Planet Money: Relocation Incentives: Kansas City vs Kansas City

When Amazon announced the locations for its second headquarters, it ended months of cities and states courting the tech giant with eye-popping tax incentives. A bunch of you wrote us and asked: Why are all these places offering this rich company huge tax breaks? Isn’t Amazon rich enough? Does it make a difference?

Back in 2016, we did an episode about this exact question. We found some answers along a narrow stretch of road that divides Kansas from Missouri. Here it is, with a little update.

Kris Kobach Is the G.O.P. at Its Worst

In his race to be Kansas’ next governor, Kris Kobach represents the ugliest part of today’s Republican Party. He also sounds a lot like the president.

.. Kris Kobach, the state’s secretary of state — and quite possibly the most pernicious public official in America.
.. This distinction is not conferred lightly. Mr. Kobach has labored for it long and hard, notably in the areas of voter suppression and nativism. He is best known for having been the vice chairman of President Trump’s ugly voter fraud commission, spawned in 2017 to root out the millions of illegal voters who Mr. Trump’s ego pathetically, and falsely, claimed had cost him the popular vote in 2016. The commission was dissolved this January, having failed to find any evidence of widespread fraud, but having succeeded in raising Mr. Kobach’s national profile and cementing his reputation as a master purveyor of Trumpism.
Mr. Kobach on Wednesday declared victory at a noon news conference, acknowledging that only 191 votes separated him from Mr. Colyer and that the election result may change as provisional and other ballots are counted. Awkwardly, as the state’s top election official, Mr. Kobach would be the person charged with overseeing any recount of votes. Unless he recused himself, which he has said he would not.
Mr. Kobach is running for governor on a promise to “Make Kansas Great Again.” (#MKGA!)
.. Starting with a failed run for Congress in 2004, Mr. Kobach has regularly sounded the alarm that illegal immigration and widespread voter fraud are destroying this nation. Indeed, he has suggested that fraud played a role in his congressional defeat.
A former constitutional law professor with degrees from Yale, Harvard and Oxford, Mr. Kobach’s specialty is concocting creative legal arguments to achieve controversial political ends — such as, say, forcing Mexico to pay for a border wall. (His plan: use a provision in the Patriot Act to track and tax the remittances that undocumented immigrants send home to family members.)

He was the brains behind the self-deportation proposal for which Mitt Romney was widely mocked in his 2012 presidential run.

..  As an adviser to immigration hard-liners in Arizona — including the felonious-until-pardoned Sheriff Joe Arpaio — he helped write the state law that, among other measures, tasked the local police with verifying the citizenship of anyone they had “reasonable suspicion” to believe was undocumented.

.. ProPublica and The Kansas City Star recently detailed Mr. Kobach’s 13-year history of pitching his consulting services to small towns, helping them enact such ordinances. This has been a profitable gig for Mr. Kobach, but not so much for the towns in question, some of which wound up drowning in legal fees after trying to defend measures that ultimately proved unenforceable.

.. His crowning achievement as secretary of state was a law passed in 2011 requiring people to prove their citizenship before registering to vote. Or, rather, it was his crowning achievement until a federal judge this year struck down the law as unconstitutional.

In the course of that case, Mr. Kobach so violated basic courtroom rules that he was held in contempt and, among other humiliations, ordered to take six hours of legal education.

.. he has a flair for the dramatic and isn’t overly concerned with facts.

.. His speeches contain plenty of red meat, such as comparing Planned Parenthood to the Third Reich’s Josef Mengele.

.. Until early 2017, Mr. Kobach spent several years hosting a local call-in show, on which he held forth on such terrors as the “illegal alien crime wave” that he warned was decimating America.

.. He also got a kick out of indulging the dark fantasies of listeners, such as the 2014 caller fearful that the immigration policies of then-President Barack Obama would lead to the “ethnic cleansing” of whites.

.. Then there was the 2015 caller anxious about whether Mr. Obama might one day decree that “any black person accused of a crime, charged with a crime, is not going to be prosecuted.”

