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If You Soak the Rich, Will They Leave?
Cities and states across the country are facing a conundrum: They are desperate for cash because of the ravages of the COVID-19 recession. Rich people are pretty much the only ones who have any, because of both the recession and the yawning inequality that long predated it. But if cities and states raise taxes on the 1 percent, they worry that rich families might simply leave, no longer bound to their offices or their children’s schools. The conundrum is real, and the solution is easy enough: Let the federal government help states and cities circumvent the whole issue.The pandemic recession has battered local coffers, causing revenue losses of an estimated $155 billion in 2020 and $167 billion in 2021, about 6 percent of local revenue. New York alone is projecting a $59 billion shortfall through 2022. The federal government could easily finance those kinds of deficits by issuing bonds. But doing so is harder for local governments, which generally have to keep their budgets balanced and often have limits on their borrowing. When big recessions hit, and the COVID-19 recession is a huge one, many of them have no choice but to raise revenue or cut services.The latter is already happening, despite the fact that schools, child-care operators, and health systems need more money, not less. States and localities have laid off 1 million workers and engaged in extensive furloughs. Connecticut’s governor, Ned Lamont, has asked agencies to identify cuts worth at least 10 percent. For Wyoming, the total is 30 percent; the state is dealing with a collapse in income related to oil-and-gas extraction too. “The cuts we’ve talked about here are getting close to the bone,” Wyoming Governor Mark Gordon told reporters earlier this year. “In some cases, we really are talking about the bone.” (The situation in Wyoming, by the way, proves that this is not simply a blue-state problem, as Republicans in the Senate like to claim.)[Annie Lowrey: How to soak the rich]If cutting to the bone sounds a bit much, the alternative is raising revenue. State and city income-tax takings have held up surprisingly well because job losses and lost hours have been concentrated among low-wage workers unlikely to pay much local income tax to begin with. Rich folks have rebounded and, in some cases, thrived during this recession: Employment is up among high-wage workers, property values are climbing, and the stock market has fully recovered. If anyone’s coffers are getting raided, why not the 1 percent’s?States soaking the rich, or considering it, include New Jersey, which passed a “millionaire’s tax” this summer, taking an additional two percent of any earnings that exceed $1 million. California is contemplating a retroactive measure that would take an additional 3.5 percent of earnings more than $5 million. New York, both state and city, is considering new measures that would hit the wealthiest of the wealthy to pay for schools, homeless shelters, and frontline medical services. Lawmakers in Hawaii, Illinois, Massachusetts, Maryland, Oklahoma, Vermont, and Wisconsin have also proposed tax hikes on high earners.In response, the wealthiest of the wealthy have broadcast a message: Pass the tax hikes and we’ll leave. The billionaire hedge-funder Ken Griffin has spent nearly $50 million—yes, you read that right—fighting Governor J. B. Pritzker’s progressive income-tax proposal in Illinois. If passed, it would mean “the continued exodus of families and businesses,” Griffin said in a statement. Any number of Silicon Valley investor types have threatened to flee to Nevada or Texas if California passes a wealth tax. President Donald Trump claimed recently that he relocated from New York to Florida because of high taxes. Some tax analysts are warning that raising taxes would not raise any additional revenue, precisely because the hikes would cause so many wealthy people to leave.In normal times, legislatures should set such fears aside. Local tax increases can cause high-net-worth individuals to move, tax experts said; tax avoidance and tax arbitrage are multitrillion-dollar affairs, and rich people are sensitive to tax rates. But many of the people who move when their home state raises taxes are close to retirement anyway. Social networks, professional networks, offices, and schools help keep high earners in place. And revenue still tends to rise overall. “There are always a few, sometimes very few, taxpayers who move because of the tax rate, but in general, that’s not really the determining factor,” Lucy Dadayan, a senior research associate at the Tax Policy Center, told me. After the Trump administration’s Tax Cuts and Jobs Act raised rates on high earners by capping the state- and local-tax deduction, the