New York State: Inequality & the Struggle to Redistribute Wealth

Part I: NY State Workers & StudentsAre Under Attack

Governor Cuomo wants to close a $9 billion deficit by:

1. Cutting $2.3 billion from Medicaid, reducing services for poor patients.

2. Cutting $2 billion in aid to K-12 schools, causing thousands of teachers and school workers to be laid off and resulting in larger class sizes and fewer services for students.

3. Laying off more than 10,000 state workers.

4. Forcing city and state workers to accept wage freezes, and to pay more toward health premiums and pensions – in short, a substantial wage cut for employees.

Less Money for CUNY• Governor Cuomo proposes to cut:

$95.1 million from the CUNY senior colleges $17.5 million from CUNY’s 6 community colleges

• In addition, Mayor Bloomberg wants to cut: $35 million from CUNY’s community colleges The total cut for the community colleges will be $52.5 million.

These cuts will result in less student mentoring and guidance, higher tuition, fewer full-time faculty, higher dropout rates, and larger class size!!!

Larger class size = less individual attention

Students Pay More and More of CUNY’s Costs

• In 1990, student tuition and fees paid for 21.4% of CUNY’s total budget.

• Today, tuition and fees pay for 41.9% of CUNY’s costs.

Part II: While the Rich Get Richer, Their Taxes Get Lower!

Home in Scarsdale, NY

The richest New Yorkers have received a bigger and bigger share of total state income

Part of NY State income that goes to the richest 1% of New Yorkers

1980 1990 2007

10% 17% 35%

Of all 50 states, New York has the most unequal distribution of income

• The 35% of income earned by the richest 1% is 50% higher than the 23.5% level for the top 1% nationally.

• The top 5% of income earners in NYS took in 49.4% of all income in 2007.

So the wealthiest 5% of NY residents have almost the same amount of income as the other 95%!!

While the rich were getting richer in NY State, their taxes were being lowered from 15% in the 1970’s to

under 7% by the 1990’s.

Between 1998 and 2000, the NY State legislature – which received millions in campaign contributions from business -- lowered corporate taxes by $3 billion over a 5-year period.

Table of campaign donations and resulting tax benefits to NYS corporations

Total Contributions

Tax Breaks2002—2003

Tax Breaks2001 -- 2005

Banks $1.1 million $86 million $320 million

Insurance $2.1 million $60 million $250 million

Other Corporations

$10.5 million $592 million $2.4 billion

Total $13.6 million $738 million $3 billion

Of the 25 largest U.S. cities, NYC has the largest gap between rich and poor

Income is even more concentrated at the top in NYC than in NYS

Part of NYC income earned by richest 1%

1980 1990 2007

12% 20% 44%

The U.S. has more billionaires than any other country. NYC has more billionaires than any other city.

According to Forbes, there are currently 60 billionaires living in NYC (65 in NY State)

Richest NYC Billionaires Personal Worth(in billions)

Business

David Koch 21.5 Oil and gas

Michael Bloomberg 18 Business information

George Soros 14.2 Hedge funds

John Paulson 12.4 Hedge funds

Carl Icahn 11 Leveraged buyouts

Ron Perelman 11 Leveraged buyouts

James Simons 8.73 Hedge funds

Rupert Murdoch 6.2 Media empire

Samuel Newhouse 6.2 Media empire

It’s Not Just Billionaires

New York State has 44,000 millionaires, half of whom live in New York City.

NYC is home to many of the most profitable banks & investment firms in the world

Goldman Sachs paid $16.2 billion in bonuses in 2010 ($498,000 per employee on average)

2007: CEO Lloyd Blankfein got $53 million in pay & bonuses

In 2009, the median income for the wealthiest 5% of Manhattan residents was $857,000. This top group had TWICE the total income of those

in the bottom 60%!

Manhattan Penthouse

Meanwhile, in the same state . . .• The bottom 50% of earners in NYS had 13.9% of total

income in 1990, but that fell to 9.1% by 2007.

• The poverty rate in NYS increased from 14.2% in 2008 to 15.8% in 2009. That’s 3 million people living in poverty.

