Record Americans live on food stamps amid record number of millionaires

Last year basically, but take a look, maybe someone could update these stats .. 

by George Bao

LOS ANGELES, Aug. 7 (Xinhua) -- The United States has seen a record number of citizens living on food stamps while the number of millionaires has also reached a record high.

The two records have shown that the United States is further polarized in the possession of wealth.

Government statistics show that the month of May posted a new food stamp record as over 40.8 million Americans rely on the government for their food. That means one out of eight Americans rely on government-provided food stamps for a living. The figure is projected to rise to 43.3 million in 2011.

Recipients of Supplemental Nutrition Assistance Program subsidies for food purchases jumped 19 percent from a year earlier and increased 0.9 percent from April, the U.S. Department of Agriculture said in a statement on its website. Participation has set records for 18 straight months.

Meanwhile, unemployment in July stood at 9.5 percent in both June and July, near levels last seen in 1983.

In California, between March 2007 and March 2010, the number of Californians receiving food stamps grew from 2.1 million to 3.27 million.

About 25,900 people received food stamps in Sonoma County, California in June, a 77-percent increase in two years, according to county officials.

The trend mirrors record national enrollment figures for the federal food program, with more than 40 million Americans getting the benefit.

But even as the number of food stamps recipients swells in the county, anti-poverty advocates warn that the impact of the recession can be magnified in areas like Sonoma County that have historically low levels of food-stamp enrollment.

Sonoma ranks 52nd in the percentage of eligible people who are signed up for the program among 58 counties in California. The eligibility analysis is based on the number of residents whose income is at or below 125 percent of the federal poverty level as determined by state enrollment and census data from 2008, the latest figures available.

"The level of hardship is so severe that we may find we are failing to reach many more people who need these benefits during these tough times," George Manalo-LeClair, senior director of legislation for California Food Policy Advocates, was quoted as saying by local media.

While the number of Americans relying on food stamps has reached a record high, the number of millionaires has also risen to a peak level, according to the new Metro Wealth Index released recently by Capgemini, a French consulting firm. It calculated the number of individuals with a net worth of over one million dollars, excluding real estate, in the 10 largest metropolitan areas in the United States.

The results provide further indication that the wealthy in the United States have recovered more swiftly than the nation's less- well-off. In the 10 cities in the study, the number of millionaires grew by 17.5 percent in 2009, a year when the national unemployment rate increased from 5.8 percent to 9.3 percent. Most of the gains for the rich are attributed to the climb in the stock markets.

According to Capgemini, the New York Metropolitan area had 650, 000 high-net worth individuals, or people with one million dollars or more in investible assets in 2009. That is 18.7 percent higher than in 2008.

The New York area topped the list of metro-area wealth centers. Its total was greater than the combined total of the next three runners-up -- Los Angeles, Chicago and Washington.

The Los Angeles metro area had 235,800 millionaires in 2009, the second most of any city in the country after New York.

According to the Metro Wealth Index, the Los Angeles numbers for 2009 were up 13.3 percent from 2008, but that was not enough to make up for the 17.8-percent drop in millionaires in the previous year during the heart of the financial crisis.

In New York City, the rise in the number of millionaires in 2009 was enough to make up for the losses the year before.

New York was one of four cities to see its millionaire ranks bounce back to where they were in 2007, along with Washington, Houston and San Jose.

San Jose had the highest percentage of millionaires of any city, which is 5.9 percent, while Houston had the lowest, at 1.9 percent. A total of 2.9 percent of the 10.2 million people in the Los Angeles metropolitan area were counted as millionaires by Capgemini.

Analysts said that the U.S. taxpayers' bank bailouts certainly helped those on Wall Street. That explains why New York has more millionaires than other cities.

Also, finance, technology and oil remain the main sources of wealth in the United States.

While New York, Washington D.C., Houston and San Jose are now above 2007 levels, the rest are still below the 2007 heights.

