Tag: Money Matters

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Money Matters: Elena Delavega Says System Fails to Raise All Boats

Credit: vepar5 | Adobe Stock and University of Memphis

Our cover story this week looks at issues stoking the embers of class struggles in Tennessee. 

School vouchers, flagging revenues, and even that brief “tax holiday” on groceries have some wondering for whom does the state’s Republican-dominated government work? 

State revenues will flatten this year, according to experts, after years of increases. This is thanks, in large part, to big tax breaks the legislature approved for business owners last year.

This “business-friendly” policy framework, which cuts taxes for the business class in hopes of prosperity for everyone, found harsh critics in economists with the national Economic Policy Institute. 

Elena Delavega is a professor at the University of Memphis, a Memphis poverty expert, and co-author of the annual Memphis Poverty Fact Sheet, along with Gregory M. Blumenthal. She said the low-tax system does not work for everyone and stymies investments in cities. Here’s what she told us in a recent interview. — Toby Sells 

(This interview has been edited for clarity.) 

Memphis Flyer: Does this “business-friendly” economic system work for everyone?

Elena Delavega: It may help two or three people at the very top, but it ends up hurting everybody else by denying the investment in the community that would make it a livable community, that would attract people who can have a choice [of a place to live].

So, it’s sort of like this downward spiral. We don’t invest and then become even less attractive. Then, we cut taxes. Then, there is less money for investment. We cut more taxes and so on.

So, that’s a no.

No, it doesn’t because in the end, these companies come, take advantage of the tax breaks for a little while, and then leave. We’ve observed this again, and again, and again. 

In the end, if companies cannot attract people to work for them — if we cannot attract highly educated people and we’re not funding schools to the degree we need to educate people that can be hired by those companies — the low wages and cutting taxes [system] is actually a myth. 

You can cut as much as you can, but unless you find ways to make more money, it really is a fallacy.  So, what ends up happening is companies cannot attract people to move here. They also cannot hire people, and they leave. Or, people are not interested because there are no amenities and the only way to do that is to actually have higher taxes.

How does this all affect our poverty situation?

It’s the policies at the top that end up creating inequality and poverty, but they hurt everyone. 

You shoot yourself in the foot because abandoned areas become not interesting to businesses. So we’re here begging, “Oh my god, let’s help businesses.” But businesses are choosing to go out to cities that provide good amenities, good schools, good roads, but also good theaters, good parks, good museums because these are the things that people find interesting and where those with money want to live. 

You’re then able to attract businesses not by getting yourself naked and taking off your clothes in the middle of the road, but by actually having an attractive city. Then, the money is going to come. You’re not having to cut your tax base. The money is now sufficient.

You also need to have a middle class to support your businesses. You can put tons of money on the three people at the top, but the reality is … can they drink — what? — 365 cups of coffee in a year? 

But if you have 200,000 adults that are able to buy a cup of coffee once a day or going to a restaurant once a week or twice a week … now you have the people who can actually support [businesses]. If you don’t have people able to support your businesses, your economy is going to go on a downward spiral. 

When you put the money in the hands of the very few at the top, what you have is a feudal system. It has a bunch of servants at the bottom who cannot afford to have anything and three very wealthy people at the top, who cannot support all the other businesses.

If you put the money in the hands of those at the bottom … if you raised the minimum wage … that would be a fantastic way [to boost the economy] because now people at the bottom are able to all go buy shoes and all go buy coffee and all go to restaurants. So, the money starts circulating and what you have is an upward spiral that really lifts all boats.

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Money Matters: Sen. London Lamar Says Tax Reform Benefits the Wealthy

Credit: vepar5 | Adobe Stock and State of Tennessee
Credit: vepar5 | Adobe Stock and State of Tennessee

Our cover story this week looks at issues stoking the embers of class struggles in Tennessee. 

School vouchers, flagging revenues, and even that brief “tax holiday” on groceries have some wondering for whom does the state’s Republican-dominated government work? 

State revenues will flatten this year, according to experts, after years of increases. This is thanks, in large part, to big tax breaks the legislature approved for business owners last year.