Crumbling Walls in a Bronx Apartment

Federal taxes on the wealthy have fallen dramatically over the years.

Top marginal tax rate on the very wealthy (70% in 1980, 35% today)

If the income of America’s top 13 hedge fund managers had been taxed as ordinary income last year, rather than as capital gains (taxed at only 15%), the extra revenue could have paid for 300,000 more teachers.

Money for schools and other social programs is being cut, after our tax money bailed out Wall Street banks

and giant firms like AIG and GM

Both major parties have voted to cut social programs rather than raise taxes on the rich or cut military

spending.

Part III: Fight to Redistribute Wealth

To pay for the services we need – schools, hospitals, day care, transit – and for livable wages and benefits (including pensions and medical coverage) we should demand a radical redistribution of wealth by:

1. Sharply increasing federal, state and local taxes on the very wealthy.

2. Sharply increasing taxes on large corporations, including the big banks and investment firms.

3. Ending all spending on wars of occupation –including the “oil wars” in Iraq and Afghanistan. Starve the bloated military-industrial complex.

Extend New York State’s “Millionaire’s Tax”

In 2009, the NYS legislature passed a small personal income tax surcharge on the wealthiest residents:

• For households earning over $300,000, the marginal tax rate increased from 6.85% from 7.85%. This higher rate applies only to income over $300,000.

• For households earning over $500,000, the marginal tax rate increased from 6.85% to 8.97%. The new top rate applies only to income above half a million.

• 75% of the taxes taken in by the surcharge was paid by people earning more than $1 million a year.

Andrew Cuomo wants the “millionaire’s tax” to expire on December 31, 2011

• However, extending the surcharge would add $1 billion to state revenue in fiscal year 2011-2012.

• Extending the surcharge would add $5 billion in fiscal year 2012-2013.

• The extra revenue would lower the state deficit and reduce cuts to education and health care.

• 64% of New Yorkers want the surcharge on high incomes to be extended. (Marist poll, 2/11)

When we look at all NY State taxes – including property and sales taxes – the wealthy pay a

smaller part of their income than middle-income and low-income workers.

Restore the tax on Wall Street transactions

A Stock Transfer Tax has been law since 1905.

• The tax is no more than 5 cents per traded share, with a maximum of $350 per transaction. A billion shares are traded daily.

• However, since 1981, the tax has been 100% rebated to the stock buyers.

• Last year, the rebate was worth $14.5 billion.

• If 50% of the tax was rebated, the state would have $7.2 billion annually in additional revenues.

If we add the revenue from the millionaire’s tax to that of the stock transfer tax, the extra revenue would entirely eliminate the deficit and provide a surplus to be used to improve schools, mass transit and other services.

Other ways to raise revenue• Impose a higher tax on Wall Street bonuses.

• Close the tax loopholes that benefit hedge fund and private equity managers.

• In the 1970’s, the top state personal income tax rate was 15%, but it was reduced by Governor’s Cuomo and Pataki to 6.85%. Raising the rates on those making a million dollars or more a year would add billions in revenue.

THESE PROPOSALS WILL BE FIERCELY OPPOSED BY THE VERY WEALTHY!

Part IV: Who We’re Up AgainstThe billionaires and millionaires in the U.S. – the

owners of big companies and banks – use a fraction of their tremendous wealth to:

(1) Finance and control the agenda of the major political parties.

(2) Spend billions to hire lobbyists to advocate for pro-business legislation.

(3) Fund think-tanks (e.g., Manhattan Institute) to write reports sympathetic to big business interests.

The Wealthy Control The GovernmentThe owners of the big corporations control politics at the

federal, state and city level by:

• Donating billions to the campaigns of politicians, electing those who are most pro-business, and punishing those who are not as friendly to business needs.

• Hiring thousands of full-time lobbyists who “help” elected officials write laws regulating the companies the lobbyists represent.

• Promising lucrative jobs to politicians and regulators when they retire from their government positions.

The golden rule:“He who has the gold makes the rules.”

