Tax Justice Can Address Inequality: J. Herbert's Remarks on A Faithful Budget

Tax Justice is Essential to a Faithful Federal Budget

Remarks as prepared by J. Herbert Nelson

Faithful Budget Congressional Budget Briefing

April 28, 2015

My name is J. Herbert Nelson and I am the Director of the Presbyterian Church (U.S.A.) Office of Public Witness. Over the last several years, our Church has expressed increasing concern over inequality in our society. In the Gospel of Luke, we Christians are taught that “to whom much is given, much will be required” (12:48). As a faith coalition, you will hear that we are calling for “reasonable revenue for responsible programs,” AND today, speaking for the General Assembly of the Presbyterian Church (U.S.A.), I would add to that the tax code is not only a way to make sure we have enough revenue to pay for the programs we think are important; but also it is a tool for reducing inequality and leveling society. The Presbyterian General Assembly issued a new statement on tax justice last year, in which it said, “Paying taxes is part of a set of moral obligations for a coherent social order.” Those who have been blessed with abundance must contribute more to the good of all.

That Assembly last year called this period we are living in “a New Gilded Age” and said that tax justice requires change if we are going to live faithfully to our conscience and to the ethical concerns for the common good shared by all citizens.  However, the recent events in the aftermath of Michael Brown’s killing in Ferguson, MO, and Freddie Gray in Baltimore, MD on yesterday reveal a deeper sense of frustration in disenfranchised communities. I am led to define this moment – great economic disparity and deep-rooted systemic racism – as the emergence of a new poor people’s movement in the United States. The massive numbers of persons across this country that are marginalized in communities redlined from jobs, transportation, decent wages, education and opportunities to achieve a decent standard of living are coming together in thought and common sympathies.

On yesterday in Baltimore, we saw children take to the streets looting and burning. Their actions represent a weariness of being taken advantage of by people in high places who possess the majority of the wealth; carve out for themselves the greater portion of tax breaks; and then pass the tax burden on to the poor. The ironic aspect of this struggle is witnessed last night and today on social media. Many former middle class Anglo-Americans who lost their jobs during the recession and/or returned to a workplace where their jobs are downgraded after the recession are sympathizing with these children and adults who looted and rioted yesterday. Although many struggle with the rioting based on their predisposition for peace, their concerns expressed are more germane to the absence of efforts to improve public education; establish a jobs program; strengthen a social safety net that helps workers who are not making an adequate wage, so that they can pay more toward taxes without being driven into the ditches of economic despair. These much needed building blocks within our nation can only be accomplished with a fair tax system at the roots of public policy. But this is not the case today.

Just taxation is a key tool for enabling communities to thrive, for advancing science and culture, for sustaining democratic institutions, and for ensuring a strong social safety net that is there to catch people when they fall. Each citizen has an affirmative duty to contribute to the common good by paying their fair share of taxes.

There is both an ethical and economic case for a fairer tax code. The U.S. tax system is regressive. Poorer and middle class households pay a higher proportion of their income in payroll, state and local taxes, including sales tax – at higher rates than those who pay lower tax rates on unearned income like capital gains and carried interest. In other words, those who make their living through investments are taxed sometimes at a lower rate than those who work 40 hours per week standing at a cash register or restocking shelves. Further, tax mechanisms, like the Estate Tax, that produce revenue from higher income households have been unnecessarily weakened in a time of increased wealth disparity and excessive influence of private interests in public policy. And those who itemize their tax returns can take advantage of huge deductions that reduce their proportionate tax liability, while low- and middle-income families settle for the standard deduction. This disparity in our tax code -- the difference in the way we tax earned and unearned income -- and the lack of overall progressivity when you look at all the levied taxes, not just the income tax code, means that those with less in our society bear a greater proportionate tax burden than those who have more. This must be fixed. Just taxation is a foundation of a moral society’s answer to poverty and its close relatives, inequality, economic insecurity, and social immobility.

We do support , in many instances, credits like the earned income tax credit  -- the EITC -- and the refundable Child Tax Credit, help ensure working people a living wage, are both are longstanding features of the tax code, supported historically by both liberals and conservatives. The need for this kind of investment is very great today, and the EITC, Child Tax Credit, or similar measures aimed at keeping working families out of poverty, should be expanded, made fully refundable, and made permanent.

