York City Mayor William de Blasio
leveraged upon the growing concern of income inequality
to win the mayoral election.He has officially declared
war on on the rich with an income tax increase on city
residents earning more than $500,000 per year.
I am not
a fan of using the term war since there are too many
casualties and the scars resulting from collateral
damage can last forever. There
are a more equitable and socially beneficial ways for
Mayor de Blasio to address income inequality that
deserves serious consideration.
President Lyndon B. Johnson began The War on Poverty 50
In real terms, it’s cost taxpayers more than
all US Wars combined.According to a recent report by
CATO Institute, $15 trillion has been spent to
battle the war on poverty and it hasn’t worked. It’s
clear the Government can't win this battle alone must
embrace new ideas in order reduce poverty.
Taxes Is The Wrong Weapon
Blasio's proposed new taxes will effect 40,000 city
and is estimated to raise $532 million over 5
years to fund
early childhood education programs.
There’s nothing more politically powerful than providing
less fortunate children with the hope of a quality
education and the potential for upward mobility.
would disagree? Unfortunately,
my experience in politics knows lawmakers usually
include a legal back door to recharacterize those
revenues to the general fund during tough budgetary
There’s no guarantee appropriate funding for the
early childhood education program is sustainable or if
the new taxes will cover the tab.The New York City
economy is highly correlated to Wall St. and when Wall
St. sneezes everyone else gets the flu causing revenue
shortfalls. Finally, a portion of those high earning
city residents will turn up AWOL and migrate elsewhere.
Tax the Rich, it’s their fault.
class war fare politics and I am a proponent of an
America that understands we all have to work in unison
to drive change.
There are millions of wealthy people in
America who built their fortunes by working hard over
many decades. Calling them greedy is both irresponsible
and disappointing. Most are grateful for their success
and they are eager to give back to create a better
society for the next generation by setting up
foundations, charitable trusts,
donations, or volunteerism.
There is a new way to
address social problems that combines free market
economics with social responsibility called B-Corporations
or Benefit Corporations.
Weapon-The Benefit Corporation
Legislation for New York Benefit Corporations was signed
into law by Governor Cuomo in December, 2011.Benefit Corporations or B-Corps, are unique in the
sense that they must use their profits for the common
good to effectuate a social or environmental benefits. Social
goals are enacted within their corporate charters and
the social impact is monitored and measured by
management, the board of directors,and their auditors.
should engender the formation of Benefit Corporations by
establishing social benefit enterprise zones in each
borough.Benefit Corporations are vested in their
community, create jobs, help distressed economies, and
grow the city tax base in ways that relieve city hall
from financial pressures.To go one step further, de Blasio could provide tax incentives for B Corporation
clusters that earmark funds for early childhood
education to cultivate more revenues over the long run
and to help fund his plan.
closing,No amount of government funding can create hope
for the millions of underemployed or unemployed living
That idea is $15 trillion dollars in the
red.Social change agents are eager to move forward but
need the right incentives from local government.
all the stakeholders including entrepreneurs, employees,
the community, and parents work towards a goal, good
things happen.For example, job growth within the
Benefit Corporation structure is growing at an average
of 5% per annum versus stagnant growth elsewhere.Benefit corporations can and should be part of the
solution.Mayor de Blasio needs to be the General who
leads this special force army of allied socially
conscience entrepreneurs into battle against the axis of
poverty and income inequality.
Mark Pappa is an account executive with
Financial Resources, Inc.