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September 26, 2020

Tax the rich

Opinion

September 26, 2020

Families’ access to wealth has largely determined how they’re affected by Covid-19, with wealthier and higher-paid families mostly avoiding the worst health and economic effects. This divergence reflects both racial and class inequities. As states face sizeable budget shortfalls due to the pandemic, they should raise taxes on wealthy people to preserve funding for crucial priorities such as education, to fund increased health spending to contain the pandemic, and to boost cash and other assistance to help struggling families make ends meet during the crisis.

High earners have been much less likely to lose jobs than other workers due to Covid-19. Employment rates have dropped by only about 1.6 percent since January for people earning over $60,000, while they’ve fallen more than 16 percent for workers earning less than $27,000, according to Opportunity Insights.

Wealth inequality is already high and, much like high-wage jobs, several sources of wealth have been spared the worst of the pandemic’s economic damage. The stock market is near its pre-pandemic peak, which mainly helps wealthy families, as over 90 percent of capital gains go to families earning over $163,000, and stock market investment rises steeply with income. Home values in many areas across the country also rose between March and June, including luxury home values. That means that the net housing wealth of many homeowners, who tend to be both wealthier than the overall population and disproportionately white, has risen despite the downturn.

Because 87 percent of wealth is already held by white households, these trends have disproportionately benefitted white families, while many families of color have encountered further economic barriers during the crisis.

The economic fallout has hit Black, Latino, Indigenous, and many immigrant people particularly hard. These disproportionate impacts reflect harsh, longstanding inequities – often stemming from structural racism – in education, employment, housing, and health care that the current crisis is exacerbating. Because people of color, particularly women of color, are overrepresented in low-wage jobs, they are likelier either to have lost jobs and income due to the pandemic, or to work in a front-line, essential occupation and risk exposure to Covid-19 and its potentially devastating health consequences. Furthermore, 1 in 5 renters is now behind on rent, with Black and Latino renters facing the highest rates of such hardship.

The recession caused by Covid-19 has slashed states’ revenues. The resulting budget shortfalls are large, affect nearly every state, and are already driving deep, painful cuts to education among other services.

Excerpted from: ‘States Should Tax Wealth to Respond to COVID-19’

Commondreams.org