“Well, it’s already happened more or less in the case of civil rights laws,” Mr. Kobach soothed. “So I guess it’s not a huge jump.”

.. in Mr. Kobach, Mr. Trump clearly sees a kindred spirit.

 

 

 

Trump’s Tax on America

It would seem that for the Republican Party, an incompetent, erratic kleptocracy might just be the best form of government.

Or at least it was until March 1, 2018, the day Trump signaled his intention to impose across-the-board import tariffs of 25% on steel and 10% on aluminum. That decision, notes Pat Roberts, a Republican senator from Kansas, “is not going to go down well in farm country.”

..  His worry now is that Trump will pursue “a trade policy that will basically result in all the benefits of the tax reform being taken away by higher manufacturing costs being passed on to consumers.”

.. In the end, American consumers will pay for Trump’s tariffs. Such broad protectionist measures will affect every sector of US manufacturing in one way or another, and manufacturers certainly will not eat the full costs of higher-priced steel and aluminum inputs.

.. So, Trump has essentially proposed a new tax on US consumers and export industries, the costs of which will be borne largely by his own supporters in the American heartland and Rust Belt.

.. It turns out that Trump’s decision was taken against the advice – indeed, over the objections – of not just his

  • chief economic adviser, Gary Cohn, but also his
  • national security adviser, General H.R. McMaster, his
  • treasury secretary, Steven Mnuchin, and his
  • defense secretary, James Mattis.

On the other hand, Secretary of Commerce Wilbur Ross apparently favors the tariffs. But it is not at all clear why. The Department of Commerce itself surely recognizes that more Americans benefit from lower steel and aluminum prices than from higher prices.

Another supporter of the tariffs is Peter Navarro, who was recently promoted to Director of Trade and Manufacturing Policy and Director of the White House National Trade Council. That comes as no surprise. Navarro has written a number of alarmist books about America’s trade relationship with China, including one titled Death by China. Nevertheless, Navarro has not yet been able to explain how creating a larger domestic steel industry through tariffs will yield a net benefit for the US economy.

A final key supporter of the tariffs is US Trade Representative Robert Lighthizer, who formerly worked as a lawyer for the steel industry. As with Ross, it is not entirely clear what Lighthizer is thinking. He has to know that Trump’s tariffs will have little to no chance of boosting the US steel and aluminum industries without also imposing substantial costs on the economy. Doesn’t he realize that his own reputation will ultimately depend on whether the administration has a successful trade policy or an obviously stupid one?

What’s the Matter With Republicans?

Thomas Frank’s “What’s the Matter With Kansas?” In answering his title’s question, Frank argued that hardworking heartland Americans were being duped by a Republican Party that whipped up culture-war frenzy to disguise its plutocratic aims.

.. Middle-class and working-class Republican voters, he insisted, were voting against their own economic self-interest and getting worse than nothing in return.

.. You don’t have to be a dupe to be a “values voter”

.. believe that some moral questions are more important than where to set the top tax rate.

.. embracing theories about how the working class was actually undertaxed, rallying around tax plans that seemed to threaten middle-class tax increases and promoting an Ayn Randian vision in which heroic entrepreneurs were the only economic actor worth defending.

.. Trump has essentially become the Frankian caricature in full

.. a mistake for liberals to suggest that Trump is just returning to the Bush playbook

.. conservatism doesn’t have to be a mix of Randianism and racial resentment

..  a depressing percentage of American conservatives seem perfectly happy with the bargain that Frank claimed defined their party, with a president who ignores their economic interests and public policy more generally and offers instead the perpetual distraction of Twitter feuds and pseudo-patriotic grandstanding.

.. a segment of religious conservatives, like those gathered at last week’s Values Voters Summit, who cheered rapturously for an empty, strutting nationalism and a president who makes a mockery of the remoralized culture that they claim to seek.

.. Far better to have a president who really sticks it to those overpaid babies in the N.F.L. and makes the liberals howl with outrage — that’s what a real and fighting conservatism should be all about!

.. they’ve decided to become part of the caricature themselves, become exactly what their enemies and critics said they were, become a movement of plutocrats and grievance-mongers with an ever-weaker understanding of the common good.