English.news.cn   2010-08-08 04:50:37

Paul Jay discusses higher taxes and migration with Cristobal Young

Transcript PAUL JAY: Welcome to The Real News Network. I'm Paul Jay in Washington. As protesters marched in support of public sector workers in Madison, Wisconsin, in their battle against the governor, one of the things we saw on signs was "tax the rich". Well, some people say that if you tax the rich at the state level, in other words a state income tax or a state estate tax, the rich will simply leave the state. Or will they? Well, research suggests perhaps they won't. Now joining us from Stanford University in California to discuss this is Cristobal Young, who's done some work on this. Thanks for joining us, Cristobal. CRISTOBAL YOUNG: Hi, Paul. JAY: So what does your research show? If you have higher income taxes or estate taxes, do the rich just bolt? YOUNG: Sure. So [incompr.] specifically at New Jersey, and we brought in the complete income tax data from the state of New Jersey, which offered, essentially, a complete census of very high income earners and millionaires in the state, and we looked at a very large millionaire surtax that was imposed on New Jersey in 2004. And we found that the rates [incompr.] migration essentially did not change at all for the overall group of people who were affected by the tax, which is to say, millionaires. At the same time, there are some groups who do appear to be more sensitive to the tax, people who live entirely off capital market earnings, investments, essentially. So people who are not tied to employers in this state of New Jersey were a little bit more inclined to leave. And also retired people who were earning very high incomes were also more inclined to leave. Still, we found that the taxes raising about $1 billion a year in net revenue was essentially zero outflow in terms of tax flight. So very little tax revenues were leaving the state. JAY: Now, the tax was, if I--it was about 2.9 percent, was it? YOUNG: It was an additional 2.6 percent marginal tax on people earning over $500,000 a year. So this was actually the biggest millionaire tax that has ever been passed in the US, at least in the current round of experimenting with millionaire taxes. And about eight states have followed New Jersey's lead. JAY: Now, do you get any sense--I suppose there's some line. If you taxed everything they had, they would leave. So somewhere in there there's a line you can't cross before the migration gets too serious. Do you get any sense what that line is? YOUNG: Yeah, no. I mean, we can't see it in our data. So it's true. I mean, we are talking about even people earning--people who are earning over $1 million a year, they're paying close to--they're paying about an extra 2.5 percentage points of their income. So it's not a large kick if you think about the costs of migration, in terms of you have to be able to sell your house, you're going to buy a new one. You're going to separate from your friends and family. You're going to separate from your business connections and your neighborhood. JAY: Kids going to school would be a big one, I guess, if you have kids in the mix. YOUNG: For schools. Exactly. So especially for people who have kids, moving, taking their kids out of school and moving to a new state and starting over is a very difficult thing to do. So--. JAY: And the truth is, the richer you get, in some ways the less meaningful this tax is anyway. Like, even if you do pay hundreds of thousands of dollars more tax, if you're a multimillionaire or billionaire, that's actually not that much money. YOUNG: Yeah, that's right. And so what this tax does is, for people earning about $1 million a year, they're paying about an extra $20,000 a year. So it is not--it is not a big chunk of their income. And whether or not it's going to force them to really--going to really lead them to, you know, uproot the lives of their families and really make new connections elsewhere--. JAY: Do you get any sense, are any states planning to go more than the 2.6 percent? Like, I'll ask again: what do you think the limit here is?

YOUNG: It's really hard to say what the limit is. I mean, if you increased the tax rate by 10 percent, would you see no tax flight? I mean, I think you would, I think you would start to see. So I would be--personally, I would be cautious about the ceiling. What our research shows in New Jersey is that the largest of the millionaire taxes that are sort of on the table right now have not had any impact in terms of tax flight. So I think in terms of the kinds of policies that we're talking about, a modest surcharge on millionaires is not going to have any migration effect. Now, during the recession, one of the things that's happened is that migration rates across states have plummeted back to levels that we haven't seen since the 1950s. So migration rates across-state are the lowest level they've been in 60 years. It's because during recessions it's very hard to move. There aren't jobs that are drawing people away. And particularly, if you're going to move, you have to be able to sell your house. If you're going to sell your house during a recession, during a housing market retrenchment, it's not the best idea. So during recessions, temporary surtaxes, I think, basically do an end-run around the risk of migration. And if you have it as a temporary tax, then you could reevaluate this as the economy improves, whether you need this additional revenue and whether or not you become worried as the economy improves that people might be able to start selling their homes from migrating. So I really think that a temporary surtax during a recession is probably a safe bet in terms of having any negative byproducts in terms of migration.