number of ultrarich New Yorkers continued to rise: The city counted 3,528 filers earning more than $5 million in 2016, and 4,412 in 2018.COVID-19 could change the calculus: Social networks have moved online, professional networks have splintered, offices are shut for months to come, and school campuses are closed. Rich workers might feel better about taking off for the Hamptons, Miami, or Tahoe under those circumstances, particularly considering how high the cost of living is in the country’s winner-take-all cities, such as San Francisco, Palo Alto, and New York. But nobody knows when life will normalize post-COVID-19. “How is life going to be in a year?” Dadayan asked. “It’s not easy to make a hasty decision about where to live, and relocation might be temporary.”[Read: The pandemic has created a class of super-savers]Legislatures might want to hold off on making big decisions until next year too. The election may determine whether states and cities need to raise additional revenue at all: Democrats and Republicans have been squabbling for months over whether Uncle Sam should keep filling local budget gaps. If Joe Biden wins and Democrats take the Senate, a large bailout is likely.Given that the federal government can borrow limitlessly, for cheap, and given states’ and cities’ desperate need to funnel more money into constituent services, a bailout is a great idea. “States have balanced-budget requirements, so absent federal aid, they need extra taxes for short-run revenue purposes,” Gabriel Zucman, an economist at UC Berkeley, told me. The federal government “has no short-run revenue need in the current low-rate environment,” as Uncle Sam functionally borrows cash for free.In the long run, lawmakers should keep in mind that tax rates are far from the only reason a rich person might consider flight: Decaying infrastructure and degrading public services are surely just as important. Both the federal government and the states should go ahead and soak the rich to reduce inequality and raise money for health care, child care, infrastructure investment, education, decarbonization, and a thousand other priorities. Zucman noted that the 91 percent top tax bracket in place from World War II to 1963 reduced inequality without reducing innovation or growth. And, I’d add, without causing many greedy, unpatriotic rich people to flee the country.
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theatlantic.com
The Inevitability of Amy Coney Barrett
Senate Republicans were always going to confirm Amy Coney Barrett to a lifetime appointment on the Supreme Court. Conservative voters wanted it, and the party united around the concept. Republicans “believe voting on this justice is a constitutional duty. The nomination happened. There was time to get it done. So they got it done,” Steven Duffield, a Republican former senior Senate aide, told me. Even the highest-ranking Republican leaders aren’t shy about admitting that this may be the party’s last gasp before losing political power for a while. “A lot of what we’ve done over the last four years will be undone sooner or later by the next election,” Republican Senate Majority Leader Mitch McConnell said during a speech yesterday. The Democrats “won’t be able to do much about this for a long time to come.”As it has become harder for the two parties to achieve their goals legislatively, the Supreme Court has become the ultimate trophy, a way to maintain influence over federal policy even when they get voted out of power. Barrett’s confirmation may lead to vicious reprisals in the war over the judiciary, which Republicans openly worry about. But for now, they are just enjoying their success. “The chief value proposition of Donald Trump’s presidency is appointees,” Noah Rothman, an editor at Commentary, told me. Barrett’s confirmation may be “the last act of this presidency,” and if Trump loses next week, “Republicans will look back on [it] fondly.”[Read: The true victors of Trump’s Supreme Court nomination]Barrett is ascending to the high court just eight days before an election that Republicans apparently expect to lose. The stakes couldn’t be higher: In her first few weeks on the job, Barrett is slated to hear a case that could end up overturning the Affordable Care Act, along with a case about whether the government can require a Catholic foster-care agency to place children with same-sex couples. At 48, Barrett will be the youngest justice on the bench, cementing a 6–3 conservative majority. Over the past 50 years, three-quarters of Supreme Court justices were named by Republican presidents, and her appointment will further consolidate the conservative influence on America’s judiciary.Democrats have spent the past month arguing that Barrett’s appointment is “the most rushed, the most partisan, and