We do believe there are measures this particular congress can take to help rebuild the fiber and the life, but more importantly to rebuild this nation in a way of awareness about what it means to live in community and to forge community, without having to take or rob from anyone to give to someone else. We ought to pay our fair share, and we ought to be reminded as our gospel and the Christian faith informs us that as we’ve done to the least of these my brothers and sisters, we’ve also done unto our God and unto ourselves.

Full Speech here: https://www.youtube.com/watch?v=HrpZ90wI_Y8

Poverty Drops in the U.S. But Remains Unconscionable

The Census Bureau yesterday released its annual report on poverty data, Income and Poverty in the United States: 2013. After four years of economic recovery from the Great Recession, the poverty rate has finally started to go down, but for 45.3 million people still living in poverty, it is not dropping fast enough.

In 2013 (the year for which this data was collected), poverty continues to afflict 14.5 percent of the U.S. population, down from 15.0 percent in 2012. For reference, the poverty level for a family of four with two children is just $23,624 total yearly income. One in three people in the U.S. are poor or near poor (living below 200 percent of the poverty level). One in five children in the U.S., 19.9 percent, live in poverty, while one in nine children live in extreme poverty (less than half the poverty level). On the bright side, however, this year is the first time since 2000 that the child poverty rate has dropped.

For communities of color, the picture is bleaker. African American communities are suffering poverty at the Depression-era rate of 27.2 percent. Nearly two in five black children (38.2 percent) are living in poverty. For the Hispanic community, 23.5 percent were living in poverty (down from 25.6 percent in 2012). This includes almost one in three Hispanic children (30.4 percent).[i]

In response to the Census Bureau’s findings, the Reverend J. Herbert Nelson, Presbyterian Church (U.S.A.) Director for Public Witness said:

"It is unconscionable that people continue to live in poverty in America. We live in a land of plenty, where there is enough for everyone. But as the economy expands after the Great Recession, wealth continues to concentrate at the top, leaving those workers at the very bottom far behind. Today’s data release only reinforces what we already know – that we must do better at all levels of society to make sure that every person has what he or she needs to live healthy, fulfilling lives. But we in the Church cannot meet the need alone. We need a healthy partnership with government to address systemic injustice and alleviate the worst of today’s need.

Meanwhile, Congress has done worse than nothing, attacking the very social safety that is meant to catch people in dire need. They have cut social services and hunger programs, they have failed to raise the minimum wage and extend Unemployment Insurance. It is time for our decision-makers, from the President on down through Congress to local County Councils, to take proactive steps to improve jobs, reduce economic inequality, and lift people out of poverty. We have the tools and the knowledge to end poverty in this country, if only we would create the political will to see it done."

In good news, a nuanced calculation of poverty, the Supplemental Poverty Measure, shows that our safety net is doing its job when Congress allows it to work. Official poverty measure calculations do not take into account income from federal anti-poverty measures like the Earned Income Tax Credit (EITC), the Child Tax Credit, or SNAP (formerly Food Stamp) benefits. But once we take those sources of income into the formula, we find that SNAP alone lifted 3.7 million people above the poverty line. Unemployment Insurance lifted 1.2 million people out of poverty (or would have, had that income been included in the above statistics).[ii] This sort of supplemental calculation shows that, while the main economic goals still need to be reducing inequality and improving jobs and wages, we must continue to invest in anti-poverty measures. They work.

As Presbyterians, we value the dignity of work and believe that God has endowed each person with the right to productive work. Over and over again we have affirmed the right of each person to earn a dignified living and meet basics needs for herself and her family. We must pay attention to these statistics. Even as the economy is growing and unemployment is declining (most likely because people are giving up and dropping out of the job market), the recovery has not reached those worst affected by the recession. Both the income and net worth of the top 10 percent of income-earners have increased, while both income and net worth for the bottom 20 percent of workers have declined. The decrease for low-income people of color is ten times that of whites. [iii]

Yesterday’s data show that U.S. policies continue to lift up the rich and the powerful, while neglecting low-income workers and the most vulnerable people in our society – children and traditionally marginalized groups. We must support economic growth that benefits all, in addition to continuing to fund important safety net programs like SNAP, Unemployment Insurance, and the EITC. We must invest in people and in people’s lives. That means standing up against economic and racial injustice and systemic inequalities that trap generations in poverty and low-wage jobs. We need jobs that keep people out of poverty, not trap them in it.

