Page 35 - Impact: Collected Essays on the Threat of Economic Inequality

government revenues that greatly outweigh government’s expenditures on legal services for the poor . Although there is no available disaggregated hard data on the amount of those tax deductions, a very rough approximation of the federal tax system subsidy for legal expenses for the wealthiest 1 percent of the U .S . population can be arrived at by estimating the amount of legal expenses deducted by the wealthiest Americans and the approximate tax deductions taken based on those legal expenses . A conservative estimate of the tax benefit is approximately $23 .6 billion annually . This figure is arrived at by looking at the self-reported revenues of the top 100 revenue- grossing law firms, considering that figure a very rough proxy for the deductions taken by the 1 percent, and applying the income tax rate for earners in the highest income bracket .22 In contrast to this figure of $23 .6 billion in tax forgiveness for the wealthy, the federal government funds legal services for the poorest 25 percent of the U .S . population at under $400 million annually .23 This all translates into a per capita benefit of $11 for each poor person,24 contrasted with a (very approximate) per capita tax subsidy for legal assistance for the wealthiest 1 percent of $754,25 or— based on these rough, but conservative estimates— almost seventy times as much federal assistance for legal services per person in the top one percent as for each person living in poverty . New York City’s taxation of individual and corporate income follows the federal practice of allowing legal expenses to be deducted from income, and, although the disaggregated figures for deductions for legal expenses are not available either, it can be assumed that New York City similarly forgoes enormous amounts of revenue in order to subsidize legal expenses for the wealthy .
Of course, because the integrity of the justice system is a cornerstone article of faith, the dissonance between ideology and practice created by wealth-based access to justice severely undermines faith in the justice system . Faith in the civil justice system is particularly challenged by the experience tenants have in defending themselves, unrepresented, in eviction proceedings in New York City . A significant number of New York City’s low-income households are exposed to the civil justice system through their experience with eviction proceedings . About 11 .5 percent of the city’s low- income households are served with eviction proceedings every year .26 About a third of the people
22 Under the Internal Revenue Code, legal expenses of corporations and other businesses are tax deductible. 26 U.S.C. § 162. According to American Lawyer, gross revenue for the 100 highest grossing law firms in the U.S. in 2010 was 67.42 billion (and 17 law firms grossed over $1 billion). Available (for charge) at http://almlegalintelligence. com/. Using that $67.42 billion as a very rough (but very conservative) proxy for the legal expenses of the top 1 percent and applying the 35 percent income tax rate for earners in the highest income bracket (http://www. irs.gov/pub/irs-pdf/i1040tt.pdf), the U.S. treasury foregoes $23.6 billion in tax revenue, in effect subsidizing legal assistance for the 1 percent to the tune of $23.6 billion.
23 See Legal Services Corporation, Fact Book 2010 (2011), available at http://lsc.gov/sites/default/files/LSC/pdfs/ LSC_2010_Fact_Book.pdf.
24 Id. (Dividing the 2010 federal Legal Services Corporation budget of $394,582,437 by the 36,0013,627 people in poverty, we arrive at a figure of about $11 per poor person).
25 U.S. Census Bureau, U.S. and World Population Clock, U.S. Department of Commerce (May 28, 2015), http://www. census.gov/main/www/popclock.html (One percent of the U.S. population in 2012 is about 3.13 million people, the $23.6 billion in tax revenues forgone by the government divided by number of one percenters is $754.).
26 This 11.5 percent figure is arrived at as follows: 3,345,154 people in NYC were living below 200 percent of poverty in 2013 (citing U.S. Census Bureau, American Community Survey, 2013, NYC Pop. Data 2013 ACS_13_1YR_B17002). There were 248,732 cases in Housing Court in 2013. See sTaTisTical reporT of acTiviTy of l & T clerk’s office, sT-30- l&T clerk’s office (march 6, 2014), available at http://cwtfhc.org/wp-content/uploads/2014/03/Case_Filings_2013. pdf. 59.5 percent of the Housing Court litigants are too poor to afford a lawyer. See communiTy Training and resource cenTer, housing courTs, evicTions and homelessness: The cosTs and BenefiTs of providing a righT To counsel iv (1993), available at http://cwtfhc.org/wp-content/uploads/pdf/donaldson.pdf. There are thus 147,995 Housing Court cases of people too poor to afford counsel (59.5 percent of 248,732). The average number of people per household in NYC (2009-2013) is 2.61, so there are 386,267 people too poor to afford counsel who have housing court cases in one year (147,995 x 2.61), or 11.5 percent of the City’s poor population (386,267/ 3,345,154). U.S. Census Bureau, State and County QuiCk FaCtS: new york City, new york, u.s. deparTmenT of commerce (April 22, 2015), http:// quickfacts.census.gov/qfd/states/36/3651000.html.
Housing and Community
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