Law and Economic Justice

1. Law and Economic Justice Jon Forman Alfred P. Murrah Professor of Law University of Oklahoma Central Oklahoma Association of Legal Assistants Oklahoma City, Oklahoma April 29, 2011

3. U.S.: Share of Household Income & Gini Index, 2005

4. Education Wage Premium 20 Facts About U.S. Inequality that Everyone Should Know, http://stanford.edu/group/scspi/cgi-bin/facts.php.

5. Job Losses 20 Facts About U.S. Inequality that Everyone Should Know, http://stanford.edu/group/scspi/cgi-bin/facts.php.

6. Productivity and Real Income 20 Facts About U.S. Inequality that Everyone Should Know, http://stanford.edu/group/scspi/cgi-bin/facts.php.

7. CEO Pay 20 Facts About U.S. Inequality that Everyone Should Know, http://stanford.edu/group/scspi/cgi-bin/facts.php.

8. 8 • Office of Management and the Budget, A New Era of Responsibility: Renewing America’s Promise (2009).

9. Deregulation of the Labor Market 20 Facts About U.S. Inequality that Everyone Should Know, http://stanford.edu/group/scspi/cgi-bin/facts.php.

10. Intergenerational Income Mobility 20 Facts About U.S. Inequality that Everyone Should Know, http://stanford.edu/group/scspi/cgi-bin/facts.php.

11. Rising Poverty U.S. Census Bureau, Income, Poverty, and Health Insurance Coverage in the United States: 2009, (Current Population Report No. P60-238, September 2010), http://www.census.gov.

13. Congressional Budget Office, Trends in Federal Tax Revenues and Rates (December 2, 2010), at 24, http://finance.senate.gov/imo/media/doc/120210DEtest.pdf.

14. Rising Inequality

15. Average Annual Earnings of Full-time Workers, 2008

20. How Taxes and Transfers Improved Equity, 2004 100% 80% 60% Percent of household income Line of perfect equality Lorenz curve (income before taxes and transfers) 40% Lorenz curve (income after taxes and transfers) 20% 0% 0% 20% 40% 60% 80% 100% Percent of households

21. Income Inequality http://dx.doi.org/10.1787/420888675468

22. Inequality and Redistribution

23. Social Spending & Child Poverty in Selected Countries

24. Joint Committee on Taxation, Present Law and Historical Overview of the Federal Tax System (JCX-1-11), January 18, 2011, www.jct.gov. Joint Committee on Taxation, Present Law and Historical Overview of the Federal Tax System (JCX-1-11), January 18, 2011, at 70,www.jct.gov.

25. U.S. Payroll Tax Rates: Selected Years 20 18 16 14 12 Percent paid jointly by employee and employer Medicare 10 Social Security 8 6 4 2 0 1940 1960 1980 2010 Year

26. Tax-to-GDP ratio, 2008 OECD Tax Database, http://www.oecd.org.

27. Earned Income Tax Credit (EITC) Increase • New credit percentage for 3 or more qualifying children • I.R.C. § 32 (ARRA § 2002) • Temporary increase 2009 & 2010 • Computed as 45% of earnings (up from 40%) • Maximum credit increased to $5,666 in 2010 • Maximum AGI increased to $48,362 in 2010

28. Child Tax Credit • $1,000 per qualifying child • I.R.C. § 24 (ARRA § 1003) • Temporary expansion of eligibility for refundable credit • More lower income families qualify: • 2008 – threshold amount was = $8,500 • 2009 and 2010 – threshold amount = $3,000

29. Poverty Levels & Net Federal Tax Thresholds, 2010

30. Taxes at Poverty Level, 2010

32. Outlays for the Principal Federal Benefit Programs in the United States (billions of dollars)

33. Some Specific Recommendations • Making Taxes Work • Making Welfare Work • Modestly Raising the Minimum Wage and indexing it for Inflation • A Two-Tiered Social Security System • A Restructured Pension System • Universal Health Care • Move Toward Full Employment

34. Percentage Composition of Federal Receipts by Source: 1940-2005 60 50 Individual Income Tax 40 Corporation Tax Social Insurance 30 Percent Excise Taxes 20 Other 10 0 1940 1950 1960 1970 1980 1990 2000 Year

38. Average Cumulative Tax Rates Confronting Low-to-Moderate-Income Families ($10k - $40k)

39. $2,000 per Worker Earned Income Credit, with or without a Phase-out

40. How a Comprehensive Tax and Transfer System Would Affect a Single Parent with Two Children

42. Health Coverage 2009

43. Summary • Government should intervene • To encourage work • Promote economic justice • Tax, spending, and regulatory proposals • Increase the size of the economic pie • Allow us to divide it more equally

44. About the Author Jonathan Barry Forman (“Jon”) is the Alfred P. Murrah Professor of Law at the University of Oklahoma College of Law; Jon is the author of Making America Work (Washington, DC: Urban Institute Press, 2006); and Jon was the Professor in Residence at the Internal Revenue Service Office of Chief Counsel, Washington, DC, for the 2009-2010 academic year. Jon can be reached at jforman@ou.edu, 405-325-4779, www.law.ou.edu/faculty/forman.shtml. 44