Conn Carroll: The income inequality factor liberals can't talk about
"In the last few decades, the average income of the top 1 percent has gone up by more than 250 percent to $1.2 million per year," Obama said. "Now, this kind of inequality -- a level that we haven't seen since the Great Depression -- hurts us all."
But do higher taxes on the rich reduce income inequality? Not according to a quick comparison of state inequality data and their corresponding tax codes.
Just take a look at the Center on Budget and Policy Priorities' recently released report "Pulling Apart: A State-by-State Analysis of Income Trends." The CBPP used Census Bureau data to determine which states had the largest gap between the bottom fifth of income earners and the top 5 percent of earners.
According to CBPP, the states with highest levels of income inequality are: 1) Arizona, 2) New Mexico, 3) California, 4) Georgia and 5) New York. The report identifies a "more progressive" tax system as one way states can battle inequality, but it never tells us which states have the most progressive tax codes.
As a matter of fact, California and New York have two of the most progressive tax systems in the country, according to a separate report by the Institute on Taxation and Economic Policy.
Even before California raised its income tax rates on the rich this past November, the top 1 percent of Californians already paid 9.8 percent of their income in state taxes (including sales, property and income taxes). Only New Jersey and Vermont had higher effective rates on the rich. And New York was just behind California at 9.4 percent.
So if taxing the rich doesn't prevent income inequality, what does? Many on the Left, including the New Republic's Timothy Noah, believe that stronger unions can help reduce income inequality, but state-by-state comparisons don't help that case either.
New York, California and New Mexico are all forced-unionization states, meaning if you take a job with a unionized firm, you must join the union. Meanwhile the three states with the least income inequality, 1) Iowa, 2) Utah and 3) Wyoming, are all right-to-work states, meaning where workers have the right to choose whether or not they want to join a union.
So if low taxes and weak unions aren't causing income inequality, what is? The CBPP identifies "more intense competition from foreign firms, a shift in the mix of jobs from manufacturing to services, and advances in technology that have changed jobs" as causes. And those are all huge factors.
But let's take a look at that list of high-income-inequality states again. What do California, Arizona and New Mexico all have in common? I'll give you a hint: Texas comes in seventh on the high-income-inequality state list.
That's right: The three states with the highest income inequality also all share a border with Mexico. But what about New York? Or Georgia? Or Illinois (which is the sixth-most-unequal state)? They are all hundreds of miles away from Mexico.
Well, it turns out that all of those states have huge illegal immigrant populations too. According to the Pew Hispanic Center, every one of the top five unequal states also is among the top 10 states with high illegal immigrant populations.
Take Georgia, where, according to the Department of Homeland Security, the illegal immigrant population doubled between 2000 and 2011. As a result, Georgia now has the eighth-highest per capita illegal immigrant population in the country.
None of this means that mass deportation is the solution to our income inequality problems. That would be an inhumane, expensive and politically suicidal policy option.
But far too often, when income inequality is discussed, illegal immigration is never mentioned. That needs to change.
Conn Carroll (ccarroll@washingtonexaminer.com) is a senior editorial writer for The Washington Examiner. Follow him on Twitter at @conncarroll.
http://washingtonexaminer.com/article/2515360#.UMSYPrahUeN
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