Sunday, December 17, 2017

The Tax Bill That Inequality Created

Photo
Credit Carlo Giambarresi
Most Americans know that the Republican tax bill will widen economic inequality by lavishing breaks on corporations and the wealthy while taking benefits away from the poor and the middle class. What many may not realize is that growing inequality helped create the bill in the first place.
As a smaller and smaller group of people cornered an ever-larger share of the nation’s wealth, so too did they gain an ever-larger share of political power. They became, in effect, kingmakers; the tax bill is a natural consequence of their long effort to bend American politics to serve their interests.
As things stand now, the top 1 percent of the population by wealth — the group that would primarily benefit from the tax bill — controls nearly 40 percent of the country’s wealth. The bottom 90 percent has just 27 percent, according to the economists Thomas Piketty, Emmanuel Saez and Gabriel Zucman. Just three decades ago these numbers were almost exactly the reverse: The bottom 90 percent owned nearly 40 percent of all wealth. To find a time when such a tiny minority was so dominant, you have to go back to the Great Depression.
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An Egregious Wealth Gap Returns

The net worth of the richest Americans continues to eclipse that of almost everybody else, more so than at any time since the Great Depression.
Percent of net personal wealth held by the
top 1% of Americans
50%
2014:
39%
40%
Wealth of
top 1 percent
exceeds
bottom 90
30%
27%
20%
Percent of net personal wealth held by the
bottom 90% of Americans
10%
1913
’20s
’30s
’40s
’50s
’60s
’70s
’80s
’90s
’00s
’10s
As kingmakers, rich families have supported candidates who share their hostility to progressive taxation, welfare programs and government regulation of any kind. These big-money donors have pushed the Republican Party in particular further to the right by threatening well-funded primary challenges against anybody who doesn’t toe the line on tax cuts for the rich and other pro-aristocracy policies. The power of donors has contributed to political polarization and made the federal government less responsive to the needs of most voters, a new book by Benjamin Page of Northwestern University and Martin Gilens of Princeton University argues.
The power of the one-percenters may help explain why President Trump, who ran as a populist, has not only abandoned any pretense of fighting for the working class but also joined Republicans in Congress in ripping up regulations that protect families and the environment — in order to help business tycoons. Together, they’ve tried to repeal the Affordable Care Act. Its repeal would have deprived millions of people of health insurance while trimming taxes for high-income families. Now, they want to cut taxes on corporations and offer new loopholes to the rich, even if that means hurting their own constituents by limiting the ability of middle-class families to deduct state and local taxes on their tax returns.
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Most political campaigns now rely on a small group of wealthy donors who give tens of thousands of dollars or more per election cycle. About 40 percent of contributions to campaigns during the 2016 federal election came from an elite group of 24,949 donors, equivalent to 0.01 percent of the adult population. In 1980, the top 0.01 percent accounted for only 15 percent of all contributions, according to an analysis by Adam Bonica, a Stanford professor, and his collaborators.
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Campaigns for the Very Few

An elite group of “superdonors” — 24,949 people in the last federal election — contributed an enormous share of campaign funding.
… made about
… and
Those superdonors, who make up
of the adult population,
or one out of every 10,000 people …
of all
of all
contributions
in 1980 …
contributions
in 2016.
Average 1980 contribution in 2016 dollars:
Average 2016 contribution:
$14,795
$108,459
Of course, the growing importance of wealthy donors is not exclusively a Republican phenomenon. Democratic candidates have also benefited from the largess of wealthy donors like George Soros, Tom Steyer and James Simons. But on economic and tax issues, big-money liberal donors have not really shoved their party to the far left. Donations from Wall Street and corporate America have, in fact, pushed many Democrats to the center or even to the right on issues like financial regulation, international trade, antitrust policy and welfare reform.
Further, liberal donors have been nowhere near as skillful at coordinating their giving as conservative donors have been. No liberal organization comes close to rivaling the network of donors and political activists created by the conservative Koch brothers, says Theda Skocpol, a professor at Harvard, who has written extensively about these issues. The Koch network has spent years methodically pushing state and federal lawmakers to cut regulations, taxes and government programs for the poor and the middle class. The leading donor network on the left, the Democracy Alliance, is smaller and much less successful.
Even allowing for money “wasted” on losing candidates and failed causes, the donor class has notched many impressive wins. Tax rates have fallen substantially, with the top marginal income tax rate now just below 40 percent, from 70 percent when Ronald Reagan won the presidency. The top corporate tax rate has dropped to 35 percent, from 46 percent in 1980, and many businesses pay an effective rate that is much lower than that. While supply-side economics remain mostly a Republican fiction, politicians from both parties have supported the effort to reduce taxes on capital — profits, capital gains and dividends — on the grounds that this would spur investment and make American businesses more competitive.
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Decades of Falling Taxes

