Ghetto Tax: Poor Losers Gain Street Cred. Or, Whither John Edwards?

Let our journalists help you make sense of the noise: Subscribe to the Mother Jones Daily newsletter and get a recap of news that matters.


As reported in the New York Times article “Study Documents ‘Ghetto Tax’ Being Paid by the Urban Poor,” Brookings Institution Senior Research Associate has Matt Fellowes has documented how the poor are charged more than the rest of us for basic services.

As the executive summary notes:

In general, lower income families tend to pay more for the exact same consumer product than families with higher incomes. For instance, 4.2 million lower income homeowners that earn less than $30,000 a year pay higher than average prices for their mortgages. About 4.5 million lower income households pay higher than average prices for auto loans. At least 1.6 million lower income adults pay excessive fees for furniture, appliances, and electronics. And, countless more pay high prices for other necessities, such as basic financial services, groceries, and insurance. Together, these extra costs add up to hundreds, sometimes thousands, of dollars unnecessarily spent by lower income families every year.

In the current issue of Mother Jones, I cited Fellowe’s previous research on the barriers facing Philapelphia’s poor (see chart) along with a whole bunch more depressing stats (all fully sourced) about how the poor are overcharged.

exhibit_chart2_265x262.gif

In Chicago’s poorest areas, the ratio of check-cashing outlets to banks is 10-to-1. Check-cashing fees for a worker who brings home $18,000 a year add up to about $450 —that’s 2.5% spent just to access income.

underserved:

In 1997, 3 out of 4 doctors provided some free or reduced-cost care. Now, 2 out of 3 do.

And just generally screwed over:

In 2004, 7 million working poor families spent $900 million on tax prep and check-cashing fees to get their refunds sooner. Average amount of time by which they sped up their refunds: 2 weeks.

Recently, I did a radio interview on this topic, in which the host asked me why nobody but John Edwards seemed to be concerned with the plight of the poor. I didn’t have a good answer, certainly the rest of the Democratic Party seems to be nowhere on this issue. Perhaps the best explanation is that Americans still believe that poverty is a sign of personal failing.

But the sad fact of it is that with 1 in 4 U.S. jobs paying less than a poverty-level income, more and more Americans will find themselves to be poor at some point in their lives. During the 1980s, 13% of Americans age 40 to 50 spent at least one year below the poverty line; by the 1990s, 36% did. And since 2000, the number of Americans living below the poverty line at any one time has steadily risen. Now 13% of all Americans—37 million—are officially poor.

And the poor are getting poorer. Among households worth less than $13,500, their average net worth in 2001 was $0. By 2004, it was down to –$1,400. That’s negative $1,400.

Local governments need to do their part. The Times notes that

“at a meeting connected with the [Brookings] report’s release, officials from three states—New York, Pennsylvania and Washington— said they were already doing just that through a variety of programs to draw banks to poor neighborhoods, help finance the construction of supermarkets and encourage innovative insurance schemes.”

That’s great. But in the meantime, President Bush’s tax cuts (recently extended until 2010) save those earning between $20,000 and $30,000 an average of $10 a year, while those earning $1 million are saved $42,700.

Oh, and in 2002, Sen. Charles Grassley (R-Iowa) compared those who point out statistics such as the one above to Adolf Hitler.

IT'S NOT THAT WE'RE SCREWED WITHOUT TRUMP:

"It's that we're screwed with or without him if we can't show the public that what we do matters for the long term," writes Mother Jones CEO Monika Bauerlein as she kicks off our drive to raise $350,000 in donations from readers by July 17.

This is a big one for us. It's our first time asking for an outpouring of support since screams of FAKE NEWS and so much of what Trump stood for made everything we do so visceral. Like most newsrooms, we face incredibly hard budget realities, and it's unnerving needing to raise big money when traffic is down.

So, as we ask you to consider supporting our team's journalism, we thought we'd slow down and check in about where Mother Jones is and where we're going after the chaotic last several years. This comparatively slow moment is also an urgent one for Mother Jones: You can read more in "Slow News Is Good News," and if you're able to, please support our team's hard-hitting journalism and help us reach our big $350,000 goal with a donation today.

payment methods

IT'S NOT THAT WE'RE SCREWED WITHOUT TRUMP:

"It's that we're screwed with or without him if we can't show the public that what we do matters for the long term," writes Mother Jones CEO Monika Bauerlein as she kicks off our drive to raise $350,000 in donations from readers by July 17.

This is a big one for us. So, as we ask you to consider supporting our team's journalism, we thought we'd slow down and check in about where Mother Jones is and where we're going after the chaotic last several years. This comparatively slow moment is also an urgent one for Mother Jones: You can read more in "Slow News Is Good News," and if you're able to, please support our team's hard-hitting journalism and help us reach our big $350,000 goal with a donation today.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate