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  • States have been on a tax-cutting spree, but revenues are now weakening | CNN Politics

    States have been on a tax-cutting spree, but revenues are now weakening | CNN Politics

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    CNN
     — 

    Fueled by surging revenues, states have been slashing taxes for individuals and businesses for the past three years.

    But the party is expected to come to an end in the coming fiscal year, which started on Saturday in 46 states. Revenue is projected to decline by 0.7% in fiscal 2024, based on forecasts used in governors’ budgets, after an estimated 0.3% dip this fiscal year, according to a recently released National Association of State Budget Officers survey.

    This reversal comes after double-digit percentage increases for the prior two fiscal years. It reflects the impact of slower economic growth, a weaker stock market and a slew of recent tax cuts.

    Some 25 states have cut individual income tax rates since 2021, according to the right-leaning Tax Foundation. This includes 22 states that reduced their top marginal rates.

    “Most states are viewing tax reform and relief as a chance to, first and foremost, return some of their excess revenue to taxpayers, but to also do that in a way that is simultaneously improving the structure of their tax cuts and make it more conducive to long-term economic growth,” said Katherine Loughead, senior policy analyst at the foundation.

    States are also seeking to make themselves more attractive to business investment, as well as to remote and traditional workers, she continued.

    In 2023 alone, at least eight states approved rate reductions, according to the Tax Foundation. Arkansas, for instance, is trimming its top individual income tax rate to 4.7%, retroactive to January 1, after reducing it from 5.5% to 4.9% last year.

    Likewise, Montana lawmakers approved deepening cuts enacted in 2021. Starting in 2024, the top marginal income tax rate will be 5.9%, instead of 6.5% as originally planned. It was 6.9% in 2021.

    In addition, previously scheduled or triggered income tax rate reductions took effect this year in Arizona, Idaho, Iowa, Missouri and North Carolina, as well as for interest and dividend income in New Hampshire, according to the Tax Foundation.

    Aside from individual income tax cuts, states have also lowered the levies on purchases and for businesses over the past three years. Two states cut sales tax rates, while 13 reduced corporate income tax rates and others made additional tax changes that benefited companies.

    In 2023, Nebraska and Utah adopted corporate income tax rate reductions. The former will phase down its top rate to 3.99% in 2027, accelerating an earlier law’s timetable. If fully implemented as planned, Nebraska will slash its top marginal corporate income tax rate nearly in half over six years, according to the Tax Foundation.

    Utah also further reduced its corporate income tax rate to 4.65%, retroactive to January 1. A law passed last year had cut it to 4.85% for 2022, down from 4.95%.

    The tax cuts, along with stock market declines and the shaky economy, have taken their toll on states’ revenues, however.

    State tax revenue fell in 37 states, after adjusting for inflation, between July 2022 and May 2023, according to Lucy Dadayan, principal research associate at the nonpartisan Tax Policy Center. Some 19 states saw declines before taking inflation into account.

    Revenue dropped nearly 12% over the period on an inflation-adjusted basis. All major sources of revenue – personal income, sales and corporate income taxes – declined, though the extent varies widely by state and source. Individual income taxes were the weakest, plummeting more than 22%.

    States are in trouble, though there won’t be an immediate crisis, she said. Much depends on factors that remain unknown, such as whether the nation will fall into a recession or whether states will face natural disasters.

    The robust revenue of recent years was “artificially boosted” by federal Covid-19 pandemic relief funds and the strong stock market in 2021, she said.

    “We knew this is temporary,” Dadayan said. “It would have been better if the states wouldn’t jump and do tax cuts and be more cautious.”

    Still, revenues in fiscal 2023 are coming in stronger than initially expected. The current estimates are outperforming earlier forecasts by 6.5%, according to the National Association of State Budget Officers. Most states have also built up big reserves in their rainy day funds in recent years.

    Whether states will continue cutting taxes in the coming fiscal year will depend on what happens with revenues.

    “A lot of states have done what they can already,” Loughead said. “They will continue to look at how revenues come in and how the rates measure up. If they still are experiencing strong surpluses, I do think they might tweak those rates down even more.”

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  • Russian aircraft harass US drones over Syria for third time this week | CNN Politics

    Russian aircraft harass US drones over Syria for third time this week | CNN Politics

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    CNN
     — 

    Russian aircraft once again harassed US MQ-9 Reaper drones over Syria Friday, the Air Force said, in a sign of increasing friction between the two countries in Middle East airspace.

    The incident marked the third time this week that US drones over Syria were intercepted by Russian aircraft.

