Numbers Behind the Tax Cut Compromise

The Sunday Globe ran an article in the Money & Careers section about how the Obama compromise on extending the Bush era tax cuts will affect families of different income levels.

Check out the full article: http://www.boston.com/business/taxes/gallery/taxdealbythenumbers/

Here's some telling data:
Population Segment by Income     Savings (as % of Income)
Bottom 20%                                   $3,342 (10%)
Middle                                            $3,246 (4.3%)
Top 20%                                        $6,538 (4.5%)
Top 1%                                          $6,788 (1.5%)
Top 0.1%                                       $92,658 (4.5%)

As you can see, these tax cuts aren't exactly progressive with the super rich getting a better deal than the middle or upper middle class.  This comes at a time when income inequality in the US, which has been growing for the past 40+ years and has especially accelerated since the mid-1980s, is reaching an all time high.  There's a lot of debate about the role the income disparity plays in the US, but in general countries that have a better education system than the US, or rate higher on health indicators, or have lower crime rates also have a more equal distribution of wealth and income.  The US' inequality is about the highest in the developed world.

The argument for extending the tax cuts is that raising taxes right now would halt any economic growth that we're seeing.  That is essentially true, economists agree that this compromise will help spur economic growth.  However, most of that growth and job creation will come from the extension of unemployment benefits and the reduction in the payroll tax, not the continued income tax cuts.  Additionally, there is a vocal group of Americans and legislators who feel that reducing the impending deficit should be our #1 priority.  Extending tax cuts doesn't do this.  Letting the tax cuts expire on earnings over $250,000, $500,000 or even $1 million would have been a reasonable way to let most of Americans continue to have money to spend and put back into the economy while using excess discretionary earnings to bring the budget into balance.  There need to be additional tax brackets above $250,000 to account for the incredible income growth and disparity that has occurred at the top end of the income scale.  There is always a lot of populist anger when people see sports stars or Wall Street bankers walking away with million and billion dollar salaries and bonuses.  It would be nice to see some anger directed towards the broken system that protects them and allows our economic growth to walk away without benefiting the vast majority of Americans for whom that growth has been so elusive.

[Additional source - http://en.wikipedia.org/wiki/Income_inequality_in_the_United_States]

The Real vs. Green Economy and Craig's List (and reading material)

Lately I've been spending a lot of time on Craig's List for various reasons. On Saturday, I bought a road bike from another guy in Somerville after a couple of weeks scouring for a good deal. I gave away an old video camera that had been gathering dust in my parents' basement to an art student who was excited to get it. I'm in the process of selling a couch from our apartment and am attempting to sell some Canon Mt passes as well as an extra mirror I have for a Civic Coupe.

What does this have to do with progressBoston you ask? A site like Craig's List is a key tool in living a sustainable lifestyle. The internet makes getting rid of your old junk much easier as there are now thousands of pairs of eyes to check it out instead of the dozens that would stop by a yard sale. As with yard sales though, one person's junk is another person's treasure and by re-selling it, you have extended the usable life of the object. This is great because it keeps it out of landfills and prevents the energy intensive process of making a new object. I feel that it also encourages a sense of community and allows people to help each other out in a way that can be lost in a modern, urban environment.

I recently joined a Sustainable Systems at Work discussion group. The first session outlined the need for corporations to take responsibility for their environmental impacts and Interface Global CEO Ray Anderson described himself as a "plunderer of the natural world." Most corporations take raw material from the Earth to create a product that will never return to the Earth in its original form. This is true of the company I work for and there must be a better way.

In many ways, our current economy has been built on this unsustainable practice. Our GDP grows and we feel 'richer' when we spend money on cheap items that will only be thrown away in a year or two. A site like Craig's List allows these items to extend their useful life (Obviously, this only works for a short period of time and products should be designed to return to their natural state which is why Cradle to Cradle is on my reading list). One of the benefits of the Great Recession is that it has placed more of a focus on person to person relationships and making due with what one has instead of a blatant consumerism. If this feeling can be extended to change our purchasing habits when we are making money then maybe there is hope for us to truly find a sustainable life model and protect our planet's resources. Capitalism and environmentalism are not naturally at odds (read: Natural Capitalism); we merely have to place a price on protecting the environment to make capitalism sustainable. Therefore, when someone says they are supporting the economy by purchasing something, it's important ask if it is a sustainable economy that they are supporting.