Local wealth taxes and income taxes on corporations and the rich would advance racial equity.
In 2030, the majority of U.S. residents under 18 will be people of color. If current household wealth trends continue, the majority of America’s young people will be growing up in economically insecure households.
In the two decades between 1948 and 1968 — years that saw the income gap between America’s rich and everyone else narrow significantly — the income gap between black and white Americans also narrowed significantly.
United for a Fair Economy has the numbers on that narrowing in State of the Dream 2012: The Emerging Majority, the Boston-based group’s just-released latest annual Martin Luther King Jr. holiday report.
In 1948, the typical African American family in the United States made 53 cents for every dollar of typical white family income. In 1968, the median black family was making 60 cents for every dollar that went to the median white family.
But that progress has ended. In 2010, typical African American and Latino families made only 57 cents for every typical white family dollar.
And wealth disparities run far wider, especially since the Great Recession hit. Between 2005 and 2009, the wealth of the typical U.S. white family dropped 16 percent to $113,149. The typical black family net worth dropped 53 percent, to $5,677 — and the typical Latino household net worth sank 66 percent, to $6,325.
These figures ought to send a shudder through anyone who worries about America’s future. In 2030, the majority of U.S. residents under 18 years old will be people of color. If current household wealth trends continue, the majority of America’s young people will be growing up in economically insecure households.[pullquote]The public investments that America made after World War II — in everything from housing to education — worked marvelously well. But not for families of color.[/pullquote]
So what do we do as a nation? We do, the new United for a Fair Economy State of the Dream suggests, exactly what we did after World War II.
We make the public investments that help working families accumulate enough household wealth to “cushion the blow of a layoff, enable someone to take time off from work to return to school or care for an ailing parent, or be used as seed money to start a new business.”
Those public investments that America made after World War II — in everything from housing to education — worked marvelously well. But not for families of color. Black veterans, for instance, couldn’t take full advantage of the G.I. Bill because most colleges either discouraged or refused to accept black applicants. Historically black colleges simply didn’t have enough seats.
State of the Dream 2012 urges a package of new initiatives that would essentially amount to a new G.I. Bill — for everybody. The package, the new United for a Fair Economy report notes, would include programs like “KidSave” and “individual development accounts,” or IDAs.
IDAs offer matching funds that can give lower-income families greater incentive “to save and build wealth,” and some IDA programs already exist in a handful of communities. “KidSave” would establish for every newborn child a small trust fund that could later be tapped, as the child enters adulthood, for college, job training, or a home downpayment.[pullquote]A simple 10 percent tax on just the wealth of Forbes 400 alone would raise enough money to bankroll a $35,000 nest-egg for every baby born this year.[/pullquote]
Stiff taxes on America’s wealthy, notes the new State of the Dream, could go a long way to help financing the KidSave-like efforts America needs to revitalize that middle class and close the racial wealth gap.
How long? America’s 400 richest currently hold $1.53 trillion in personal wealth, Forbes reported this past September, a total 12 percent up from the previous year — and 608 percent more than the combined wealth of the Forbes 400 in 1982, after adjusting for inflation.
A simple 10 percent tax on just the wealth of Forbes 400 alone would raise enough money to bankroll a $35,000 KidSave nest-egg for every baby born this year in the United States. Dr. King would approve.
“A society based on making all the money you can and ignoring people’s needs,” as he told his future life partner Coretta Scott in 1951, “is wrong.”