Can Taxing the Wealthy Fix the Economy?
Taxing the rich is having a moment in American politics, even more than usual.
For decades, Democrats and Republicans in Washington have battled over how much money the highest-earning Americans should send to the federal government each year — a fight that has mostly played out between a few percentage points of the top marginal rate of income taxes. President Bill Clinton raised that rate, George W. Bush lowered it, and Barack Obama raised it again. President Trump’s 2017 tax cuts lowered it. It was the political equivalent of watching two football teams push the ball back and forth between the 40 yard lines.
As the 2020 election approaches, a new crop of Democratic candidates has opened a much larger field of play on the issue, cheered by voters who tell pollsters the economy is stacked against the working class and in favor of the rich. Those candidates are looking beyond the income tax — which many of them would increase for the rich, to be clear — and offering plans to tax wealth, investments and a variety of other hallmarks of the economic top 1 percent.
Senator Elizabeth Warren of Massachusetts suggests a tax on the 75,000 wealthiest American households, as well as a suite of increased investment and payroll taxes on high earners. Senator Bernie Sanders of Vermont wants to increase significantly the tax rate that heirs must pay when inheriting large estates, to raise the top income tax rate above 50 percent and to increase taxes for businesses and for wealthy investors who earn money from dividends and capital gains.
The flurry of proposals are entwined with questions of economic fairness, mobility and efficiency. JIM TANKERSLEY
CLOSE INHERITANCE LOOPHOLES The government should eliminate the so-called “step-up in basis” for assets that are passed on at death, which allows wealthy heirs to avoid taxes.
INCREASE TAX COMPLIANCE More funding should be allocated for tax enforcement to increase compliance and raise more tax revenue.
BETTER BENEFITS FOR WORKING FAMILIES The earned-income tax credit could be improved and expanded in ways that increase fairness and mobility.
Some members of the panel, including James Pethokoukis, a fellow at the American Enterprise Institute, viewed the proposal of a wealth tax as simply punitive, arguing that it targeted the wealthy without accomplishing larger aims like fairness or social mobility. Other members, including Gene Sperling, a former economic adviser to Presidents Obama and Clinton, argued that this is an important moment in which the concept of fairness and economic dignity has become central to the larger debate around tax reform. Abigail Disney argued it was wrong for people like her, who inherit wealth, to pay lower taxes than people who work for their income.
Task Force Moderator: Jim Tankersley, economic and tax policy correspondent, The New York Times. Participants: Lily Batchelder, Frederick I. and Grace Stokes Professor of Law, N.Y.U. Law School; Abigail Disney, filmmaker and activist, Fork Films and Level Forward; John Bryant, founder, chairman and chief executive, Operation HOPE; Robert Glenn Hubbard, dean emeritus and Russell L. Carson Professor of Economics and Finance and Professor of Economics; Columbia University; Stephanie Kelton, professor of economics and public policy, Stony Brook University; Jacob Leibenluft, executive vice president for policy, Center for American Progress; Grover Norquist, president, Americans for Tax Reform; James Pethokoukis, DeWitt Wallace Fellow, American Enterprise Institute; Kyle Pomerleau, chief economist, Tax Foundation; Steven Rattner, chairman and chief executive, Willett Advisors; Tiffany Smith, chief tax counsel, Senate Finance Committee; Gene B. Sperling, former national economic adviser, presidents Obama and Clinton; G. Warren Whitaker, partner, Day Pitney; Vanessa Williamson, senior fellow, Brookings Institution; Kathryn Wylde, president and chief executive, Partnership for New York City; Mark Zandi, chief economist, Moody’s Analytics.
How to Deal With Legal Weed
Cannabis legalization in the United States and Canada was promoted as a radical social experiment that would tame the illegal trade and usher in a new era of responsible drug use.
However, the results have been mixed.
Hundreds of illegal dispensaries in California continue to proliferate, and the state’s governor, Gavin Newsom, recently ordered National Guard troops near the Mexican border to go after black market cannabis farms. And pot regulations have been unevenly applied. While major cities like Los Angeles and San Francisco host cannabis retailers, 80 percent of California’s nearly 500 municipalities do not.
In Canada, it has been nearly a year since the country became the first major world economy to legalize recreational cannabis — a seminal moment akin to ending Prohibition in the United States. Yet a black market that has previously been estimated at 5.3 billion Canadian dollars continues to thrive, and legal sales are far below what proponents of legalization had hoped for.
