United Nations says solving extreme inequality, poverty will require USA to ‘get real about taxes’

Deliberate public policy decisions, including a cavalier and unrealistic approach to taxation, are driving preventable inequality and poverty in the United States.

That’s according to a recently released report by the United Nations’ Special Rapporteur on Poverty. The report (here), states that the United States is a country of extreme economic inequality thanks to a series of deliberate policy choices made by the country’s elected officials.

“The United States is a land of stark contrasts,” the report states. “It is one of the world’s wealthiest societies, a global leader in many areas, and a land of unsurpassed technological and other forms of innovation. Its corporations are global trendsetters, its civil society is vibrant and sophisticated and its higher education system leads the world. But its immense wealth and expertise stand in shocking contrast with the conditions in which vast numbers of its citizens live.”[1]

Those conditions are described in detail in the report and summarized below:

  • 40 million Americans live in poverty, including 18.5 million in “extreme poverty” and 5.3 million in “Third World conditions of absolute poverty,” defined as living on less than $4 per day.
  • The United states has the highest youth poverty rate, the highest infant mortality rate and one of the lowest levels voter registration among members of the Organization for Economic Cooperation and Development.
  • United States citizens live shorter and sicker lives compared to those living in all other rich democracies, as well as the highest obesity levels in the developed world.
  • Americans are incarcerated at a higher rate than any other nation in the world.

Poverty in the United States is the result of deliberate decisions by policymakers in several areas, including voting rights, the social safety net, criminal justice, drug addiction, and environmental protection. Across these policy areas, the report finds routine discrimination and counterproductive measures that perpetuate, rather than mitigate, poverty. For example, the report notes the “shameful” reality that Black Americans have significantly higher poverty, infant mortality and unemployment rates than Whites; earn less than two-thirds what their White equivalents earn; and are 6.4 times more likely than Whites to be imprisoned.

The report recommends a raft of solutions to poverty — from recognizing the right of all Americans to health care to ending those laws and practices that make being poor a crime. But its final recommendation is perhaps the most fundamental, and offers a path forward to solve the poverty problem unique to the United States among developed nations.

The obsession with cutting taxes needlessly deprives the country of the means to address the entirely solvable problem of poverty. The recently enacted Trump tax plan is illustrative; In delivering $1.5 trillion in tax breaks, primarily to the wealthy, the cuts with one stroke will increase income inequality and create justification for cuts to social programs that mitigate the harmful effects of poverty.

From the report:

“At the state level, the demonizing of taxation means that legislatures effectively refuse to levy taxes even when there is a desperate need. Instead they impose fees and fines through the back door, some of which fund the justice system and others of which go to fund the pet projects of legislators. This sleight-of-hand technique is a winner, in the sense that the politically powerful rich get to pay low taxes, while the politically marginalized poor bear the burden but can do nothing about it. There is a real need for the realization to sink in among the majority of the American population that taxes are not only in their interest, but also perfectly reconcilable with a growth agenda. A much-cited IMF paper concluded that redistribution could be good for growth, stating: “The combined direct and indirect effects of redistribution — including the growth effects of the resulting lower inequality — are on average pro-growth.”

As MECEP often notes, taxes are the way that all of us come together to pay for the things that help families and communities thrive. As long as policymakers remain more interested in cutting taxes than eradicating poverty, the United States can expect to continue its outlier status among developed countries.

Click here to read the full U.N. report.

[1] The Special Rapporteur met with government officials at the federal, state, county and municipal levels, including members of Congress. He also interviewed academics and Americans living in poverty. During his investigation, he visited California, Alabama, Georgia, Puerto Rico, West Virginia and Washington, D.C.