President Obama has been criticised for plans in his State Of The Union Address aimed at introducing tax benefits for childcare, college education and retirement.
His crime? The initiatives would be funded by raising funds from banks and rich families and pumping the estimated $300bn. raised into initiatives which would be popular with America’s middle classes.
The money would be raised by imposing a new levy on the US’s top financial institutions, raising the top rate of capital gains tax to 28%, and closing the loophole that lets wealthy families pass on assets without paying tax. The White House claims that the capital gains and inheritance tax changes would almost exclusively effect the wealthiest 1% of Americans and that 80% of the impact would fall on the much narrower 0.1% – those with an annual income of more than $2m.
However the proposals are unlikely to pass a Republican controlled Congress who claim such changes would slow economic growth.
The President’s plans coincide with a report from Oxfam that suggest the wealthiest 1% will soon own more than the rest of the world’s population. The report was launched ahead of the annual World Economic Forum meeting in Davos which Oxfam executive director Winnie Byanyima will co-chair who said: “Do we really want to live in a world where the one per cent own more than the rest of us combined? The scale of global inequality is quite simply staggering and despite the issues shooting up the global agenda, the gap between the richest and the rest is widening fast.
“In the past 12 months we have seen world leaders from President Obama to Christine Lagarde talk more about tackling extreme inequality but we are still waiting for many of them to walk the walk. It is time our leaders took on the powerful vested interests that stand in the way of a fairer and more prosperous world”.
“Business as usual for the elite isn’t a cost free option – failure to tackle inequality will set the fight against poverty back decades. The poor are hurt twice by rising inequality – they get a smaller share of the economic pie and because extreme inequality hurts growth, there is less pie to be shared around”.
Oxfam is calling on governments to adopt a seven point plan to tackle inequality:
• Clamp down on tax dodging by corporations and rich individuals
• Invest in universal, free public services such as health and education
• Share the tax burden fairly, shifting taxation from labour and consumption towards capital and wealth
• Introduce minimum wages and move towards a living wage for all workers
• Introduce equal pay legislation and promote economic policies to give women a fair deal
• Ensure adequate safety-nets for the poorest, including a minimum income guarantee
• Agree a global goal to tackle inequality
With regards to Northern Ireland a report by the Joseph Rowntree Foundation in March 2014 shows that after inflation, incomes for the poorest fifth fell by 16% (£39 a week lower) – compared to 5% in the rest of the UK on average – between 2006/07 and 2011/12 (the latest available data). Average households saw their incomes fall by 9% over the same period.
The Northern Ireland Fuel Poverty Coalition found that Around 300,000 households in Northern Ireland cannot afford to heat their homes.
Monday’s Budget Statement by Simon Hamilton announced that a further £28.8 million of Financial Transactions Capital has been allocated by the Executive meaning that £40.9 million in total is available for “much needed investment in infrastructure such as energy efficiency”.
The budget itself does not provide the mechanisms to explicitly tackle the myriad of poverty issues highlighted by Oxfam.
Is there an opportunity to establish a mechanism to use a proportion of the Northern Ireland Investment fund to begin to tackle Fuel Poverty – an issue that affects 42% of the population compared with only 15% in England?
(Originally published on Slugger O’Toole)