Six months after Canada legalized pot for recreational use, more than 40 percent of Canadian cannabis users said they bought it from illegal sources, according to a recent report from Canada’s national statistics office. Proponents of legalization argue that it is far too early to pass judgment; it took several years for legal sales in Colorado to surpass 70 percent, for example. DAN BILEFSKY
BETTER EDUCATION ABOUT RISKS Amid the notion that legalization has not been met by adequate education about risks of use, the industry should be required to fund a campaign to educate people on the risks of cannabis, but not be involved in writing the literature. Education should have a strong focus on youth to try and delay the onset of teen use.
CONNECT BANKS WITH LEGAL DISTRIBUTORS Most members of the group were in favor of the Safe Banking Act, which would destigmatize financial relations between banks and businesses that might have an ancillary relationship with cannabis companies, although some in the group strongly objected.
Normalizing banking industry relations with cannabis companies, growers and retailers will help bring businesses out of the illicit market.
Some members of the panel did not agree that cannabis should be legal, given its illegality at the federal level. While most people agreed with the necessity of some amnesty, as the criminal justice system disproportionately affects people from marginalized communities, there was little agreement on what decriminalization should look like.
Task Force Moderator: Dan Bilefsky, Canada correspondent, The New York Times. Participants: Alex Berenson, author of “Tell Your Children”; Hilary Black, chief advocacy officer, Canopy Growth Corporation; David Damschen, state treasurer, Utah; Kassandra Frederique, New York State director, Drug Policy Alliance; Sion Harris, director of Center for Adolescent Substance Use and Addiction Research, Boston Children’s Hospital; Steve Hawkins, executive director, Marijuana Policy Project; Rob Nichols, president and chief executive, American Bankers Association; Emily Paxhia, co-founder and managing director, Poseidon; Michelle Peace, associate professor department of forensic science, Virginia Commonwealth University; Kevin Sabet, president, SAM; Steve White, chief executive, Harvest Health & Recreation; Hope Wiseman, chief executive, Mary and Main.
What Will End the Student Debt Crisis?
Americans owe nearly $1.6 trillion on student loans. The debt has tripled in less than 15 years and eclipsed the amount due on credit cards, auto loans and all consumer debts outside of mortgages. For a generation of students — and, in many families, their parents — the cost of college has become a crisis. One in four adult Americans has student loan debt; the typical borrower owes more than $20,000.
The federal government is the primary lender for those who borrow for college, and the Education Department has effectively become one of the nation’s biggest banks. It directly holds more than $1.2 trillion in loans owed by 34 million people.
There are signs that the burden is weighing on the broader economy. Homeownership rates among those under 32 dropped significantly over the last decade, which is partly attributable to their student loan debts, Federal Reserve researchers said in a recent report. The increase in debt has also hindered small business formation, reduced young adults’ retirement savings and contributed to lower marriage rates, economists have found.
The issue has become a signature policy point for some 2020 presidential hopefuls. STACY COWLEY
EXPAND TARGETED DEBT RELIEF Most panelists agreed that some portion of the $1.6 trillion owed on student loans needed to be written off. The government’s current income-based repayment plans on federal student loans (which can culminate in debt forgiveness) should be improved and may also need to be paired with outright debt elimination for some borrowers.
EXPAND FREE PUBLIC EDUCATION; ASK MORE OF STATES AND BUSINESSES Students are guaranteed a free education from kindergarten through high school, but that education is no longer sufficient for many jobs. Offering free higher education — as more than a dozen states have done, to varying degrees — can keep students out of debt and improve the nation’s work force. But successful outcomes require a sustained and nuanced commitment from states and, ideally, from employers, too.
The panel broadly agreed that student lending should be restructured to make the amount students repay for higher education more contingent on their post-college income. But there was strong disagreement about whether the approach should focus on improved income-based repayment options or should shift to income-share agreements, in which students agree to pay a portion of their future income to a financier in exchange for an education. Some panel participants said they wanted the federal government to exit student lending entirely.
Task Force Moderator: Rebecca Blumenstein, deputy managing editor, The New York Times. Participants: Mary Clare, policy analyst, The Heritage Foundation; Sheila Bair, director, Volcker Alliance; Sandy Baum, nonresident fellow, Urban Institute; Rachel Carlson, chief executive and co-founder, Guild Education; Seth Frotman, executive director, Student Borrower Protection Center; Ashley Harrington, senior policy counsel, Center for Responsible Lending; Drew Holler, senior vice president of associate experience, Walmart; Farnam Jahanian, president, Carnegie Mellon University; Geoff Lewis, founder and managing partner, Bedrock; Yvette Mozie-Ross, vice provost for enrollment management and planning, University of Maryland, Baltimore County; Gov. Gina Raimondo of Rhode Island; James Runcie, president and executive director, The Education Finance Institute; Mark Schlissel, president, University of Michigan; Benjamin Wiseman, director, office of consumer protection, Office of the Attorney General for the District of Columbia; Daniel Zibel, vice president and chief counsel, National Student Legal Defense Network.
