Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, April 18, 1990 TAG: 9004180304
SECTION: NATIONAL/INTERNATIONAL PAGE: A3 EDITION: METRO
SOURCE: Cox News Service
DATELINE: WASHINGTON LENGTH: Medium
The report by the private Center on Budget and Policy Priorities debunked any notions of a bucolic boom.
Instead, it says relatively few highly paid people live in rural areas, while a disproportionately large percentage of the nation's low-income households are located there.
This urban-rural income disparity would be worsened by enacting proposed tax code changes such as lowering the capital gains tax or increasing the availability of tax-deferred Individual Retirement Accounts, the report warned.
Citing Census Bureau data from 1987, the latest available, the report said more than nine of 10 households with incomes of $75,000 or more are located in urban areas. Only 8 percent of these high-income households are in rural areas.
On the other end of the economic scale, 26 percent of all rural households had incomes placing them within the poorest fifth of U.S. households, compared with 18 percent of urban households with incomes so low.
While rural workers have traditionally earned less than their urban counterparts, this pay gully is growing. In 1979, the per capita income in rural areas was 77 percent of the per capita income in urban areas. By 1987, it was down to 73 percent of per capita urban income.
The pay difference between the average urban job and the average rural job grew from about $5,000 in 1979 to nearly $6,200 in 1987. The average urban job produced earnings of $24,455 in 1987, compared with $18,270 for the average rural job.
"The great majority of rural residents have low or moderate incomes. Only a small fraction have high incomes," said the report, "The Rural Disadvantage."
Thus, the report said, rural areas are especially hard hit by programs that benefit the well-to-do more than the poor or lower middle class. Those include proposed cuts in taxes on capital gains and an expansion of Individual Retirement Account tax breaks, it charged.
"More than 94 percent of the benefits from the capital gains cut would go to the top fifth of taxpayers," the report said. While this group makes up 23 percent of urban residents, it includes only about 11 percent of rural residents.
A cut in capital gains taxes would therefore "result in a transfer of income and resources from rural to urban areas, thereby widening rural-urban income disparities," the report said.
Likewise, the top fifth of taxpayers would also benefit most from liberalizing IRA breaks, the report said, and most of these beneficiaries live in cities, not in the country.
The Center on Budget and Policy Priorities is a Washington-based independent research organization that concentrates on issues affecting low- and moderate-income Americans. The center is conducting a series of reports on rural poverty under a grant from the Ford Foundation.
by CNB