Harvard economist and former director of the National Economic Council Larry Summers has been making headlines in recent days for his criticism of the wealth tax proposed by Senator Elizabeth Warren (D-Mass.), along with economists Gabriel Zucman & Emmanuel Saez.
One point among many that Summers has made against the proposed wealth tax is that it will not diminish the political influence of wealthy individuals, families, and businesses. Following a recent debate on the proposal, Summers took to Twitter to expand on this point:
The point that Summers is making here is drawing the ire of many progressives, but it’s not wrong and it’s not even theoretical. In fact, the phenomenon and potential response that Summers describes is on display right now in Seattle, where the business community, led by Amazon, is pouring a historic amount of money into the upcoming city council elections, which will be decided next Tuesday, November 5.
The increased political spending in Seattle’s local elections this year follows the Seattle City Council’s controversial May 2018 vote to impose what’s referred to as the “head tax.” The $250 per worker “head tax” applied to any business with annual revenue of $20 million or more. In response to backlash from Amazon and other Seattle employers, Seattle City Council members subsequently repealed the head tax on a 7-2 vote only a month after it was unanimously approved.
Now, in order to help elect a city council that is less hostile to it and other employers, Amazon and other businesses have increased their political engagement in Seattle’s municipal elections by providing heightened financial support for city council candidates who are not as inclined to impose costly new regulations and taxes, like the aborted head tax, as is the current city council.
Last year’s passage of the head tax and the ongoing threat of other harmful proposals has prompted Amazon and others to increase their engagement in local Seattle elections. This logical response from Amazon is analogous to what Larry Summers warns could be the response from those who would be hit by a wealth tax.
What is happening in Seattle right now should be a wake up call to wealth tax proponents who think their plans will depress the political influence and activity of wealthy people and companies. Instead of seeing the situation in Seattle as cause for reconsideration, progressive frontrunners in the Democratic presidential primary are lambasting Amazon’s political engagement.
Bernie Sanders recently tweeted out his opposition to Amazon’s increased giving in local races:
Elizabeth Warren also took to Twitter to rip Amazon for spending on local races in the city where the company is headquartered:
It’s not just Sanders and Warren who think such political spending is terrible. Many other left-of-center politicians talk about their plans for “getting money out of politics.” Yet what these politicians seem to not compute is that their own progressive policy agenda — which calls for a drastic increase in the size and scope of the federal government, involving tens of trillions of dollars worth of costly new taxes and regulations — will nudge businesses and people, particularly those who would be most harmed by the proposed taxes and regulations, to increase their political spending and engagement.
The best way to reduce the amount of money in politics, particularly corporate money, would be to implement reforms that reduce the size and scope of government with policies that are less meddlesome in the private sector. However that’s the opposite of what Bernie Sanders, Elizabeth Warren, and other progressives want to do.
When it comes to progressives who claim to want to get money out of politics, their biggest obstacle is their own agenda. Seattle is just the most recent example of this.