Can Pricing Carbon Stall Climate Change?
Earlier this month, the 10 top-polling Democratic primary candidates took part in a CNN town hall event on climate change, the first prime-time televised forum devoted to the issue in a presidential campaign.
In perhaps the most significant development of that night, nine of the 10 candidates openly embraced the idea of putting a tax or fee on carbon dioxide pollution. While most economists agree it is the best way to cut emissions, it has drawn intense political opposition, such as from the so-called yellow-vest protesters in France last winter, when protests shut down the Louvre and the Eiffel Tower.
And this year, even as the issue of climate change gained political prominence, progressive lawmakers did not include a carbon tax or price in the Green New Deal.
Still, recent scientific reports, which have concluded that the impacts of climate change — stronger storms, droughts, heat waves, rising sea levels and flooding — are already being felt, have also called more explicitly on governments to respond by pricing carbon.
Polls have shown that rising numbers of Democratic primary, millennial and independent voters see climate change as an increasingly important issue. But the political path for the promise of turning that pledge into legislation remains steep and tricky. CORAL DAVENPORT
NET ZERO EMISSIONS Although the panel could not reach consensus on how exactly we would get here, they agreed the federal government needs to place a limit on greenhouse gases with the goal of net zero emissions by no later than 2050, combined with carbon pricing.
REDIRECT FUNDS IN POSITIVE WAYS A portion of the revenue from carbon pricing should go toward underserved and low-income communities, supporting them in a just and equitable transition away from fossil fuels.
Members of the panel were divided on whether trading a carbon tax in exchange for stripping away regulations would be the most effective way to lower emissions. While most members of the panel agreed with the necessity of a price on carbon in general, there was little agreement on how to make a price on carbon palatable to Republicans and businesses, or even whether appealing to them is an important element to consider.
Task Force Moderator: Coral Davenport, energy and environmental policy correspondent, The New York Times. Participants: Vicki Arroyo, executive director, Georgetown Climate Center; Jason Bordoff, founding director of Center on Global Energy Policy, professor of professional practice in international and public affairs, Columbia University; Carlos Curbelo, principal, Vocero; United States Representative Ted Deutch, Florida; Rhiana Gunn-Wright, policy director, New Consensus; Ted Halstead, chief executive and chairman, Climate Leadership Council; Nate Hurst, chief sustainability social impact officer, HP; Fred Krupp, president, Environmental Defense Fund; Erich Pica, president, Friends of the Earth U.S.; Mary Powell, chief executive and president, Green Mountain Power; Barry Rabe, professor of public policy, University of Michigan; Valerie Smith, managing director and global head, corporate sustainability, Citi; William Snape III, senior counsel Center for Biological Diversity, professor American University Law School; Alison Taylor, chief sustainability officer, Archer Daniels Midland Company; Daniel Zarrilli, chief climate policy adviser and OneNYC director, New York City Office of the Mayor.
How to Keep Private Data Private
New revelations seem to emerge every month or so about privacy violations by the internet’s biggest platforms. With concerns over online privacy increasing, United States regulators and lawmakers are scrambling to create laws and regulations to protect internet users.
The result so far has amounted to a fractured and often dizzying regulatory landscape for businesses trying to navigate the limits of their ability to collect, share and protect user data.
It has been a striking turn of events for Silicon Valley, which Democrats and Republicans had for years sought to bolster by limiting laws that could curb the growth of America’s brightest engine of economic growth. But with Europe’s implementation last year of a privacy law known as the General Data Protection Regulation and issues like Facebook’s mishandling of data harvested by the political consulting firm Cambridge Analytica, the question for lawmakers is not whether to regulate, but how forcefully.
Members of Congress have promised a new comprehensive federal privacy law to keep in step with Europe’s groundbreaking law. There are even state and federal proposals to put a price on the value of personal data, and internet companies would have to pay users in order to profit from their information. CECILIA KANG
PASS A COMPREHENSIVE FEDERAL LAW The law would pre-empt (or nullify) one in California that is about to go into place, because the existence of state and federal laws creates a confusing regulatory landscape. This federal law must create baseline standards on the kind of data collection companies can pursue.
BETTER ENFORCEMENT OF REGULATIONS A federal law should include greater enforcement abilities on the federal level, specifically at the Federal Trade Commission. The F.T.C. should be given more resources with a bigger budget from Congress, as well as rule-making authority. States should still be able to enforce a federal law.
