According to a new report by the Corporation for Enterprise Development, almost half of South Carolinians are financially insecure. That’s nearly 2 million families who are just one broken-down car or unexpected medical expense away from serious economic hardship. At the same time, wealth inequality is skyrocketing, with the wealthiest 0.1 percent now owning about as much as the bottom 90 percent of Americans combined.
At the S.C. Association for Community Economic Development, our mantra and our focus is “Building Wealth One Community at a Time.” Wealth is the down payment on your first home. It’s having enough saved to send your kids to college without tapping out your retirement fund. At the most basic level, wealth is just having enough in the bank to weather a rainy day. Wealth, in short, is opportunity — and more and more we know that it’s unfairly distributed.
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We also know one of the driving forces behind this trend is enormous, unfair, upside-down federal tax programs that just pile on more wealth for those who have already hit the jackpot a few times over.
According to the Turn It Right Side Up Campaign, a typical millionaire got nearly $150,000 in 2015 from these lopsided tax programs, which help the wealthy save for retirement and invest in education, home ownership and the stock market. A typical working family gets little or nothing. The game is rigged.
There is one wealth-building tax program that expands opportunity for working families: the Earned Income Tax Credit. The credit incentivizes work by making work pay. And families use their credit-enlarged tax refunds to invest in their future — by paying down debt, saving for their kids’ education or putting away a little for a rainy day. At its heart, the Earned Income Tax Credit is a wealth-building, economic opportunity program. This is why advocates in South Carolina are pushing the Legislature to create a state version of the federal credit.
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Imagine if all of the $660 billion spent on helping Americans build wealth was targeted to working families rather than millionaires. This would create an historic increase in economic opportunity. And if we accomplished this by turning those upside-down tax programs right-side up, it would also mean an historic decrease in wealth inequality. We’d stop actively making wealth inequality worse with the tax code and start using it to expand opportunity instead.
Growing inequality and stagnating opportunity demand big nationwide solutions, but we can demonstrate a best-practice model with our own homegrown successes.
President and CEO, S.C. Association for Community Economic Development