I joined CNBC’s Squawk Box this morning along with Mattie Duppler to discuss the coming tech IPO boom, its impact on tax revenues, and how governments will react to the prospective windfall.
How California should handle taxing its tech unicorn companies from CNBC.
As I argue here, and I’ve said before, ambitious progressive policies will require huge amounts of new revenue, more than you can get from simply ratcheting up marginal rates. Wealth tax proposals along the lines of Senator Elizabeth Warren’s plan are where the puck is headed, and the danger is that it carries significant populist appeal that transcends party–to wit, early polling numbers show majority approval of such policies…and that’s just among Republicans. While it won’t happen in the near term at the federal level, single-party towns like Sacramento have both the policy appetite and the political will to be a wealth tax laboratory. Like Willie Sutton, revenue-hungry politicians go where the money is–and in California, that’s big tech and its IPOs.
I spoke with Colin Wilhelm of the Washington Examiner about stubborn public perception of the tax law on the first tax day under the new code.
In fact, about two-thirds of households received tax cuts in 2018, according to an estimate from the Tax Policy Center, a nonpartisan think tank. Only 6% saw tax hikes.
But the perception that more Americans saw a tax increase than not persists.
“No one really knew if they were going to get a tax cut for the first year, year and a half that it was enacted,” said Liam Donovan, a tax lobbyist for Bracewell and former staffer for the National Republican Senatorial Committee. “You already have some of this baked in because this is our second April 15 to come through. Just the sheer length of time from then through now makes the causal link harder.”
Donovan noted that most individuals who received tax cuts got them on an incremental basis, withheld from their biweekly paychecks. Families didn’t get a tangible sign of the tax cuts — there was no single big check in the mail — which likely made it hard for them to keep track of whether they benefited.
Democratic presidential candidates have floated proposals to undo the tax cuts. But Donovan, who saw political parallels between the dynamics of Obamacare and the GOP tax overhaul, thought that would be easier said than done.
“If and when Democrats try to unwind this it comes with a similar risk, in that people don’t like change but that works in both directions,” Donovan said. “Because it’s the devil that you don’t know and the tax system is as winding, and nearly as complex, as the health system.”
Read the full piece here.
Luke Thompson, political consultant and co-host of the National Review podcast Constitutionally Speaking, joins us for a discussion of the world of consulting in politics, the 2020 presidential, and what Constitutional history can show us about modern politics.