Reich: Why Is the Racial Wealth Gap Widening? And What Should Be Done to Reverse It?

[eridani]

http://www.nationofchange.org/news/2016/04/28/racial-wealth-gap-widening-done-reverse/

So what can we do to help all Americans accumulate wealth?

First, reform the tax system so capital gains – increases in the value of assets – are taxed at the same rate as ordinary income.

Second, limit how much mortgage interest the wealthy can deduct from their incomes.

Then use the tax savings from these changes to help lower-income people gain a foothold in building their own wealth.

For example:

1. Provide every newborn child with a savings account consisting of at least $1,250 — and more if a child is from a low-income family. This sum will compound over the years into a solid nest egg..

1. Allow families receiving public benefits to save. Today a family receiving public assistance can be cut off for having saved just $1,000. Raise the limits on what a family can save to at least $12,000—roughly three months’ income for a low-income family of four—and thereby put that family on the road to self-sufficiency.

[Travis_0004]

1. Mortgage interest is limited

If the loan is 1 million or more it can not be deducted. 1 million seems too high, but I dont have a problem with it.

Some very well off doctors are taking the deduction, but the average billionare isnt.

[Warpy]

2. Well, a couple of things are wrong with this

1. Interest rates always lag behind inflation so the purchasing power of that little nest egg will be less than the initial investment, even though the numbers go up every year.

2. That amount should have been raised decades ago, that $1000 being fairly generous in the 1960s when it was set. This points out the absolute necessity of indexing many things like wages and benefits to inflation. And no fucking around with the CPI market basket, either, cancel Greenspan's meddling and put that chuck roast back into it.

[Redness]

3. Why race?

The article is actually about increasing wealth inequality, and what can be done to reverse increasing wealth inequality. Wealth's (weak) correlation to whiteness, thus a racial wealth gap, is sufficiently explained by its permanence and prior correlation to whiteness. So while a few unquantified words are said about discrimination, race rightly does not inform the proposed solutions. And yet race is elevated to centrality in the headline, perhaps so that the author is not accused of being a Russian spy for talking about class too bluntly.

As for said solutions, they're essentially identical, the second being the first in installments. They are a move, however timid, away from the Christian charity approach to poverty, and toward the citizen's dividend, in which one does not have to prove one is miserable in order to reclaim one's share (or in this case a fraction thereof) of the commons.

[Punx]

4. Ugh...

The average rate for a savings account is around .30% right now, if not less. At that rate you would have to wait 240 years to double your money. Unless you gamble (say the stock market), there is no way based on current rates this is going to amount to much and as Warpy mentioned inflation will most likely be way ahead.

Maybe invest in mid term US Treasuries, but at that point maybe the US government should just guarantee a certain return above inflation.