Comments:

they claim patriotism as their own, try to spiritualize secular laws, and demonize immigrants.

Maybe Trump can supporters can live well on spite, resentment, and the veneer of religion (“Merry Christmas!), but I can’t.

.. Jesse The Conservative

The biggest fear of Democrats, is that Conservative Republicans will gain the upper hand–and actually enact some of their ideas–lower taxes, less regulation, free market health care, school choice, tightened welfare guidelines, and control of our borders and enforcement of immigration laws.

Democrats are scared to death that American will become accustomed to lower taxes, more disposable income, a smaller, less intrusive government, a vibrant economy, better schools, better health care, and the enforcement of the rule of law. Liberals know full well, that as soon as Americans return to their free-market, capitalist roots, Conservative messaging will be powerful and direct. Americans will have no problem understanding where their newly-found prosperity comes from.

.. I’m a Republican. I don’t like big government. I am against almost everything they do in DC night and day, aka, The Swamp. I vote on moral issues first and all the rest second. AND, I want the government to do something to return moral values to the center of American life.

.. DougTerry.us

What’s wrong with this picture? I don’t like government and I want government to do something about it!

.. Does anyone remember that Obama was staging war games in Texas a couple of years ago as part of a master plan to take over the country and stay in office? Never mind.

  • The old south still hates “the north” from the Civil War.
  • The far west hates Washington because it owns and controls so much public land.
  • The Republicans generally hate federal taxes because of the vast power amassed by Washington to tax for the common good. They aren’t really interested in that all that much. They want to whack away at “common” and shift to “good for me”, which is, after all, a basic human instinct.

.. Nothing is going to satisfy the dissatisfied 1/4 to 1/3. NOTHING. They are wedded to their grievances.

.. Victor James

.. So forget Reagan and think Brownback, the Kansas version of Trump who led that state into financial ruin. Brownback only denied financial reality, but Trump has that beat by a mile.

.. Francis W

.. The most depressing thing about the rise of Trump is that a sizable percentage of the population really wants a bullying, inexperienced narcissist to be president and and another substantial percentage didn’t see it as a major problem when they cast their vote last fall.

.. WallyWorld

.. There has been one balanced, pragmatic, Republican President since Dwight Eisenhower, and that’s George H.W. Bush, and the party cast him out for trying to be responsible about the budget deficit. Trump did not create the current Republican party, he merely fully unmasked it. The Republican party of today is full of a lot of very dark and dangerous thinking, governing out of animus and resentment, all from a base of ignorance. It’s bad out there.

Most U.S. States Aren’t Prepared For the Next Recession

Just 16 states have adequate backup money on hand, according to a new Moody’s Analytics analysis

If the next recession hit the U.S. this year, more than a quarter of states would be financially unprepared to weather even a moderate downturn, according to a new report.

Fifteen states would struggle in the case of a recession-related tax revenue slump and spike in demand for services, such as Medicaid. They are more than 5 percentage points below the share of funds left in their budgets they would need to tap, according to a new Moody’s Analytics analysis. Another 19 states narrowly fall short.

Just 16 states have adequate backup money on hand, with Alaska having almost three times as much as the state would need to keep its economy buoyant.

 

STATE
EXTRA CASH ON HAND
NECESSARY BACKUP FUNDS
DIFFERENCE BETWEEN EXTRA CASH AND NECESSARY BACK-UP FUNDS
Louisiana 3.10% 27.20% -24.00%
North Dakota 0.70% 20.10% -19.40%
Oklahoma 4.00% 16.00% -12.10%
New Mexico -1.10% 10.00% -11.10%
Illinois 0.40% 11.10% -10.70%
Colorado 5.30% 15.10% -9.80%
New Jersey 1.40% 11.00% -9.60%
Pennsylvania -1.80% 6.90% -8.80%
Missouri 5.40% 13.80% -8.40%
Kansas 1.60% 9.20% -7.60%

Four Rules for the Coming Tax Reform Debate

True reform will require a bipartisan consensus around closing loopholes to pay for the lowering of statutory tax rates paid by businesses, and reducing burdens on working families. Changing tax law must be done in a fiscally responsible way, without cutting taxes for the very wealthy.

