Posts Tagged ‘United States’

Ivies

Back in graduate school, I was a member of SUPE, Students United for Public Education. We conducted a study in which we showed that the very rich and seemingly private Harvard University received more public monies than our own poorly funded and very public University of Massachusetts-Amherst.

A new study, by Open Books (pdf), broadens that study by investigating the amount of public monies that are funneled to the eight Ivy League schools: Harvard, Princeton, Yale, Cornell, Columbia, Dartmouth, Penn, and Brown.

The amount of taxpayer-funded payments and benefits—$41.59 billion over a six-year period (FY2010-FY2015)—is by itself extraordinary, more money ($4.31 billion) annually from the federal government than sixteen states.

But we’re also talking about universities whose endowment funds (in 2015) exceeded $119 billion, which is equivalent to nearly $2 million per undergraduate student. In FY2014, the balance sheet for all Ivy League colleges showed just under $195 billion in accumulated gross assets—equivalent to $3.35 million per undergraduate student. The Ivy League also employs 47 administrators who each earn more than $1 million per year (two executives each earned $20 million between 2010 and 2014). And, in a five-year period (2010-2014), the Ivy League spent $17.8 million on lobbying, which included issues mostly related to their endowment, federal contracting, immigration and student aid.

The bottom line is clear: Ivy League are nominally private universities that receive vast amounts of public financing, much more than the public colleges and universities that educate most students in the United States.

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I continue to maintain that Congressional Republicans will stick with President Donald Trump until they get their favorite policies enacted—or until Trump’s missteps and declining popularity stand in the way of their getting what they want.

And one of the things they want is tax reform—specifically, a cut in corporate taxes.

Here’s the problem: U.S. corporations aren’t taxed too heavily. They’re taxed too little.

As is clear from the chart above, corporate profits (as a percentage of GDP) have risen dramatically since the mid-1980s—from 5.8 percent in 1985 to 11.8 percent in 2016.

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However, as I have shown before, even while individual taxes have remained relatively high (as a percentage of federal tax receipts), taxes on corporate income fell throughout the postwar period and have remained relatively low (at about 10 percent federal tax receipts) since the mid-1980s.

Here’s what the Economic Policy Institute recommends in a recent report:

If we wish to reform corporate tax policy to benefit the vast majority of Americans—and not just a wealthy few—we should not be talking about lowering corporate tax rates or offering other tax breaks to corporations; we should instead be focusing on closing loopholes in the system that have eroded the corporate income tax base, to ensure the corporate sector is paying its appropriate share of taxes.

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Yesterday, I discussed new findings concerning the fact that, while the United States is getting richer every year, American workers are not.

That same problem is showing up in American cities, which since 1970 have experienced a “hollowing-out” of the middle-class.

The graphic above shows the change in income distribution in 20 major U.S. cities between 1970 and 2015. In 1970, each of these cities exhibits a near-symmetrical, bell-shaped income distribution—a high concentration of households in the middle, with narrow tails of low and high-income households on either end. By 2015, the distributions have grown more polarized: fewer middle-income households, and more households in the low-income and/or high-income extremes.

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Chicago is a good example of what has taken place in urban areas across the country. It boasted a thriving manufacturing sector in 1970. As illustrated in the map on the left above, incomes were lowest in the city center, growing higher radially outward toward the city’s borders. And while Chicago was largely successful in transitioning away from manufacturing to a service-based economy by 2015, that transition created a heavy concentration of wealth in the business/financial district and marked decline in most of the surrounding areas (as indicated in the map on the right).

To listen to the champions of American capitalism, cities represent the solution to growing inequality and the decline of the middle-class associated with the “old” manufacturing economy. But, as it turns out, urban centers are characterized by the same kind of grotesque inequalities and hollowing-out of the middle-class as the rest of the country.