March 20, 2012
Moreover, that $259,000 average household income for the top 20 percent is 29 times the average household income of the bottom 20 percent, which is only $9,100 a year.
The citadel of liberalism that Obama carried 93-7 has a disparity of incomes between rich and poor that calls to mind the Paris of Louis XVI and Marie Antoinette.
Washington is a textbook case of the inequality that Obama says “distorts our democracy,” and it is the ideal place to prove that he is serious.
For Washington is Obamaville. The mayor is a Democrat. The city council is Democratic. There are more lawyers and lobbyists concentrated here than in any city in America.
Here we have the perfect test case—the most liberal city in the republic, with the greatest income inequality, where Obama’s political clout and personal popularity are highest. And there is no obstructionist Republican cabal to block progressive reforms.
If Obama and the Democratic Party will not use their power to close the inequality gap right here in their own playpen, how do they remain credible in Middle America?
How to proceed, if the left is serious about inequality?
Consider. The District of Columbia income tax reaches 8.5 percent after the first $40,000 in income. A 5 percent surtax takes that rate to 8.95 percent for incomes over $350,000.
Yet, half a dozen states have higher and more progressive income tax rates than that.
Obama should call on his allies in the city government to raise the district income tax to the 15 percent level New York had in the 1970s.
Since district income taxes are deductible against federal income taxes, this would translate into an actual top tax bite on the Washington rich of 9.75 percent. Is that too much to ask of true progressives?
The new revenue could be transferred to Washington’s working class and poor through tax credits, doubly reducing the district’s glaring inequality.
Republicans will argue that raising the district tax rate to 15 percent on incomes above $250,000 will precipitate an exodus into Maryland and Virginia, where the top tax rates are not half of that. Conservatives believe as an article of faith that tax rates heavily influence economic behavior.
But Obama, who has kept the U.S. corporate tax rate among the highest in the world and wants U.S. personal tax rates raised closer to European levels, rejects this Republican argument.
Has he the courage of his convictions?
When the district’s schools were desegregated in the 1950s, liberals fled. Let us see if they will stick around for a “progressive income tax” to reduce this unconscionable inequality between Kalorama and Spring Valley—and Anacostia and Turkey Thicket.