First, changes in the tax rates for individuals must at least maintain the current levels of progressivity

  1. Cutting tax rates for the very wealthy would deepen the income inequality that underlies the anxiety and anger among American voters. If Congress doesn’t preserve or increase progressivity, we won’t have the resources to pay for investments like infrastructure and child care.
    • .. Congress must also maintain the estate tax, which is levied only on estates worth more than $5.49 million ($10.98 million for a couple), affects only the wealthiest 0.2 percent and protects small businesses, including family farmers.
    • .. Many of the estates that are taxed have assets that have increased in value but have never been subject to capital gains tax, and never will be. The idea that the estate tax imposes double taxation is largely a myth.
  2. Second, tax cuts must be offset by revenue-raising measures. With the country in the ninth year of an economic recovery, the case for pure stimulus is weak, and digging a deep hole of debt by cutting taxes will make it harder to pay for other priorities.
    • Tax cuts need to be revenue neutral, paid for by reducing tax subsidies, ending loopholes or generating new revenue.
  3. Third, Congress should rely on its Joint Committee on Taxation and the Congressional Budget Office to estimate what a tax bill will cost.
    1. Claims that tax cuts pay for themselves must be treated with great skepticism.
    2. Such a reckless move would almost surely produce an explosion of debt. In 1981, 2001 and 2003, tax cuts based on projections that they would largely pay for themselves did not, and when deficits soared, future presidents had to make hard choices to restore fiscal stability.
  4. Fourth, business tax reform must not open up new loopholes for top earners to evade taxes. Proposals to lower the tax rate on “pass-through” income (income that partnerships, sole proprietorships, S corporations and limited-liability companies “pass through” to owners) would create a costly, unpoliceable loophole. Wealthy individuals and businesses could easily reorganize on paper to take advantage of low pass-through rates.
    1. most pass-through income goes to wealthy individuals and big businesses like hedge funds and large oil and gas pipeline companies organized as limited partnerships.
    2. Kansas instituted a similar policy in 2012 and repealed it this year after 100,000 new pass-throughs emerged — among them the coach of the University of Kansas basketball team, who had his salary paid to a pass-through entity to escape state income tax. Yet job and economic growth in Kansas lagged that of most neighboring states, evidence that the policy did not produce the growth that supporters promised

Trump has a plan to change the tax code to make himself much, much richer

The plan creates a massive loophole with which ordinary people can evade taxes. Instead of just working for Vox.com, I could form DylanCorp LLC, contract with Vox to provide writing services, and pay a 15 percent rate on DylanCorp’s earnings rather than my current 25 percent rate. For rich people paying a top rate of 39.6 percent (or the top individual rate of 33 percent that Trump proposed during the campaign)

.. A new study finds that when Kansas exempted pass-through income, the result wasn’t more investment or growth but a surge in this kind of tax avoidance.

.. the Trump Organization, and the entire Trump family. The Trump Organization isn’t a “C corporation.” It doesn’t pay corporate income tax. Instead, it’s structured as a collection of pass-through enterprises, so the vast majority of income accruing to Trump and his family is taxed through this system. Trump almost certainly pays the 39.6 percent rate on his earnings, so he’s cutting his own top tax rate by more than half. It’s the most transparently self-interested policy he’s proposed since taking office, and it will likely save him tens of millions of dollars.

.. That return also implied that without the alternative minimum tax, which Trump wants to repeal, he would have paid less than 3.5 percent of his income in federal income taxes. Cutting the pass-through rate while repealing the AMT would probably reduce his tax burden to roughly half that level. Instead of paying $38 million, he could’ve paid less than $3 million.

.. A paper by Berkeley economist Stefano DellaVigna and co-authors found that Italian Prime Minister Silvio Berlusconi’s TV network, Mediaset, saw profits grow by at least €1 billion during his time as premier, not necessarily due to graft but because businesses shifted advertising to Mediaset as a way to lobby Berlusconi.