the least legitimate nomination to the Supreme Court in our nation’s history,” as Senate Minority Leader Chuck Schumer recently said at a press conference, in large part because it’s happening right before the election. “I don’t even come close to buying that,” Gregg Nunziata, a former chief nominations counsel to the Senate Judiciary Committee, told me. Especially after Justice Brett Kavanaugh’s contentious confirmation battle, Republicans believe Democrats have fully embraced norm-breaking in order to win, including by throwing out Senate rules to confirm Democratic nominees and by using procedural maneuvers to tank a Republican nominee. “Why should our guys play by some enhanced rules of etiquette?” Nunziata said. Republicans have followed suit: Senator Lindsey Graham of South Carolina reversed his position on confirming Supreme Court nominees in an election year after Justice Ruth Bader Ginsburg’s death. Besides, the Democrats never had the votes to stop Barrett from getting through. “The fits of pique that we witnessed from Democrats and progressive activists around this event [have] been uniquely impotent,” Rothman said.[Read: How conservatives really feel about Amy Coney Barrett]Republicans claim that Barrett’s confirmation is not about securing a justice who will be friendly to Republican causes: Conservatives look for justices “who have a fealty to the Constitution and not to particular policy goals,” Duffield said. But even among themselves, conservatives disagree about the extent to which Republicans look to the Supreme Court as a firewall for their agenda. Conservative advocacy groups spent millions on swing-state ads meant to pressure Republican senators, points out James Wallner, a Republican former senior Senate staffer and current fellow at the R Street Institute. “It’s nonsense to suggest it’s not supposed to be political,” he told me.Even after four years of controlling the Senate and the White House, along with two years of holding the House of Representatives, “Republicans don’t have a lot to show for [themselves],” Wallner said. “Confirming Barrett right before Election Day is a continuation of a trend: We have to do something.” In the absence of major legislative achievements, he said, the judiciary has become an arena where Republicans, the party of small government, look to entrench their power. The party’s instinct “is not to check the Court. It’s to control the Court,” Wallner said.For voters who care intensely about Supreme Court justices, Barrett’s confirmation is unlikely to change their minds about their preferred candidate. And for voters who don’t follow judicial nominations that closely, it seems unlikely that this confirmation would decide their vote. After all, the president has already appointed two other Supreme Court justices and filled 217 other federal-judiciary seats. Republicans are already anticipating the worst for next week: “It could be a bloodbath of Watergate proportions,” Senator Ted Cruz of Texas recently said on CNBC. Republican losses could continue long after 2020. As my colleague Ronald Brownstein recently wrote, the courts may provide conservatives with recourse against a growing Democratic majority, built on the diversity of Millennial and Gen Z voters: “Every young conservative judge that the GOP has stacked onto the federal courts amounts to a sandbag against that rising demographic wave.”[Read: What the rush to confirm Amy Coney Barrett is all about]The long-term consequences are the ones that will matter: whether Democrats will seek their revenge by attempting to pack the court with liberal-friendly justices after the election, for example, and whether any hope of bipartisan cooperation on judicial nominations is officially dead. “With the erosion of norms, I do worry that, long-term, both parties will be more tempted to put on the bench more explicit partisans, rather than searching for legal excellence,” Nunziata said. In a different time, under a different president, it’s possible that the vote on Barrett’s nomination would have gone differently—less drama, more senators willing to cross party lines. Barrett got unlucky with the timing of her nomination, becoming the face of a political fight she had no control over. “For her sake, and for the sake of the republic, it would have been nice had this process occurred earlier. But that’s not the way Supreme Court vacancies work,” Nunziata said.Republicans understood perfectly that Democrats would protest against installing a justice to the bench just a few days before a potentially transformative election. But Republicans are determined to use their power while they still have it. “It may not be prudent to proceed with filling a vacancy at this time,” Nunziata said. “But we don’t live in an age or enjoy a politics marked by prudence.”
