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Breakingviews

Breakingviews - Billionaires hang on Georgia as U.S. tax firewall

Georgia Senate candidate Jon Ossoff speaks during U.S. Democratic vice presidential nominee Kamala Harris's campaign rally in Duluth, Georgia, U.S. November 1, 2020. REUTERS/Brandon Bell

SAN FRANCISCO (Reuters Breakingviews) - Billionaires are about to line up for a bite of the Peach State. Rich donors like Blackstone’s Steve Schwarzman have already given millions to keep the U.S. Senate in Republican hands. Now that effort will focus on Georgia, the southern state where two runoff races in January will decide what happens to the upper chamber – and potentially, to affluent Americans’ taxes.

The 1% put their money to work for local races as well as the national presidential contest. Casino magnate Sheldon Adelson and his wife spent $60 million on groups dedicated to preserving the Republican majority in the 100-member chamber, according to the Center for Responsive Politics. Schwarzman gave $20 million to the Senate Leadership Fund and $2 million to support Senator Susan Collins, who successfully defended her seat in Maine.

Who runs the upper chamber of Congress is now the big question. President-elect Joe Biden wants to increase income taxes for those that make more than $400,000 a year. He also wants to increase the levy on capital gains from selling assets for those who make more than $1 million a year. That change becomes a possibility – though not a certainty – if Democrats hold a majority in the Senate. They can only do that by winning in Georgia, which is rerunning the vote for its two seats after no candidate got a majority. Vice President-elect Kamala Harris would then hold the tie-breaking Senate vote.

The candidates themselves matter too. Kelly Loeffler, the Republican running against Democrat Raphael Warnock, has solid finance credentials. She is a former executive at Intercontinental Exchange, which her husband Jeffrey Sprecher runs. Jon Ossoff, the Democrat running for Georgia’s other seat, has bashed the “government safety net” for Wall Street and advocates breaking up big banks. The Adelsons already gave $1.5 million to back Ossoff’s rival David Perdue; hedge fund boss Ken Griffin spent $4 million on groups backing the two Georgia Republicans.

Will money prevail? Democratic former New York Mayor Mike Bloomberg plowed $100 million into Florida’s race, only to see the state back Donald Trump. That suggests on-the-ground political organization is important too. Still, not contributing could be costlier. An American in the top 0.1% could end up paying $1.3 million more in personal taxes per year under Biden, according to analysis by the Wharton School of the University of Pennsylvania. That will put Georgia on every plutocrat’s mind.

Breakingviews

Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.


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