Some media commentators acknowledge that a wealthy oligarchy controls U.S. politics

Bob Herbert, New York Times, 1/12/11

• “While millions of ordinary Americans are struggling with unemployment and declining standards of living, the levers of real power have been all but completely commandeered by the financial and corporate elite. It doesn’t really matter what ordinary people want. The wealthy call the tune, and the politicians dance.”

• “So what we get in this democracy of ours are astounding and increasingly obscene tax breaks and other windfall benefits for the wealthiest, while the bought-and-paid-for politicians hack away at essential public services and the social safety net, saying we can’t afford them.”

Andrew Cuomo’s campaigns for Attorney General & Governor have been bankrolled by wealthy real

estate magnates and Wall Street investors

Andrew Cuomo’s Rich Friends• After leaving the Clinton administration as secretary of

HUD, Cuomo went to work for real estate magnate Andrew Farkis, who paid Andrew $2.5 million for 3 years of work.

• Farkis and his associates have given Cuomo $800,000 in contributions for his electoral campaigns.

• Farkis served as Cuomo’s finance chairman, reaching out to other wealthy real estate figures for campaign donations.

Billionaires & Millionaires for Cuomo Some of the NYC elite who have contributed to

Cuomo’s campaigns

• Real estate executives Bruce Ratner, Richard Lefrak, and Stephen Ross

• Investment banker Felix Rohatyn

• Private equity manager Peter Peterson (famous for lobbying for reductions in social security and Medicare benefits)

• David Koch (well-known conservative, who donated $74, 000 to Cuomo)

The rich own the big newspapers and TV stations and use them to divide public from private workers.

Business Lobbying Groups

One such group is the Committee to Save New York:

• CSNY is a project of the Real Estate Board of NY (REBNY), which represents wealthy real estate interests in NYC

• REBNY officials – like Steven Spinola and Rob Speyer – sit on the board of directors of CSNY

• 26 members of REBNY’s board each donated $10,000 or more to Andrew Cuomo’s gubernatorial campaign.

• REBNY has lobbied for years for lower taxes on big business and high-end earners.

• Real estate magnates like Rob Speyer contributed $10 million for CSNY’s publicity campaign to support Cuomo’s plan to cut taxes on the wealthy, lay off state workers and reduce benefits to public employees.

Part V: Our Response60,000 Wisconsin workers rally at the State Capitol to protest

anti-labor legislation

1. Organize mass rallies and strikes against layoffs, cuts in education and other services, and attacks on

the benefits and rights of public workers.

2. Ally with students fighting against tuition hikes and deteriorating learning conditions.

Students & Faculty Unite

Demand free college education(CUNY charged no tuition until 1976)

3. Build strong solidarity between private sector and public sector workers.

CUNY faculty and students unite with Stella D’Oro strikers & other workers in a rally at City Hall.

Without working class solidarity, private and public sector workers will be picked off separately

4. Explain and fight against the racist aspect of layoffs, foreclosures, cuts to education and increasing poverty.

Support Citizenship for Undocumented Workers

5. Build international solidarity: support the struggles of workers & youth, from Puerto Rico to Egypt

Mass uprisings in Egypt & Tunisia inspire people throughout the world

Students & workers in Puerto Rico lead militant struggle against austerity

“In defense of our jobs and the rights of the people.”

Workers’ Struggles Know No Borders!

6. Tell the truth about capitalism – in our schools, in the workplaces, in our unions. Begin to imagine

alternatives.

Explain how slashing jobs & diminishing pay and benefits today, will hurt students tomorrow.

Is another world possible? A world without:

Joblessness and job insecurity, homelessness and lack of health care, poverty, racism and sexism, job dissatisfaction, exploitation, wars, imperialist domination, alienation, hunger, national rivalry, inequality, homophobia, illiteracy, ecological destruction, global warming, . . .

Our future depends on what we decide.

Important Sources

1. Grow Together or Pull Further Apart? Income Concentration Trends in New York, Fiscal Policy Institute, December 13, 2010

2. Five Key Facts about the Stock Sales Tax, Working Families Party

3. Robert Reich, “The Republican Strategy,” Huffington Post, February 18, 2011