Below are some additional highlights from the numbers:

• 14.5 percent of the population, or more than one in seven Americans, lived below the poverty line in 2013 ($23,624 for a family of four with two children), down from 15.0 percent in 2012. This is the first drop in poverty since 2006. The number of people in poverty, 45.3 million, was not a statistically significant difference from 2012.
• Median household income did not rise significantly and remained 8.0 percent (or $4,497) below its pre-recession level in 2007 and 8.6 percent below its level in 2000, before the 2001 recession.
• Nearly 19.8 million people lived in extreme poverty (below 50 percent of the poverty line) in 2013
• Over 106 million people, or 33.9 percent of the population, were poor or near poor in 2013 (living below 200 percent of the poverty line)
• Child poverty dropped from 21.8 percent in 2012 to 19.9 percent in 2013, the first annual drop since 2000.
• Close to one in nine children, nearly 6.5 million in all, lived in extreme poverty in 2013 (below half the poverty line).
• 27.2 percent of African-Americans, and 23.5 percent of Hispanics lived in poverty in 2013.
• 38.3 percent of African-American children, and 30.4 percent of Hispanic children lived in poverty in 2013.
• The official poverty numbers do not account for programs like SNAP (formerly food stamps), the Earned Income Tax Credit (EITC), or the Child Tax Credit. Accounting for SNAP, 3.7 million fewer people would have been in poverty.

 Top 10 states (including the District of Columbia) with the highest poverty rates:

1.  Mississippi: 22.5%

2.  New Mexico: 21.7%

3.  District of Columbia: 21.3%

4.  Arizona: 20.2%

5.  Kentucky: 20.0%

6.  Louisiana: 19.2%

7.  North Carolina: 18.6%

8.  Tennessee: 18.1%

9.  Nevada: 17.4%

10.  West Virginia: 17.3%

Many Thanks to Bread for the World for help in compiling the Data Highlights.

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i. Income and Poverty in the United States: 2013. Current Population Reports. By Carmen DeNavas-Walt and Bernadette D. Proctor. U.S Census Bureau, U.S. Department of Commerce. Issued September 16, 2014. http://www.census.gov/content/dam/Census/library/publications/2014/demo/p60-249.pdf

ii. Ibid.

iii. The New Poverty Data: Using it to Show What Works (and What Doesn't) to Reduce Poverty. Presentation by Jared Bernstein. Coalition on Human Needs Webinar. Presented September 11, 2014

Women Deserve Equal Pay for Equal Work

Women continue to earn less than men. In 2012, the last year for which we have data, women earned 76.5 cents for each dollar earned by a man—a figure which has remained essentially unchanged since 2001. The statistics for women of color are even more staggering, with African American women earning 64 cents and Latinas only 54 cents for each dollar earned by a white man.

This practice is bad for women, bad for families, and bad for our local economies.

April 8 was recognized as Equal Pay Day because it marks the date a woman’s salary finally catches up with a man’s salary from the previous year. Additional “Equal Pay Days” throughout the year mark the even higher discrepancies for particular groups of women: June 12 for mothers, July 16 for African American women, and November 12 for Latinas. The Senate voted down the Paycheck Fairness Act earlier this year, which would have taken a critical step in the right direction to eliminate the gender wage gap.

But for the first time ever, the Senate last week agreed to move on to a full debate of the Paycheck Fairness Act, by a vote of 73-25. We’ve passed the first of many hurdles, but it's not over – this is the Senate’s chance to do the right thing.

Act now! Urge your Senators to vote in support of the Paycheck Fairness Act and a fair up or down vote.

Paycheck Fairness Act: Background

The most blatant forms of pay discrimination based on gender are illegal, but current law is too narrow to serve as an effective deterrent or tool for enforcement. The Paycheck Fairness Act (PFA) would help narrow the gender pay gap by closing some of the loopholes in current law and give employees the legal tools they need to challenge the wage gap itself. Specifically, the PFA would:

• Require employers to demonstrate that wage differentials between men and women holding the same position and doing the same work stem from factors other than sex;
• Prohibit retaliation against workers who inquire about their employers’ wage practices or disclose their own wages, and permit reasonable comparisons between employees within clearly defined geographical areas to determine fair wages;
• Strengthen penalties for equal pay violations;
• Provide guidelines to show employers how to evaluate jobs with the goal of eliminating unfair disparities;
• Encourage proactive enforcement of equal pay laws by re-instating the collection of wage-related data and providing training for the workers who enforce our equal pay laws.
• Modernize the Equal Pay Act to make it more in line with the class action procedures available under Title VII.