Under the Republican plan, the top corporate tax would fall to less than half of what it was for most of the 1950s, ’60s and ’70s.
100%
94%
91%
Top individual rate
80
70%
60
52%
48%
Proposed
new rates:
40%
Corporate rate
40
37%
35%
21%
20
1913
’20s
’30s
’40s
’50s
’60s
’70s
’80s
’90s
’00s
’10s
But the cuts have done little to bolster the economy or the working class. In fact, incomes have stagnated, and workers have been forced to part with a larger share of their pretax earnings in the form of payroll taxes.
Meanwhile, where are the political champions of poor Americans? Whoever they are, they haven’t been producing results. Wages for the poorest have languished, partly because Congress has been so slow to raise the minimum wage — $7.25 an hour since 2009 — that its purchasing power is now about 10 percent less than it was in 1968. Lawmakers and conservative judges have also undermined workers by making it harder for them to unionize, so they are not in a position to demand better pay and better working conditions.
This tax bill would exacerbate all these trends. The Urban-Brookings Tax Policy Center and the Joint Committee on Taxation, both respected, both nonideological, say the bill would primarily benefit the wealthy and would leave most poor and middle-class Americans worse off over the long run. That’s without Congress doing anything else to widen the gap. But even now, Mr. Trump and Republicans in Congress are talking about cutting government programs like Medicare, Medicaid and Social Security next year to help make up for the more than $1 trillion the tax bill would add to the federal deficit.
Inequality in America does not have to be self-perpetuating. When people turn up at the polls, as they did recently in Alabama, they can produce unexpected results. That’s why Republican lawmakers might want to think again about whether they want to be the means through which their wealthy donors pull off this heist.

Wednesday, December 13, 2017

How the Tide Turned Against Roy Moore in Alabama

Big cities, college towns and black communities sent a wave of energized voters to cast ballots for Doug Jones, the Democratic Senate candidate, in Alabama on Tuesday. At the same time, many white suburbanites deserted President Trump’s choice, Roy S. Moore, and much of the president’s white rural bloc stayed home.
Here are statewide results for the race, compared with the 2016 presidential election.
50
70%
Vote share
Democrat
Republican
Presidential Election 2016
BirminghamMontgomeryMobileHuntsvilleTuscaloosa
U.S. Senate Special Election 2017
BirminghamMontgomeryMobileHuntsvilleTuscaloosa
Turnout change from
2014 governor race
+14%
Change in G.O.P. margin
from Trump 2016
-14 pct. pts.
Write-in votes1.7%
There was a discernible write-in vote, but most of the protest against the Republican candidate seemed to be registered in votes for his opponent.

Suburban White Voters

An ominous harbinger for Republicans in future elections came from areas with mostly white voters who have relatively high incomes and higher levels of education. Solidly Trump in 2016, those areas showed far less enthusiasm for the president’s United States Senate candidate one year later and seemed motivated to register their doubts: Turnout was up, and write-ins were high.
These are counties that are at least 75 percent white, and where at least 20 percent of residents have a college degree.
Presidential Election 2016
PrattvilleDaphneEnterpriseFlorenceAthensDecaturAlabaster
U.S. Senate Special Election 2017
PrattvilleDaphneEnterpriseFlorenceAthensDecaturAlabaster
Turnout change from
2014 governor race
+18%
Change in G.O.P. margin
from Trump 2016
–14 pct. pts.
Write-in votes2.3%

Big Cities

The most committed voters were in the state’s larger cities. Residents in Birmingham, Mobile, Huntsville and Montgomery, which have high populations of black residents and young professionals, turned out in unusually high numbers, and Mr. Jones won more than 60 percent of the vote. Democrats and allied groups ran a widespread, but quiet, turnout campaign, which may have juiced the urban voting.
Here are results from the state’s four biggest counties.
Presidential Election 2016
BirminghamHuntsvilleMobileMontgomery
U.S. Senate Special Election 2017
BirminghamHuntsvilleMobileMontgomery
Turnout change from
2014 governor race
+31%
Change in G.O.P. margin
from Trump 2016
–13 pct. pts.
Write-in votes1.8%

Trump’s Biggest Supporters

The belt of predominantly white counties that were Mr. Trump’s most enthusiastic backers appeared to be the most demoralized: Turnout was down 45 percent from a year ago.
Here are results from counties that voted for Mr. Trump by 80 percent or more.
Presidential Election 2016
CullmanFort PayneAlbertvillePell CityJasper
U.S. Senate Special Election 2017
CullmanFort PayneAlbertvillePell CityJasper
Turnout change from
2014 governor race
–5%
Change in G.O.P. margin
from Trump 2016
–9 pct. pts.
Write-in votes1.6%

College Towns

Turnout in college towns was especially high in the Senate race, as was the antipathy toward Mr. Moore. Mr. Trump won Lee County, home to Auburn University, with 58 percent of the vote; Mr. Moore won just 41 percent.
College students “dislike Trump intensely, disagree dramatically with the G.O.P. on most or all social issues, and regard Republicans as being from a moon of Jupiter,” said Larry J. Sabato, the director of the Center for Politics at the University of Virginia. “Over time, this will be deadly to the G.O.P.”
These counties are the state’s youngest, and home to major colleges.
Presidential Election 2016
AuburnTroyTuscaloosa
U.S. Senate Special Election 2017
AuburnTroyTuscaloosa
Turnout change from
2014 governor race
+24%
Change in G.O.P. margin
from Trump 2016
–16 pct. pts.
Write-in votes1.8%

Black Voters

In overwhelmingly black rural counties, Republican votes went from few to fewer. Turnout was higher than in the 2014 governor’s election, but did not grow as much as in other areas. These counties are at least 60 percent black.
Presidential Election 2016
Selma
U.S. Senate Special Election 2017
Selma
Turnout change from
2014 governor race
+10%
Change in G.O.P. margin
from Trump 2016
–5 pct. pts.
Write-in votes0.0%
Note: Turnout change is the number of voters in 2017 compared with another off-year election, the 2014 governor’s race.