"Taxing the Poor: Doing Damage to the Truly Disadvantaged"

Book explores evolution, motives and causes behind U.S. tax policies and policies' effects on disadvantaged citizens.

Newman,  Katherine S. & O'Brien Rourke L. (2011) Taxing the Poor: Doing Damage to the Truly Disadvantaged.  Berkeley, Calif.: University of California Press.

"Taxing the Poor: Doing Damage to the Truly Disadvantaged"This book presents a carefully documented discussion of the many ways in which state and local tax structures impact low-income families in the United States. The text begins with a 30 page history of the evolution of tax policy in different regions of the United States, dating back to before the Civil War. The authors then provide a cogent rational for the persistence of tax policy that disadvantages the already disadvantaged, demonstrating the particular disadvantage that continues to this day in the American South. The book concludes with a compelling, data-driven assessment of the effects of poverty on a number of poverty related challenges, including obesity, early mortality, high school dropout rates, teen pregnancy and crime. This relatively brief volume, at 162 pages plus a technical appendix, is a groundbreaking analysis of the structural perpetuation of poverty in this country.

The excellent historical overview of how tax policies developed is an important contribution to the history of economics and public policy in this country and demonstrates, with regional comparisons, how tax policies are the authors of many contemporary problems faced by the poor of today. Citing the work of historian Robin Einhorn, the authors first discuss the class conflicts in the antebellum South that pitted the slaveholding elite against non-slaveholding small farmers. This class divide led to artificially low taxation on property, including chattel slaves, throughout much of the south during that period. As a result, southern states governments had relatively slim resources to support public infrastructure and services for those in need. Although the confederate states turned briefly to a broader tax policy that included a progressive income tax to fund the Civil War, post-war the southern states introduced regressive tax policies to punish newly freed Blacks and force them to work for wages once Radical Reconstruction was defeated and the south entered the era of Redemption. During the Great Depression, highly regressive state sales taxes were introduced to provide revenue unavailable due to low property taxes in the south. By the time of post-World War II America, many southern states became and remain (in) famous for generous tax preferences that lure industry but typically leave little revenue to provide for their neediest citizens.

The regressive sales taxes coupled with low property and corporate taxes persist robustly into this day due to political maneuvering. Southern states constitutionally limit a variety of taxes and constitutionally mandate legislative supermajorities to raise any property or corporate taxes. Thus, the states with the highest rates of poverty, the highest rates of poverty-related hardship and the lowest levels of support for their disadvantaged citizens tend to be in the old south. Although these restrictions have been implemented throughout the country, most notably the Jarvis-Gann initiative limiting property taxes and establishing supermajority rules in California in the 1970’s, the earliest versions of these policies were introduced in the south during the height of the depression. The authors detail these political initiatives to make the persuasive and well documented case that the most punishing tax policies faced by the poor are in the American south, especially in rural places, although these policies are migrating west in a disquieting fashion.

The authors’ most  compelling argument, one that takes up slightly more than half the book, is that policies that take money away from poor people have a direct relationship to some of the most well documented correlates of poverty. A series of longitudinal analyses measure the effects of changes in state tax and local policies on mortality, property crime, violent crime, high school dropout, births to unmarried mothers and obesity, all measured annually at the state level. The authors argue that regressive taxation takes away resources for those living on the edge, resources that might allow them to access a better education and stay in school, enjoy better health, and avoid crime and other risky behaviors. Their argument is based on comparisons across time as well as across regions of the United States. For example, many of the southern states tax food for home consumption, making it more likely that the poor will rely on cheaper food that is less often fresh (e.g., more expensive fresh fruits and vegetables) and more often processed and high in fat , sodium and carbohydrates. This kind of diet leads to higher levels of obesity and chronic health conditions. The authors demonstrate with alarming clarity how problems of health and obesity cluster disproportionately in the states with the highest combination of regressive sales taxes and policies that tax food for home consumption. In a similar vein, the authors make impressive causal links between tax policies and crime, education and risk behavior. In sum, there is today a robust political discussion on the American economy that encompasses the deficit, taxes and the necessary role of a taxpayer funded social safety net. This conversation has long term consequences for social stratification, poverty and inequality. Newman and O’Brien have marshaled an outstanding lesson to the contrary for anyone who believes that taxing the poor is harmless.