This “business-friendly” policy framework, which cuts taxes for the business class in hopes of prosperity for everyone, found harsh critics in economists with the national Economic Policy Institute. 

Another harsh critic of Tennessee’s version is Memphis state Sen. London Lamar. Here’s what she told us in a recent interview. — Toby Sells 

(This interview has been edited for clarity.) 

Memphis Flyer: Does Tennessee economic policy work for most folks in Tennessee? 

Sen. London Lamar: Our tax policy is incentivizing businesses for keeping people poor. 

I say that because when you think about since 2011 and when the Republicans got in office, the main tax reform and benefits have truly benefited the wealthy and big corporations. 

When you look back since 2011 … think about it. You had a repeal of the millionaire estate tax. You have a repeal of the luxury gift tax. A repeal of income taxes on stocks and bonds. A reduction of the jet fuel tax. Corporate exemptions to the sales tax and exemptions for corporate income tax. 

So, all of these major policy reforms around taxation have all been policies to benefit corporations and rich people. So the question is,  where are the priorities for those citizens who are working the hardest to contribute to our economy?  

If we are really about seeing … everybody being able to elevate their economic status, then you would demand that there be a set minimum wage, understanding the cost of housing inflation, taking into account people who have children and families they got to feed, the cost of housing, rent, being able to be approved for housing loans based on income. You got to think about that and setting a basic living standard where people can know they can go to work and be able to feed themselves. 

Secondly, I just feel like if Tennessee wanted to see equity in the system, they would demand a minimum wage because everybody improves in my opinion, not only Black and brown communities, but everybody. 

But because there’s so few regulations on what business have to pay, and the hiring practices — this is a right-to-fire state or a right-to-work state, basically — I think that our policies don’t reflect the values of trying to create an equitable workplace. The data show you that when these policies are not in place, Black people and brown people are suffering the most.

As someone who’s living in Memphis, Tennessee — that’s predominantly African American — you can look at our school system where half our kids are living below the poverty line, and the state of housing, and just the livelihood and the economic status of Black people in our city that is actually affected by it. It’s sad and it should be a crime.

I don’t think Tennessee is oblivious to its impact on which communities [it affects the most]. Again, I think they’re incentivizing businesses to keep people poor, knowing that Black and brown people are going to be at the brunt of that. 

When you think of businesses in Memphis, they’re like warehouse jobs … and temp services that people have to rely on. That’s where where a large population of Black people are working at. But they’re paying them [minimum wage]. $15 an hour is still really not affordable, to be honest, if they’re getting that.

Because they’re temp workers, are they getting healthcare services? No. Getting healthcare off the marketplace is still really expensive.  So, these people are going without healthcare services, making probably nothing, and they have to work 16 to 17 hour shifts just to make sure they can meet ends meet. 

Then what does that lead to? Them not being able to watch their kids. And those other kids that’s getting in trouble out here in Memphis streets.

So, how we are building our economic base in Tennessee and the South is perpetrating a continuous system of poverty for Black and brown people? There’s not another study that needs to be shown that this is going to be the result. It’s just a matter of our politicians deciding to continue to reinforce this system or change their policies.  

Rank-and-file taxpayers got a temporary reprieve from grocery taxes last year. But they went right back on the books while those businesses taxes were made permanent. What do you think about that?

Again, it’s about policy priorities. You know that grocery tax will help middle, working, and poor-class families tremendously.  That loss of money could be made up if we kept many of these tax decisions in place that we had previously,  right? 

So, you can’t say that you don’t have no money. We could have had the money, but you decided to break off corporations and rich people over being able to sit here and put in a tax policy that supports the lower, working class.

This study says economic policies like there are “rooted in racism.” What do you think about that?

I do think it’s rooted in racism. As long as Black and brown people aren’t economically viable, then they don’t have really any impact politically. You can look at that in the campaign funding of Black candidates in Tennessee. We’re funded far less than Republican white folks, even white Democrats. As long as our community stays poor, then we can’t compete against rich people who have the ability, access, and resources to play in a political game in a real way. 

I think this system of racism is reinforced through classism. As long as you keep people of color poor, other white folks get to stay on top. This, more than likely, correlates to who owns the most businesses that are doing well. Who owns the corporations? What’s the income makeup of policymakers and people that they’re voting to benefit? So, you can look at all those things, not just the economics side. It’s racism that is rooted in the whole system.  