theatlantic.com
The Atlantic Daily: How to Not Go Crazy the Week Before an Election
Every weekday evening, our editors guide you through the biggest stories of the day, help you discover new ideas, and surprise you with moments of delight. Subscribe to get this delivered to your inbox.GETTY / THE ATLANTICWelcome to the great wait. The 2020 election is now close enough that you can feel its dragon breath on your neck. And yet! There’s still one more full week to go.American elections are drawn-out affairs, but this year’s contest may feel particularly long. An unusually high number of voters have cast their ballot early this year. And a pandemic-driven surge in mail-in voting threatens to delay the final tally.Hence: the waiting.The stakes are high, and you’d be justified in spending the next week absorbed in political news. However, if you’re looking for an escape from unstructured doom-scrolling, we’ve compiled six suggestions for how to kill time productively.1. Adjust your expectations. We may not know who the president is on Election Night. Spend time studying up on the “blue shift,” signature matching, and the myriad ways this election could break down, particularly if it’s close.2. If you’re concerned about election integrity, consider taking action. Our staff writer Anne Applebaum put together this citizen’s guide to defending democracy.3. Consider limiting your news consumption. As Lori Gottlieb, our Dear Therapist columnist, wrote back in March: “Bingeing on up-to-the-minute news is like stress eating—it’s bloating our minds with unhealthy food that will make us feel sick.”4. De-stress with an election-anxiety playlist.Spencer Kornhaber, who writes about music, curated 12 songs to help you express impatience, agitation, and hope. Follow along on Spotify. (And keep scrolling for a sample.)5. Kill time by streaming a political drama. Our staff writer Hannah Giorgis recommends Scandal or The West Wing: Oh, to be transported to the electrifying Washington, D.C., of Shonda Rhimes’s imagining, where any political nightmare can be solved as soon as Olivia Pope defiantly announces that “it’s handled.” For an option with less disregard of the Constitution, there’s Aaron Sorkin’s dreamlike The West Wing, where the only thing more important than good-hearted Americans working together is the witty banter that keeps them entertained while they do it. 6. Or read something totally unrelated to politics.Read about a biblical mystery. (It’s a dramatic tale of theft and fraud.) Or about the dark art of stealing from the self-checkout line. (It’s more common than you think.)Our Election-Anxiety PlaylistGETTY / THE ATLANTICSpencer Kornhaber, a staff writer who covers music, picked 12 songs for you: “Here’s a playlist that rummages through pop history to approximate what the next couple of weeks might feel like.”Here are the first three. Follow along on Spotify. 1. Shamir, “Paranoia”To start, let’s slurp down some medication and scream in agony. Black Flag’s “Nervous Breakdown” or Green Day’s “Brain Stew” could have gone here instead, but there’s something very now about the young singer Shamir’s version of the punk-rock freak-out. There’s also something oddly comforting about the playful oh-well quaver of his voice.2. Madonna, “Hung Up”Time goes by … so slowly. But Madonna knows there can be a dark thrill in watching the clock while amped on anger and dread. Pause your podcasts and dance to the spooky mash-up of ABBA and wristwatches.3. Nu Shooz, “I Can’t Wait”Like most songs about waiting and impatience, this 1980s R&B oddity is about romantic tension, not the possibility of court packing. All the same, the arrangement suits this season of fidgeting. Just think of the song’s “baby” as the electorate, whom we’re all begging, “Tell me what is on your mind!”Continue reading the rest.Follow this playlist on Spotify. Did someone forward you this newsletter? Sign up here. Need help? Contact Customer Care.
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theatlantic.com
Massachusetts: Images of the Bay State
Massachusetts is one of the smallest, but most densely-populated states, with a population of nearly 6.9 million. From the Berkshires through the Pioneer Valley to Boston, out to Cape Cod and the Islands, here are a few glimpses of the landscape of Massachusetts, and some of the wildlife and people calling it home.This photo story is part of Fifty, a collection of images from each of the United States.
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theatlantic.com