One member, Gabriel Weinberg, the founder and chief executive of DuckDuckGo, proposed a law called Do Not Track that would enable consumers to limit data tracking, giving them more control over their data and also solving a problem with competition in the tech industry, where Google and Facebook command the online advertising industry. Several members disagreed with Mr. Weinberg’s proposal because they said it was too narrow and could defeat the broader goal of a comprehensive federal law.
Task Force Moderator: Cecilia Kang, national technology correspondent, The New York Times. Participants: Michael Beckerman, president and chief executive, Internet Association; Patrick Berlinquette, search engine marketer, Berlin SEM; Lindsey Finch, executive vice president, global privacy & product legal and chief privacy officer, Salesforce; Joan Khoury, chief marketing officer, Oppenheimer & Company; Nicola McCormick, general counsel, GroupM Worldwide; Laura Pirri, senior director, legal — privacy, product & regulatory, Fitbit; Kalinda Raina, head of global privacy, LinkedIn; Jessica Rich, former director Bureau of Consumer Protection, Federal Trade Commission; Julian Sanchez, senior fellow, Cato Institute; Susan Shook, global privacy officer, director — associate general counsel, The Procter & Gamble Company; Gabriel Weinberg, founder and chief executive, DuckDuckGo.
Can Cyberattacks Be Prevented?
At the end of World War I, the airplane, invented to speed transport, suddenly looked fearsome. It had been turned into a weapon of war. It was still a matter of debate whether the aeroplane, as the British called it, could cause mass chaos or threaten entire cities. But that is what happened a quarter-century later.
The same debate now rages over cyberpower. Connectivity has changed our lives and made possible applications we never dreamed of decades ago — with many more to come. But we are way past the moment when the biggest fear is spies using cyber for espionage, or thieves draining our bank accounts because we clicked on the wrong link in a phishing scam. Cyberattacks can range from election interference, to the manipulation of financial or medical data, to the physical destruction of equipment, whether nuclear centrifuges or entire power grids.
A series of ransomware attacks this summer has proved that for all the talk about major advances in protecting ourselves, small towns, school boards and water districts are wildly vulnerable to extortion. With a few exceptions, the best protected have spent tens of millions of dollars on detection and deterrence.
And now there is another concern: New high-speed 5G networks will create all kinds of new applications, but they will also allow attacks to move much more quickly and create new vulnerabilities. “We can’t forget,’’ said Brad Smith, president of Microsoft, “that every better tool is also a better weapon.” DAVID E. SANGER
BAN THE TERM “CYBERSECURITY” There are huge differences between the theft of intellectual property, the breach of a bank account, a disinformation campaign and a state-sponsored attack to shut down a power plant or a missile launch. And protecting against each attack involves a radically different approach. Grouping them all as “cybersecurity” problems makes solving them harder. Instead, focus on the kind of problem we are trying to solve and think of comprehensive ways to approach them — some of which will involve cyber protections, but some of which won’t.
NONDIGITAL BACKUPS FOR ELECTIONS Some functions are too important to trust to the vulnerabilities of electronic manipulation. There is no excuse for not having a forensic trail for elections that is nondigital, and thus not subject to digital attacks. And these systems need resilience. At a moment when the government is worried about “ransomware” attacks on states, cities and town voter registration databases, make sure the voter rolls are backed up and printed out.
Vast amounts of information about vulnerabilities is classified by the government — making it hard to discuss, much less protect against. Our experts disagreed on whether there could be a presumption that vulnerabilities are quickly, if not instantly, shared. The intelligence agencies fiercely want to protect their sources and methods, and the big users of this data say collecting it is useless if the government is going to spend weeks or months before sending up an alert.
Task Force Moderator: David E. Sanger, national security correspondent and senior writer, The New York Times. Participants: Dmitri Alperovitch, chief technology officer and co-founder, CrowdStrike; Neil Chatterjee, chairman, Federal Energy Regulatory Commission; Nicole Eagan, chief executive, Darktrace; Victoria Espinel, president and chief executive, BSA | The Software Alliance; United States Representative Michael Gallagher of Wisconsin; Avril Haines, former deputy director of the C.I.A.; Lorraine Hariton, president and chief executive, Catalyst. Ryan Macias, owner, RSM Election Solutions; Elizabeth Petrie, managing director, emerging technology risk & analytics, Citi; Neill Sciarrone, co-founder and president, Trinity Cyber; Nick Selby, director of cyber intelligence and investigations, New York City Police Department; Suzanne Spaulding, senior adviser, homeland security, international security program, Center for Strategic and International Studies; Phil Venables, senior adviser of risk and cybersecurity, and board director, Goldman Sachs Bank.