JAY: We've talked about what happens with wealthy people when their income tax gets raised. Within certain limits, the evidence is they don't move. What happens with the general population within a state if income taxes go up? Do you see that kind of flight? Now joining us to talk about that is Jeffrey Thompson. He's coming to us from the PERI institute of Amherst, Massachusetts. Thanks for joining us, Jeff.

JEFFREY THOMPSON: Glad to be here.

JAY: So what does the research say? If states increase income taxes and/or estate taxes, what actually happens? What's the research?

THOMPSON: The research on migration behavior suggests that taxes play very little role in where people decide to live. And that would come as a huge shock to politicians, but for researchers in this field it's not at all surprising. It's a finding that's been verified in a number of very good academic studies, and it's a finding that's supported in my recent paper that I'm putting out as well.

JAY: Well, talk about some specific research that you refer to. What did you find?

THOMPSON: Sure. My work is looking at income taxes overall, so I'm not isolating specifically the rich, but they're included in the lot. What we show is that when states increase their income tax, for example, to raise revenue to finance public services, that there's very little impact on people's migration decisions. But if you imagine that the state, say, raises its income tax, raises a lot of revenue from doing it, and then holds a big bonfire and burns the money, sure enough, that will make it so that some people opt to leave your state and fewer people will decide to move to your state. For example, a one-point increase in your income tax, depending on what state you're looking at--in Massachesetts it would mean that a couple of thousand people leave your state or decide not to come to your state.

JAY: And what's the net of that in terms of how much income you pick up versus how many people leave?

THOMPSON: One-point increase in Massachusetts' income tax rate would bring in about $2 billion, and the combined effect on just looking at the tax side, you're looking at about 1,800 fewer people, on net, coming to or staying in your state.

JAY: And if you figure out how much money that 1,800's worth, what do you come up with?

THOMPSON: Well, in terms of--well, the tax would bring in $2 billion. And if you just burned it, like I'm saying, then you would expect 1,800 fewer people to be in your state. But the point is that no state ever burns $2 billion. What they do is they decide to spend it. And when they spend it on services, they end up hiring people. And what the research shows again and again is the factors that motivate people's migration decisions are jobs and family decisions and housing decisions. So if Massachusetts, instead of burning the $2 billion, decides to hire people to provide services, then the employment effects of that taxation decision swamp the deterrent effect. So people are going to come to Massachusetts for the jobs. When there are more jobs in the state, fewer people will leave.

JAY: Right. So talk about how you came to this conclusion. Like, what research, what states did you look at? What models? How do you come to this conclusion?

THOMPSON: Sure. We're using migration data from the Internal Revenue Service. They have data tracking the flow of people leaving states every year for 20 years. So we know the number of people leaving New Hampshire and going to North Carolina. So the whole country. And what we've done is we've done a statistical analysis to explore the relationships between peoples' migration decisions and different economic factors and different fiscal factors--state spending, you know, crime rates in the state, income tax rate. And so the relationships that we identify in that statistical analysis confirm mostly everything that's already been said in this literature, which is it's employment that matters; [in] people's migration decisions, taxes play very little role.

JAY: So what the research suggests, then, within certain limits--and I guess those limits are still to be explored, but it's not just a truism that if taxes go up, people leave, and it's not a truism that if you tax the wealthy within a state, the wealthy leave. So maybe it is time for some experiments on this. Thanks for joining us on The Real News Network.

End of Transcript

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