnings, nationally in 2009.
Median-income families lost $335 in income, 2008 – 2009. Across 2007 – 2009 their income loss was over $2200, a drop of over 4% and the largest in over 35 years.
This seems very good justification for allowing the tax breaks to continue for those households which are still losing wealth. Conversely, it justifies not continuing the tax benefit experienced by the top earners.
According to the Washington Post (9/28/10), the wealth divide between those at the top and those in the lower quintiles is greater than in any recorded time. The rich grow richer as the poor decline deeper into poverty. Over 6% of our nation’s population lives in “Deep Poverty,” defined as below 50% of the poverty threshold.
Some political entities proclaim that we need to eliminate the tax break for all income levels at this time. However, during the “Live Webcast: Conference on America’s Fiscal Choices” on October 6, a panel of economists agreed that perhaps in twenty years taxes would need to be raised for those earning under $250,000 – but that is neither necessary nor healthy now. Rather, they propose ending the tax benefit for the wealthiest members of our communities and continuing the breaks for middle and lower income households. These are known to spend the additional money, therefore supporting the economy, whereas studies are showing that the wealthiest among us are far more likely to put additional income into savings, gaining ever more income on their money.
The history of the last nine years evidences that tax cuts for the wealthiest members of our communities have NOT served to create jobs in the U.S. Those created were outside the U.S. The argument of cutting taxes on the wealthy to increase economic activity and to create more U.S. jobs does not hold up.
Therefore, NETWORK continues to support elimination of the tax benefits to households with earnings over $200,000 ($250,000 / couple). However, it is critical to continue the tax cuts for all other income levels.
(For more information about changes in income for the different income groups, click here.)