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December 28, 2011
Page 7
O pinion
Business as Usual for Oregon Leaders
Ignoring Income
Inequality
by
C huck S heketoff
The latest iteration of
the Oregon Business
Plan prepared for a
gathering o f Oregon
business and political leaders is
remarkable for what it leaves out.
Put together by the Oregon
Business Council, this "policy
playbook" not once mentions in
come inequality or poverty, even
as it purports to discuss Oregon's
"economic progress and chal
lenges."
P rior L eadership Sum m it
roadmaps have also ignored the
inequities of our economic sys
tem, but this year the environ
ment is different.
The document reads as if the
Council failed to notice Occupy
Portland's encampments in the
heart of Portland's business dis
trict. Why is it so difficult to
acknowledge the extent to which
economic gains of the past
few decades have gone to a
relative few and left Oregon
with more poor?
Over the past three de
cades, those at the top of
Oregon's income scale, the
wealthiest one percent, collec
tively have seen their income soar,
while those in the middle have
seen their income erode.
From 1979 to 2009, the most
recent year with data available,
the average income for Oregon's
wealthiest one percent nearly
doubled to about $635,000. Yet
over the same time period, the
income of the typical Oregonian
declined by about 10 percent to
$30,327 in 2009.
On average, Oregon's wealthi
est top one percent were enjoying
21 times the income of a typical
Oregonian by 2009. To belong to
Oregon's top one percent that
year, you would have had to make
at least $278,150.
But that's peanuts compared to
the income gains of Oregon's
wealthiest one-tenth of one per
cent, the wealthiest one out of
every 1,000. This privileged group
at the top, roughly 1,600 of
Oregon's 1.6 million taxpayers,
had an average income of $2.5
million in 2009, more than triple
what it was 30 years earlier.
It is this elite group that would
reap the rewards of any tax cut on
income from capital gains, a key
part of the Oregon Business Plan's
proposal to reform our tax sys
tem.
In 2009, the top one-tenth of
one percent amassed nearly half
of all capital gains income. The
rest of the top one percent col
lected another 22 percent.
Thus, the top one percent
reaped a little over two-thirds of
all capital gains income in Or
egon. The remaining 99 percent
(more than 1.5 million tax filers)
were left to share the remaining
third.
Picture the disparity of capi
tal gains income by imagining a
pizza with 10 slices and 1,000
people in the room. Just one
person (Mr. top one-tenth of
one percent) takes five slices
and leaves; nine other people
(the rest of the top one percent
family) share two slices as they
exit the room; and the other 990
people (the 99 percent) are left
to divvy up the remaining three
slices.
Still think most Oregonians
would get much benefit from a
capital gains tax cut?
Since the recession, life has
gotten tougher for many Orego
nians. While Oregon's wealthy
bask in swollen earnings and capi
tal gains income, an increasing
share of Oregonians cannot make
ends meet.
Over the course of the reces
sion, Oregon's poverty rate has
risen every year. From 2007 to
2010, nearly 120,000 more Or
egonians fell below the poverty
line. And many Oregonians who
earn enough to rise above the
poverty line still struggle to make
ends meet.
Income inequality and poverty
are central to what ails Oregon's
economy. As the chairman of a
Boston-based global investment
management firm put it recently,
"You can't run the economy on
BMWs alone. If the average per
son is in a pickle, how do you
have a healthy economy?"
That is the question those who
gather each year for the Oregon
Business Plan's Leadership Sum
mit ought to be asking. Until they
do, however, it will be business
as usual — to the detriment of the
great majority of Oregonians.
Chuck Sheketoff is executive
director of the Oregon Center for
Public Policy.
Wealth is the Gift that Keeps on Giving
Supporting
financial
responsibility
M ariko C hang and
D edrick M uhammad
by
The holiday season
exerts a lot of pressure to
spend what you don't
have and go deeper into
debt in the name of "giv
ing." This year, let us all
support each other to be
financially responsible and
engage in building wealth
instead of destroying it.
Wealth, or net worth,
is the value of your assets
minus your debts. Assets include
things such as money in checking
or savings accounts, the equity in
your home, and stock. Common
types of debt include credit card
debt, mortgages, and college
loans.
Without any wealth, people are
just a paycheck away from finan
cial disaster. Wealth makes it pos
sible to pay the bills when unem
ployment strikes or you get so ill
that you can't work. Wealth en
ables you to pay for large or
unexpected expenses such as a
new hot water heater or engine.
It's important to remember that
during these tough economic
times, celebrating the holidays
shouldn't inhibit one's ability to
save and build wealth. This is
particularly important for com
munities of color.
A report published this
year by the Pew Research
Center revealed that the
_ _ wealth divide between
p whites and people of color
hit a record high in 2009,
with the median wealth of
white households 20 times
higher than black house
holds, and 18 times higher
than Latino households.
This recession is espe
cially tough on people of
color because they face much
higher levels of unemployment.
Joblessness has depleted their sav
ings. Plus people of color have a
greater percentage of their wealth
in homes. They were dispropor
tionately hammered when real
estate prices plummeted after the
housing bubble burst, and be
cause people of color were more
often targeted for higher-cost
subprime loans, they were left
more vulnerable to foreclosure.
One out of four African Ameri
cans and Latinos who received a
loan between 2004 and 2008 face
foreclosure or are over two
months delinquent in mortgage
payments.
Even before the economic
troubles set in, the financial foun
dation of many families of color
was typically insecure as com
pared to white Americans.
Data from the Institute on As-
The racial wealth divide origi
nated generations ago when
people of color were legally and
routinely denied the same oppor
tunities as whites. The inequities
of the past continue to haunt cur
rent generations because family
wealth not only affects the amount
of inheritance one receives, but
The inequities o f the past continue to
haunt current generations because family
wealth not only affects the amount o f
inheritance one receives, but also the ability
o f parents to help their children become more
financially stable...
sets and Social Policy at Brandeis
University revealed that the wealth
gap between white and black fami-
lies more than quadrupled be-
tween 1984 and 2007, growing
from $20,000 to $95,000 (in con-
stant dollars). Clearly, while the
recession may have exacerbated
the racial wealth divide, there was
a significant problem even before
the recession began.
The racial wealth divide is likely
to remain even after the economy
recovers, because this divide isn't
simply a result of racial differ-
ences in employment, income, or
investment strategies.
also the ability of parents to help
their children become more fi-
nancially stable, for example, by
helping them make a down pay-
ment on a home or pay for col-
lege.
The $95,000 wealth gap be-
tween black and white Ameri-
cans means that children of white
parents are more likely to be able
to afford to go to college debt-
free, while children of black par-
ents will have to assume more
debt to attend college. That's why
communities of color must be
especially prudent in how we de
cide to "celebrate" the holidays.
We don't want to disappoint
our families, friends, and most
especially our children, so start
changing expectations now. Let
them know that this year you
want to celebrate the upcoming
holidays by spending special time
with them rather than spending
on an extravagant gift.
Your local library, museums,
religious institutions, and other
organizations offer a plethora of
activities during the holiday sea
son. Many of them are free, and
they're ideal for spending special
time with your loved ones and
friends.
The word "holiday" comes from
the pairing of the words holy and
day. The word holy stems from
the Scottish "hale," meaning
health, happiness, and wholeness.
You, your family, and your
friends will find much more fi
nancial health, overall happiness,
and wholeness if you do not make
the holidays days of greater in
debtedness and wealth insecu
rity.
Mariko Chang is the author of
Shortchanged: Why Women Have
Less Wealth and What Can Be
Done About It. Dedrick
Muhammad is the senior director
of the NAACP's Economic De
partment.