The same phenomenon occurs when we think about wealth. Most of us are concerned, perplexed, and vexed by the rapid concentration of wealth at the top while the middle-class disappears. But when it comes to pointing at local examples of this polarization, we hesitate to talk about them.
Maybe they give to community institutions, maybe they fund a scholarship, maybe they endow a foundation. So let's not discuss where this money came from. But at play here is a bigger picture of who gets what and who gets left behind.
So let's talk about Steve Ballmer. He seems a bit untethered. “I don't work anymore so I have more geographic flexibility than I did a year…… ago.” Last week, we all watched as Ballmer plunked down $2 billion for the Los Angeles Clippers. He trumped his competition with a bid that was nearly four times the next highest previous purchase of a NBA franchise.
Let's put $2 billion into perspective. That amount would pay the tuition for every single Washington student at the University of Washington, Washington State University, Central Washington University, Eastern Washington University, Western Washington University, Evergreen State College, and all thirty four of our public community colleges. All told, that's 291,000 students. The annual bill: $1.9 billion.
Perhaps Steve could simply donate his income from his $20 billion in assets, which at 5 percent a year would be about $1 billion a year. This contribution alone could reduce tuition for public higher education so that it would be close to what it was when Steve was an undergraduate. That would be about $2,500 in today's dollars at UW, $2,000 at Western Washington, and $1,000 at Everett Community College.
We shouldn't be begging Ballmer, Bezos, Paul Allen or other Washington billionaires to pay their fair share to live and prosper in our great state. That's what taxes are for — but in Washington we tax middle-class and working families more than we do multi-millionaires. Because our tax system is heavily dependent on purchases by middle class and low-income families, we can't generate the revenue for investing in higher education, not to mention caring for the developmentally disabled, or fully funding K-12 education. With a tax system tilted away from the wealthy, we leave a lot of money on the table for folks like Mr. Ballmer, and jeopardize our kids' education.
The results are not pretty: tuition jumped 50 percent at the University of Washington since 2010, and has gone up 30 percent at the community colleges, while middle class incomes have flattened out. At the same time, the very wealthy are doing great: Mr. Ballmer's wealth has grown by $6 billion.
We had a chance to redirect a small percent of Mr. Ballmer's income five years ago, with an initiative to tax 9 percent of a family's income in excess of $1 million to fund education. That went down in flames, thanks in large part to the opponents' campaign, funded in part by Mr. Ballmer himself.
If that income tax on the wealthy had been the law, Mr. Ballmer would have contributed about $540 million of his added wealth of $6 billion for taxes to fund education. (That's nine percent of $6 billion.) He could still have bought the Clippers, bought another home in Los Angeles and retired early. And at the same time, Washington's students and families would be better off, with access to fully-funded schools from elementary through college. That is a choice we voted down.
Since that vote in 2010, we have had a real-life lesson in prospering or failing together. We all — rich, middle class, and poor citizens — know that being poor is not benign, not for the poor themselves and not for society. As it turns out, being super-wealthy isn't benign either, not for society and, in the big picture, not for the wealthy themselves.
John Burbank is the Executive Director of the Economic Opportunity Institute (www.eoionline.org). Email firstname.lastname@example.org
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