Costs of Underfunding Concentrated Poverty Schools

 

If a kid comes out of a school in a poor area partially illiterate or illiterate and ends up in the criminal justice system partly as a result, this costs society in several direct and indirect ways.

• Lost tax revenue (income tax, sales tax)
• More police
• More judges
• More jails and prisons (public and private)
• Public defenders
• Prosecutors
• Probation officers (public and private)
• Parole officers (public and private)
• Monitoring (drug tests, tracking) (public and private)
• More courts and court services
• Pre-release centers (usually private)

So basically all these people end up making money from this, whether it's a contractor building a new jail, or a probation officer working for a private contractor. It may even be a non-profit: they make money.

Income Tax Policy

Money motivates people. The way this is supposed to work is if someone works more, they make more. If they work less, they make less. In times like the 50's and 60's, people making less got by alright. Executive salaries were within range, yet we still managed to compete very well. The median standard of living was much better.

Non-CEO executive pay is somewhat inflated. CEO pay for large corporations is bloated. Whereas a typical executive may make 200,000-1,000,000, CEO's can make 15,000,000-1,000,000,000. Amongst other things, this can create ethics considerations. People can get more ruthless as the stakes get higher.

The current income tax brackets are 10%, 12%, 22%, 24%, 32%, 35%, and 37%. 37% is for 626,351 and up (single taxpayer). There's a lot of 626,351 and up. There should be more brackets for the up part. Maybe a 40% for 1,000,000-10,000,000, 45% for 10,000,000-25,000,000 and 50% for 25,000,000 and up. Something like that anyway. 

Things such as tax rates can be used to control incentives. Different things motivate people: money, power, control, egos, competition. When it's money, it's sometimes a matter of relative standing. They'll compete based on standing, they don't need 50,000,000 to motivate them. With lower CEO salaries, costs can be controlled, and savings can be passed on to workers or consumers. 

Most of the pay packages for upper executives is usually stock. Stock as pay is taxed as income.

Inequality

We had this Gilded Age up until the 1890s. The Progressive Era followed where most of the presidents during this time were Republicans. There are various similarities between the Gilded Age and today. Currently we have an eroded middle class, extreme wealth on the one end and people dealing with low wages and high costs on the other.

Extreme wealth usually results when entrepreneurs are really successful and they end up with a lot of stocks which have risen in value exponentially. Also, top corporate executives' pay has become, in general, grossly inflated. As for the former situation, the gains in wealth aren't taxable until the shares are sold. Service and retail workers need better wages and lower costs, so they can enjoy a more middle class-like lifestyle.

Tax policies can be used to equal-out the wealth gap. Costs, such as housing and medical, can be controlled so lower wage earners have a higher effective income. Labor laws need to be strengthened. Whereas high corporate salaries can be controlled, it is difficult to raise wages for those on the bottom. Corporations' savings in executive pay can be applied to lower earners, but it needs to be done the right way. Lower pay for top executives can lower operating costs, resulting in lower prices for goods and services, thereby benefiting lower wage earners. 

Raising minimum wage doesn't always work. Sometimes, this results in lost jobs and shifts to automation. Union numbers have declined, and unions can be influential by controlling executive pay, as well as championing worker interests. Often in management-worker relations, there's an us vs. them mentality. Managers might just want to win through strategy, and unions can be too demanding. Management and workers need more teamwork.

Stock buybacks became legal in 1982, around the same time executive pay started growing fast. Buybacks are usually bad because there's a conflict of interest (stock is given to executives while being inflated through buybacks), possibly resulting in a bubble. Often times buybacks are leveraged, and the resources used for buybacks could go toward R+D, production or pay to workers. A lot of the pay packages for top executives is stock awards. Companies could buyback less stock to give to top earners and just pay the under-paid more.