    “Earlier today three MQ-9 drones were once again harassed by Russian fighter aircraft while flying over Syria,” commander of US Air Forces Central Lt. Gen. Alex Grynkewich said in a news release. “During the almost two hour encounter, Russian aircraft flew 18 unprofessional close passes that caused the MQ-9s to react to avoid unsafe situations.”

    “We continue to encourage Russia to return to the established norms of a professional Air Force so we can all return our focus to ensuring the enduring defeat of ISIS,” Grynkewich added.

    On Thursday, Russian fighter jets harassed a US MQ-9 Reaper drone that was conducting a mission against ISIS targets in northwest Syria. One of the Russian jets dropped flares in front of US drone in an apparent attempt to hit the drone, forcing it to take evasive maneuvers, the Air Force previously said.

    And earlier in the week, three Russian jets dropped parachute flares in front of three US drones, forcing the drones to take evasive maneuvers. One Russian jet also lit its afterburner in front of a US drone, limiting the drone operator’s ability to safely operate the aircraft.

    Russia is operating in Syria in support of Syrian President Bashar al-Assad, while the US maintains its presence as part of the anti-ISIS coalition.

    While the two countries have used a deconfliction line in Syria over the last several years to avoid unintentional mistakes or encounters that can inadvertently lead to escalation, Russian military actions have increasingly violated the deconfliction protocols, including flying too close to US military bases in Syria.

    But the US wasn’t the only target of harassment from the Russian military this week. On Thursday, a Russian SU-35 fighter jet conducted a “non-professional interaction” with two French Rafale fighter jets that were flying a mission near the Iraq-Syria border, according to the official Twitter account of the French Armed Forces.

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  • Oklahoma governor calls on officials to resign over recording of racist and threatening remarks | CNN

    Oklahoma governor calls on officials to resign over recording of racist and threatening remarks | CNN

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    CNN
     — 

    The governor of Oklahoma is calling on four McCurtain County officials to resign after they allegedly participated in a secretly recorded conversation that included racist remarks about lynching Black people and talking about killing journalists.

    The McCurtain Gazette-News over the weekend published the audio it said was recorded following a Board of Commissioners meeting on March 6.

    The paper said the audio of the meeting was legally obtained, but the McCurtain County Sheriff’s Office said in a statement that it was illegally recorded and is investigating. The sheriff’s office also said it believes the recording had been altered.

    “I am both appalled and disheartened to hear of the horrid comments made by officials in McCurtain County,” Gov. Kevin Stitt said in a statement Sunday. “There is simply no place for such hateful rhetoric in the state of Oklahoma, especially by those that serve to represent the community through their respective office. I will not stand idly by while this takes place,” the statement said.

    The governor called for the immediate resignations of McCurtain County Sheriff Kevin Clardy, District 2 Commissioner Mark Jennings, sheriff’s investigator Alicia Manning and jail administrator Larry Hendrix. He also said he would ask the Oklahoma State Bureau of Investigation to look into the case.

    McCurtain County is in southeastern Oklahoma, about 200 miles from Oklahoma City.

    The recording was made hours after Gazette-News reporter Chris Willingham filed a lawsuit against the sheriff’s office, Manning and the Board of County Commissioners, alleging they had defamed him and violated his civil rights, the newspaper reported.

    In the recording, Manning spoke of needing to go near the newspaper’s office and expressed concern about what would happen if she ran into Willingham, the Oklahoman reported, citing additional reporting from the Gazette-News.

    According to the Oklahoman report, Jennings said, “Oh, you’re talking about you can’t control yourself?” and Manning replied: “Yeah, I ain’t worried about what he’s gonna do to me. I’m worried about what I might do to him. My papaw would have whipped his a**, would have wiped him and used him for toilet paper … if my daddy hadn’t been run over by a vehicle, he would have been down there.”

    Jennings replied that his father was once upset by something the newspaper published and “started to go down there and just kill him,” according to the Gazette-News.

    “I know where two big, deep holes are here if you ever need them,” Jennings allegedly said. Clardy, the sheriff, allegedly said he had the equipment.

    “I’ve got an excavator,” Clardy is accused of saying during the discussion. “Well, these are already pre-dug,” Jennings allegedly said.

    In other parts of the recording, officials expressed disappointment that Black people could no longer be lynched, according to the paper.

    CNN has not been able to verify the authenticity of the recording or confirm who said what. CNN has reached out to all four county officials for comment.

