“Shared sacrifice” is killing the middle-class economy

Delaware United | by Dustyn Thompson

Let’s be straightforward about something in Delaware today. The middle and working class, and indeed even people living in absolute poverty, are getting ready to be taken advantage of once again, and it’s important to understand how and why. It’s a relatively simple matter. The powers that be know that the middle and lower classes are so busy trying to survive that we probably will not become politically involved enough to stop an agenda against our interests.

Our Governor is proposing a budget that is a matter of, and I quote, “shared sacrifice.” He says that to deal with our $395 million state deficit, we all must sacrifice more money in tax dollars and services. If all were fair, and our state tax codes were fair tax codes, maybe it would be a shared sacrifice. However, in our state, that is just not the case. So what is really happening here is not a “shared sacrifice;” despite what Governor Carney calls it. Rather, it continues a tax code benefiting very wealthy people in our state, while balancing a gross deficit on the backs of hard-working middle-class families, many of whom have sacrificed enough for this state, and are barely making it now. Meanwhile, people making millions of dollars per year pay comparatively very little in state taxes. This is unacceptable, but it is fact. Some of the wealthiest families in the region live here in Delaware, but you wouldn’t know it if you walked down the streets of many of our cities. Some of the largest corporations in the country claim residency in our state, but you would never know that, either.

It is unacceptable to me, and hopefully to many of you, that while this grotesque level of income inequality persists, our Governor tells the middle-class workers of this state that we are not paying our fair share. Let’s think for a minute about what he proposes, and then consider all our options and what they mean for our economy.

Governor Carney proposes a tax hike on all brackets, from lowest earners to top earners. Currently, the top tax bracket is staggeringly low at $60k per year. People making millions of dollars per year pay the same tax rate as a lower-middle-class earner making $60k a year. This fact alone should tell you why our economy is faltering in such a monumental way. We tax working-class people, many of whom are paying outrageous costs in childcare, student debt, medical expenses, and other living debts, at the same rate as someone making $5.5 million dollars per year (like the President of Wilmington University). Any decent economist will tell you that when you give middle-class people more money in their paychecks, they will spend it and help grow the local economy. However, when you give more money to very wealthy people, they invest it in the global market, further increasing their wealth and contributing little to the local economy. This is exactly what is happening in Delaware today, and exactly what our current Governor proposes we continue to do.

What are our other options? We can sit by and allow the Governor to continue to drain the middle class while allowing his campaign contributors to gain more and more wealth at the direct expense of our state’s economy, or say simply and loudly that enough is enough. Right now, a bill is being presented in the House by Representative John Kowalko from Newark (HB 109). The bill would lower taxes on middle-, lower-, and working-class families while adding two tax brackets for Delaware’s top income earners. This is exactly how you grow an economy, by putting more money into the hands of those who will spend it locally, not by allowing more money to be hoarded by millionaires.

By implementing truly progressive tax reforms, like those proposed by Rep. Kowalko, and telling the millionaire class and massively-profitable large corporations, most of which offer few or no employment opportunities in Delaware, that they must pay their fair share, we can stop the rapidly growing “drug economy” perpetuating itself across our state. We can re-introduce a working- and middle-class-centered economy to benefit the entire state and lift people out of poverty by expanding job growth. Study after study shows that when the middle class does better, the economy does better, more jobs are created, and people achieve a better standard of living. Furthermore, when we talk about racial, criminal, and economic justice, we need to understand, just as Dr. Martin Luther King Jr. understood, that these are not separate issues, but multiple facets of the same issue. Without improving the economy to work for all people and not just the very wealthy, we will never see improvement in other social areas. When you deny people the opportunity to work and earn a decent living, you deny them success, often leading to drugs and other destructive acts that cause social downturn as a whole. We cannot expect to break the cycle of poverty and an expanding “drug economy” without correcting systemic economic inequality problems in our state, and Governor Carney’s tax proposal is a step in the wrong direction.

To help make sure that our State Legislature passes Rep. Kowalko’s bill to stop tax hikes on the middle class, please ask your State Representative and Senator to support HB 109. If you don’t know where to start, please contact Delaware United on Facebook, or at delawareunited4all@gmail.com.

For added benefit, and proof of this absurd tax policy here is the increases for the taxes as proposed by Governor Carney (notice that the upper bracket above $60k has one of the lowest increases, while the lower income brackets, between $10-25k a year, see the highest):

Annual income — Current rate — Proposed — Change

$0 – 2,000 — 0 percent — 0 percent — 0 percentage points

$2,001 – $5,000 — 2.2 percent — 2.4 percent — 0.2 percentage points

$5,001 – $10,000 — 3.9 percent — 4.2 percent — 0.3 percentage points

$10,001 – $20,000 — 4.8 percent — 5.2 percent — 0.4 percentage points

$20,001 – $25,000 — 5.2 percent — 5.5 percent — 0.3 percentage points

$25,001 – $60,000 — 5.55 percent — 5.7 percent — 0.15 percentage points

$60,001 and up — 6.6 percent — 6.8 percent — 0.2 percentage points

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