A few days after print publication, Knight's syndicated newspaper column, which moves twice a week, will be posted. The most recent will appear at the top.

Wednesday, June 24, 2015

Are we in an economic Civil War? Or Reconstruction?

Bill Knight column for Mon, Tues., or Wed., June 22, 23 or 24

Considering the fiscal chasm between the top and the rest of us – the 1/10th of 1 percent vs. most Americans – it’s not ridiculous to see financial disparities as an economic Civil War. But developments – ranging from the Strange Bedfellows from the Right and Left who tried to stop the Trans-Pacific Partnership schemes and the Export-Import Bank, to the increasing realization by small businesses that they have more in common with their employees than with giant corporations – could point to reform, rebuilding an economy that works for all.

Maybe an economic Reconstruction.

Sure, battles remain.

States where Republicans took control by using wedge issues to persuade people to vote against their own economic interests are gutting labor rights, cutting pay through plots like Right To Work (for less) laws and the elimination of Prevailing Wage standards, and targeting no-fault workers compensation systems or civil lawsuits, which would hurt victims and plaintiffs juries agree with.

Such attempts are even happening in Illinois, where the Democratic legislature is resisting Republican Gov. Bruce Rauner’s anti-labor, pro-business “turnaround agenda.” But besides the first-term governor’s clumsy attempt to cater to his wealthy peers, the way things are already enriches the wealthy and powerful.

State-assisted schools are woefully underfunded. Local districts get state revenues based on local property values, so places with valuable real estate, like suburban Chicago, spend about three times what the Illinois State Board of Education sets as schools’ “foundation level,” $6,119 per student per year – which is less than what Districts receive anyway.

And Rauner wants to freeze property taxes that they and less-well-off schools rely on.

Further, property owners in rich areas benefit not only from well-funded schools; they also write off their property taxes. The wealthier they are, the more they don’t contribute.

And speaking of taxes, Illinois’ regressive, flat-rate 3.75 percent income tax means that billionaires, construction workers and window washers all pay the same rate. Also, Illinois corporations – which used to pay taxes based on the size of their work force and value of their property – now pay only on their net income from sales in Illinois, if anything. Various loopholes permit most Illinois corporations to pay no taxes, one reason the share of state receipts from corporations fell from more than 20 percent to about 15 percent.

From progressive taxation to safety regulations, lawmakers once passed measures to legislatively mediate between everyday folks and the 1%, who often care little beyond themselves, according to studies such as Berkeley professor Paul Piff’s “Wealth and the Inflated Self: Class, Entitlement and Narcissism.” That research shows that the affluent have a sense of entitlement, and it’s grown in recent years. Further, while reactionary politicians repeat the fallacy that many Americans are lazy and don’t want to work, the real malingerers are the super-rich, who use exemptions, subsidies, tax havens and other methods to avoid taxes, costing the nation more than $2 trillion a year – more than the cost of Social Security and Medicare combined – points out Paul Buchheit, author of “American Wars: Illusions and Realities.”

Such unfairness is starting to dawn on people. For instance, Republican proposals to cut corporate tax rates have sparked a push-back by small businesses.

“Given the option – this or nothing – nothing is better for our members,” the director of legislative affairs at the GOP-leaning Associated Building Contractors, Liam Donovan, told Bloomberg News.

Why? It’s not in the interest of members of the National Federation of Independent Businesses and similar small-business advocates.

“Small businesses won’t benefit from such a tax deal because most are ‘S’ corporations and partnerships, known as ‘pass-throughs’ since business income flows through to them and appears on their owners’ individual tax returns,” said economist and former Labor Secretary Robert Reich. “It represents a split in Republican business ranks.”

Again, it’s a battle. Big Business’ priorities, unfortunately, remain stuck with selfishness and short-term profits rather than social responsibility and long-term consequences.

Last month, Chief Executive Magazine surveyed more than 500 CEOs asking them to rank “business-friendly” states, and six low-wage Southern states, plus five of the 11 with the highest poverty rates, were in the Top 10. First was Texas, the state with the highest percentage of residents poor enough to receive federal assistance despite being employed full-time. Therefore, business benefits while taxpayers foot the bill.

People are starting to object, organize and demand change. Some state legislatures, city councils and other responsive governments are raising wages, considering paid sick days, and adding benefits people need. And even Main Street Republicans (voters in conservative strongholds including Arkansas, Nebraska and South Dakota last year supported raising minimum wages) are starting to appreciate paying workers more so they can become the consumers the economy needs.

Reconstruction could be at hand.

[PICTURED: Illustration from -- the National Council of Negro Women.]

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