President Obama has signed an executive order prohibiting federal contractors from retaliating against workers who discuss their salaries. We must extend these same basic protections to all working women!

As faithful advocates, we know we must respond to the command in Leviticus 19:13, “Do not defraud or rob your neighbor. Do not hold back the wages of a hired worker overnight.” Ask your Senators to continue to shed light on the issue with each passing Equal Pay Day by passing the Paycheck Fairness Act!

What does the PC(USA) say?

The 218^th General Assembly (2008) approved “God’s Work in Women’s Hands: Pay Equity and Just Compensation.”  “For the ‘promotion of social righteousness, and the exhibition of the Kingdom of Heaven to the world’ (Book of Order, G-1.0200)” the Assembly “recommitt[ed] itself to the support of institutional policies and legislation that would:

• Expand women’s civil protections to include equal pay for work of comparable worth;
• Provide prorated compensation and benefits for part-time employees;
• Heal work/family conflict through adequate financial support for those providing childcare and elder care, more flexible work hours, paid medical and family leave, family-supporting wages for all workers, and universal access to quality health care;
• Establish quality education as a basic human right;
• Uncover and eliminate racial bias in hiring and employment practices;
• Reduce the growing inequality in wages, benefits, and wealth.

“God’s Work in Women’s Hands” further directed the Washington Office and the UN Office to advocate for the ratification of the Equal Remuneration Convention and urged “synods, presbyteries, and individuals to advocate for local, state, and federal legislation that support these (above) policies.”

Urge Your Representatives to Pass the Fair Minimum Wage Act

Many U.S. workers have come to rely on and expect an annual wage increase from their employers. Indeed, the practice of annual cost of living increases and raises came into standard practice in the heyday of labor unions when the collective bargaining power of workers ensured that the increased productivity of the company was shared with all its employees, not just those at the top.  And yet, today marks the fifth anniversary since the last time the United States government raised the minimum wage. For tipped workers, the wait has been even longer, as the tipped worker minimum wage has stagnated at $2.13 per hour since 1991.

Click here to write to your Members of Congress in support of a raise for low-wage workers.

Low-wage workers have gone five long years without a raise, even while there have been positive signs of economic growth -- GDP has surpassed pre-recession levels and the unemployment rate has reached the lowest level since before the recession. But while the economy is improving, low-wage workers still feel like we’re in a recession. As the economy has improved, better-paying jobs have been replaced by lower-wage jobs, meaning that highly qualified workers are taking jobs out of their field and below their skills and/or education levels. The U.S. labor force participation rate is at its lowest since 1978 (meaning that the unemployment rate is going down, in part, because workers are despairing, giving up their job searches, and leaving the labor market), the median income is at its lowest since 1998, and income and wealth inequality are growing. All of these problems are economic drags on the economy.

 Living wages that allow workers to support themselves and their families are crucial to closing the widening gaps in our economy, and a minimum wage above poverty level for a family is a great place to start. It is time for Congress to lift minimum and low-wage workers out of poverty by raising the minimum wage above a poverty wage. A job should keep you out of poverty, not trap you in it.

Currently, the minimum wage is $7.25 per hour. The Fair Minimum Wage Act (H.R. 1010/H.S. 1737) will raise of the minimum wage to $10.10 per hour and will lift a family of four just above the federal poverty measure. While this increase still is not high enough to ensure a living wage, it is an important step in the right direction. The bill also raises the minimum wage for tipped workers and indexes the minimum wage for inflation; ensuring low-wage workers too will come to receive the same annual cost of living increase as so many others in the economy. A recent study cited by Senator Elizabeth Warren (D-MA) shows that had the minimum wage kept pace with economic productivity, it would now be about $22 per hour. This is one reason income inequality has been growing so precipitously and it shows how much more work we have to do in demanding justice for the worker. 

Write to your member of Congress and call for a minimum wage increase: HERE

The Department of Labor estimates that a total of 28 million workers would benefit if the minimum wage were raised to $10.10. In earning higher wages, 3.8 million people would earn enough that they would no longer need to rely on SNAP (food stamps) assistance, saving the federal government over $500 million over the fiscal year. Between 14-17 million children would benefit from the raise. This is more than a question of justice for the worker, though it is that. A just minimum wage is about ensuring an economy that provides good jobs for working people, lifts families out of poverty, and pays workers a fair day’s wage for a fair day’s work.

Write to your Members of Congress today! 

Image via Department of Labor

In 2006, the PC(USA)’s 217th General Assembly called on Congress to pass “legislation to increase the minimum wage… [to] at least reflect the increase in the cost of living since the last minimum wage increase in 1997, with the goal of a wage level sufficient to lift full-time workers out of poverty.” (Minutes, 2006, pp. 894-895)

Women in the Workforce: Women's History Month

Saturday, March 8th, is International Women's Day and March is Women's History Month, times to celebrate and educate about the ways women contribute to society, to the workforce, to their families, to our faith communities, and to all walks of life. 

The PC(USA) Office of Public Witness is joining with faith partners to remind Congress that women are a growing and vital part of the U.S. workforce. It is time for workers to be able to support themselves and their families. 

A Job Should Keep You Out of Poverty, Not Trap you In It.

Despite High Participation Rates in the Work Force, Women Workers Continue to Struggle for Equal Pay for Equal Work and a Living Wage

March is Women’s History Month. This is a time to celebrate how women are contributing to society – to our communities, our labor force, our cultural heritage, and our communities of faith. With today’s new jobs numbers, we are reminded that women are a growing part of our labor force, but are still held back by unfair levels compensation and a low minimum wage.

The trajectory of women’s participation in the labor force in the United States continues on an upward climb. In 2009 women made up 52% of the labor force, as compared to 1965 when 35% of workers were women. Women’s participation in certain industries and in educational attainment continues to grow as well. A report from the Bureau of Labor Statistics shows 36.4% of women workers attaining a bachelor’s degree or higher in 2010, as opposed to only 11.2% in 1970. Additionally, federal and local governments employed more than three times the number of women in 2011 than they did in 1964.

In the unemployment figures from the month of February, we see women holding steady at a 5.9% unemployment rate or 4.2 million workers total. At this time, women who are looking for work are slightly more likely to find employment than men, with the average unemployment among men growing slightly from 6.2% in January to 6.4%.

And yet, women are still paid less for equal work, especially in more lucrative careers. In 2011, female lawyers, for example, earned only 77 cents for every dollar earned by a male lawyers, according to a report by the Bureau of Labor Statistics. Across fields, women make, on average, 82 cents to a man’s dollar. Women also comprise a considerable proportion of the low-wage-earning population (defined as less than $10.10 an hour), making up 77% of all low-wage earners, according to the National Women’s Law Center. As such, even though women who look for work are slightly more likely to hold a job than their male counterparts, they are less likely to be able to earn enough to support themselves, let alone a family. In fact, the Bureau of Labor Statistic’s 2012 Women In the Labor Force: A Data Book indicates that women are more likely than men (7.5% as opposed to 6.7%) to be classified as “working poor,” (referring to workers who are making at or below minimum wage). Despite being fully employed, women still have a difficult time making ends meet.

This is because even though women have seen a growth in their overall employment, the jobs that they are able to attain are often insufficient for their needs. According to a report from the National Women's Law Center, 60% of women’s gains in employment from 2009 and 2012 were in the ten jobs that, on average, are most likely to pay less than $10.10 an hour. Only 20% of men’s gains in employment in the same time period were in these same ten jobs. Women of color are often hit the hardest, with 14.5% of Black women and 13.8%  of Latina women being classified as working poor in 2010, as opposed to 6.6% of White women. Finally, women who are single parents are more likely than their childless counterparts to live in poverty, at a rate of 29.7%, according to the Center for American Progress.

It is clear, then, that it is time to ensure that women who work do not have to live in poverty. We may do so by raising the minimum wage. Raising the minimum wage is not only an economic issue, but a moral issue and a matter of supporting our families. Isabel V. Sawhill of the Brookings Institute estimates that raising the minimum wage would lift as many as one million families out of poverty, and increase earnings for 16.5 million people. As people of faith, we must pray for our legislators to do the right thing and send a message to the women of the United States that their work will be enough to not leave them and their children hungry. As Rachel asks in Genesis 31:14-15, “Is there yet any portion or inheritance for us in our father's house? Are we not counted of him strangers? For he has sold us, and has quite devoured also our money.” Our collective faiths call for equality and justice for all workers, including women. Let us stand together and call for the right to equal pay for equal work, and to raise the minimum wage.

You can find DHN’s Jobs Statement of Principles at http://domestichumanneeds.org/uploads/DHN-Jobs-Statement-of-Principles.pdf.