Scott Walker: Inequality’s best friend

Conservatives who lurk on this blog hoping that I’ll eventually slip up and reveal a recurring, continually embroidered fantasy about me, Sarah Palin, and a soft-as-satin bearskin rug newly harvested during a late-night couples excursion into the Yukon-Kuskokwim Delta probably think I spend the bulk of my time scrubbing my Che Guevara T-shirts with free trade Bolivian quinoa soap while scowling at sepia-toned, circa 1862 photos of Cornelius Vanderbilt.

But I do get out of the house occasionally. In fact, I’ve met a millionaire or two in my time. We’ve gotten along just fine, and their criticism of me has generally been confined to my views on tax policy and the unnecesary lengthiness of my sentences.

I’m not sure if I’ve met anyone who’s earned more than a million dollars a year, but probably. I don’t ask. Anyway, of the very wealthy people I have met, I thought maybe they could use a fresh lather and shave, someone to top off their single-malt Scotch on the rocks, and maybe a bit less of a tweedy look. What I’ve never thought is, “Whoa, you look like you could use another $2,518 a year!”

Then again, I’m not Scott Walker.

A recent Wisconsin Budget Project analysis revealed the least shocking news of the past week: Under Gov. Walker’s three most recent tax-cut packages, the top 1% of Wisconsin’s income earners (who average more than $1.1 million in earnings each year) are getting by far the most tax relief, while those in the lowest quintiles are getting peanuts.

Here’s the breakdown:

The lowest 20% of earners, who average $14,000 a year in income, are getting $48 in tax relief; the second 20% ($30,000) get $109; the middle 20% ($49,000) get $197; the fourth 20% ($76,000) receive $323; the next 15% ($119,000) get $504; the next 4% ($233,000) get $887; and the top 1% ($1.118 million) receive $2,518, or 53 times more than the cut received by the lowest earners.

Said the Wisconsin Budget Project: Three major tax cut packages passed by the Wisconsin legislature in the last year have delivered relatively little benefit to the lowest earners, who are struggling to make ends meet. In dollar amounts, the largest tax cuts went to the Wisconsin taxpayers who earned the most.”

The full lowdown — including colorful charts — can be found here.

Of course, I can already hear the squealing from Republicans — even with the windows tightly shut on their Bentley limos. (Okay, that one was uncalled for.)

You can’t have broad-based tax relief without giving more back to the wealthy, because the wealthy pay more in taxes! Far more! Socialist! Stop daydreaming about Sarah Palin on an Aleutian beachfront in a raccoon-skin bikini and endangered leatherback sea turtle flip-flops and face reality, sir!

And all that is true. Except for the facing reality part, of course.

The reality is that Scott Walker has not only cut taxes for the wealthy on the backs of teachers, prison guards, and other public workers, he’s also taken steps to make it harder for poor people to get ahead.

The Wisconsin Budget Project again: “The broad-based tax cuts the legislature passed don’t do much to help families that earn the least. To remedy this, lawmakers should strengthen the Earned Income Tax Credit and the Homestead Credit, which keep taxes low for people who have low incomes. The legislature cut both credits in 2011, resulting in low-income individuals and families paying $170 million more in taxes over the last four years.”

And while the individual making $1.1 million certainly will appreciate a $2,500 tax cut and may get around to spending it by and by, the person making 14-large is certain to pump his or her tax cut back into the economy. Why not ensure that that poor person’s (or public worker’s) disposable income is higher?

This is a familiar dance, of course. Republicans cut taxes — which everyone likes — and then Democrats point out that most of the gains go to the wealthiest taxpayers. Then Republicans counter that that’s only happening because they pay more to begin with, and a small percentage of a big number is greater than a small percentage of a little number. Hey, whatcha gonna do?

Well, the answer is to maintain the progressivity of our tax system, which tends to even the playing field.

Contrary to what many people may think, I have no problem with individuals accumulating large fortunes. Hard workers who take risks should be allowed to enjoy the fruits of their labor. Heck, I want Mary Burke to rake in even more untold millions so she can sell her house again in order to give the money to the homeless. But I do find it odd that we’re giving so much back to people who won’t spend it and don’t need it while giving next to nothing to people who desperately need it and will use it to stimulate the economy right away.

What’s more, the rich hardly need the help. That’s been made all too plain by French (oh no! French!) economist Thomas Piketty’s tectonic new book Capital in the Twenty-First Century, which has many on the right freaking out of late.

The gist of the book? As far as I can tell, it confirms the old truism that it’s a lot easier to make money if you already have money. (Which, if you’re following my train of thought, means the playing field is hardly level to begin with.)



Sam Pizzigati deftly summarizes Piketty at

The twentieth century’s incredibly disruptive world wars, Piketty argues, opened a unique window for egalitarian shifts in tax and other public policies.

But the mid-twentieth century, Piketty argues, represents a special case, and he spends a major portion of his Capital in the Twenty-First Century endeavoring to show why. His central theme: The rate of return from capital will generally tend to outpace economic growth, a relationship Piketty reduces to the formula r > g.

In plainer terms: “Wealth accumulated in the past grows more rapidly than output and wages.” Inevitably, writes Piketty, the entrepreneur “tends to become a rentier, more and more dominant over those who own nothing but their labor.” Eventually, “the past devours the future.”

In other words, the inequality train doesn’t need Scott Walker’s help to keep itself chugging along, but he’s going to shovel in a few ingots of coal anyway, just for fun.

Meanwhile, a majority of economists believe wealth inequality is currently holding back the U.S. economy (see this Associated Press survey), so Walker’s, et al., trickle-down jibber-jabber falls apart on close inspection as well.

The best and surest way to improve the economy is to create sufficient demand by ensuring that low-wage earners and the middle class have plenty to spend, not by giving a wad of folding money to people who already have more than enough.

It’s pretty obvious. So why do we have to keep explaining it over and over again?

Click here to sign up for the free IB ezine — your twice-weekly resource for local business news, analysis, voices, and the names you need to know. If you are not already a subscriber to In Business magazine, be sure to sign up for our monthly print edition here.