Anything I left out or that you’d like to add?

I want to challenge business owners and stakeholders and people of influence in the system to ask themselves, “Do you want to keep the status quo? Or, do you want to start putting us on the path for better?”

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Letter From An Editor Opinion

On Making Money Matters

London Lamar (Photo (left): Clyde Sims, Jr.); Elena Delavega (Photo (right): University of Memphis)

Editor’s note: Flyer writers will occasionally share this space.

Some news stories don’t finish where they started. This week’s “Money Matters” cover story is one of those.

Back in October, the national Economic Policy Institute (EPI) published a report critical of the South’s “business-friendly” economic policies. They favor the wealthy, are “rooted in racism,” and their promised prosperity doesn’t really trickle down the way we’ve always been told, the study says.

EPI is a nonprofit think tank “that researches the impact of economic trends and policies on working people.” The Flyer is a paper for people. Tennessee data in the report were interesting. So, I wrote a post back then outlining some of the findings. At Large columnist Bruce VanWyngarden suggested at the time that the story could make a good cover story with some local quotes and context. Does this model work for working-class Tennesseans and, especially, Memphians? That’s where this week’s cover story started.

Just as I began to report on the story, the Tennessee General Assembly began to crank up. Most of the folks who head to Nashville to make our laws every year are evangelists of the “business-friendly” economic theory. They love it, promote it, and (usually without any kind of evidence) believe that it really does work for all of their constituents, whether they own the car dealership or just work there. So, a story based on data that showed the Southern economic model didn’t work seemed well-timed.

But as I began to dig, I found new money issues in Tennessee were pressing old class frictions to the top of discussions at the beginning of the session. GOP tax cuts for the business class were flattening state revenues, making the budget even more dependent on the state’s regressive tax structure. Some argued Gov. Bill Lee’s controversial school voucher plan would take money from lower- and middle-class taxpayers and give it to the wealthy so they could pay for private schools they can probably already afford. This all comes as Lee’s administration has fumbled two federal programs to help the state’s working poor, a sign to most that those folks were not a priority for Lee.

With all this, I diverged from the main idea of the story and these class issues became the primary focus of the main “Money Matters” piece. And I feel like I flubbed the very good original idea.

Information on the new story angle edged out some enlightening commentary from two Memphis thought leaders. Elena Delavega is a professor at the University of Memphis, a Memphis poverty expert, and co-author of the annual Memphis Poverty Fact Sheet. State Sen. London Lamar (D-Memphis) is a constant voice for poor and working-class people in the legislature. Look for full interviews with both of those this week on The News Blog at memphisflyer.com under a “Money Matters” headline.

For a sample, here’s what Delavega said when I asked if pro-business policy models work for everyone: “It may help two or three people at the very top, but it ends up hurting everybody else by denying the investment in the community that would make it a livable community, that would attract people who can have a choice [of a place to live].

“So, it’s sort of like this downward spiral,” Delavega said. “We don’t invest and then become even less attractive. Then, we cut taxes. Then, there is less money for investment. We cut more taxes and so on.”

Lamar said Tennessee policies have favored the wealthy since Republicans took power in 2011. She rattled off a list of cuts including the millionaire estate tax, the luxury gift tax, the reduction in the jet fuel tax, and more. But she said there have not been big moves to aid “those citizens who are working the hardest to contribute to our economy,” especially Black and brown people. This is on purpose and permeates the system, she said.

“You can look at that in the campaign funding of Black candidates in Tennessee,” Lamar said. “We’re funded far less than Republican white folks, even white Democrats. As long as our community stays poor, then we can’t compete against rich people who have the ability, access, and resources to play in a political game in a real way.

“I think this system of racism is reinforced through classism. As long as you keep people of color poor, other white folks get to stay on top,” Lamar continued. “This, more than likely, correlates to who owns the most businesses that are doing well, who owns the corporations. What’s the income makeup of policymakers and people that they’re voting to benefit? So, you can look at all those things, not just the economics side. Racism is rooted in the whole system.”