    The Oklahoma Sheriffs’ Association voted Tuesday to suspend the membership of Clardy, Manning and Hendrix, the group’s executive director told CNN.

    Willingham and his father, Bruce Willingham, the paper’s publisher, have been advised to temporarily leave town, CNN affiliate KJRH reported.

    “For nearly a year, they have suffered intimidation, ridicule and harassment based solely on their efforts to report the news for McCurtain County,” Kilpatrick Townsend, the law firm representing the Willingham family, told CNN in a statement.

    The McCurtain County Sheriff’s Office said in a statement Monday that there is an “ongoing investigation into multiple significant violations” of the Oklahoma Security of Communications Act, which makes it “illegal to secretly record a conversation in which you are not involved and do not have the consent of at least one of the involved parties.” It also said the recording has yet to be “duly authenticated or validated.”

    “Our preliminary information indicates that the media released audio recording has, in fact, been altered. The motivation for doing so remains unclear at this point. That matter is actively being investigated,” the statement said.

    The Oklahoma Attorney General’s Office has received an audio recording and is investigating, Communications Director Phil Bacharach said.

    The FBI wouldn’t confirm or deny whether it was involved in the investigation, with spokesperson Kayla McCleery saying it is agency policy not to comment.

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  • Call of Duty to remain on Playstation following Activision Blizzard Microsoft merger | CNN Business

    Call of Duty to remain on Playstation following Activision Blizzard Microsoft merger | CNN Business

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    CNN
     — 

    Microsoft

    (MSFT)     has signed an agreement with Sony

    (SNE)     to ensure “Call of Duty” remains available on PlayStation after Microsoft

    (MSFT)     closes its $69 billion Activision Blizzard

    (ATVI)     merger, the tech giant said Sunday.

    The agreement could resolve long-standing complaints by Sony that the merger — which aims to make Microsoft the third-largest video game publisher in the world — threatens competition. Sony didn’t immediately respond to a request for comment.

    “We are pleased to announce that Microsoft and @PlayStation have signed a binding agreement to keep Call of Duty on PlayStation following the acquisition of Activision Blizzard,” said Phil Spencer, Microsoft’s Xbox head, in a tweet. “We look forward to a future where players globally have more choice to play their favorite games.”

    Sony had been among the loudest critics of the acquisition. Addressing the company’s concerns about the continued availability of “Call of Duty,” one of the industry’s most popular franchises, could help Microsoft overcome any remaining opposition to the deal and usher it to a conclusion.

    In response to competition concerns from regulators around the world, Microsoft had already signed multiyear licensing agreements with rival companies including Nintendo and Nvidia, among others, to ensure Microsoft would not be able to restrict Activision titles from users of those businesses’ platforms and consoles.

    On Sunday, Microsoft did not disclose the duration of the agreement with Sony.

    “From Day One of this acquisition, we’ve been committed to addressing the concerns of regulators, platform and game developers, and consumers,” said Microsoft President Brad Smith in a tweet. “Even after we cross the finish line for this deal’s approval, we will remain focused on ensuring that Call of Duty remains available on more platforms and for more consumers than ever before.”

    During a five-day hearing last month in federal court, Microsoft executives including CEO Satya Nadella testified properties such as “Call of Duty” would not be restricted from competitors following the deal’s close.

    Last week, US District Judge Jacqueline Scott Corley wrote in her opinion the US government had “not shown it is likely to succeed on its assertion the combined firm will probably pull Call of Duty from Sony PlayStation, or that its ownership of Activision content will substantially lessen competition in the video game library subscription and cloud gaming markets.”

    Microsoft faces a contractual deadline of July 18 to close the merger with Activision, though the companies could mutually seek to extend that time frame.

    Last week, Microsoft won two successive court victories when a federal district court and a US appeals court declined to temporarily block the merger from being consummated. The Federal Trade Commission had argued a preliminary injunction was necessary to prevent video game consumers from being immediately harmed by the deal, which regulators said would enable Microsoft to withhold “Call of Duty” and other popular titles from competing consoles and cloud gaming services.

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  • Leading AI companies commit to outside testing of AI systems and other safety commitments | CNN Politics

    Leading AI companies commit to outside testing of AI systems and other safety commitments | CNN Politics

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    CNN
     — 

    Microsoft, Google and other leading artificial intelligence companies committed Friday to put new AI systems through outside testing before they are publicly released and to clearly label AI-generated content, the White House announced.

    The pledges are part of a series of voluntary commitments agreed to by the White House and seven leading AI companies – which also include Amazon, Meta, OpenAI, Anthropic and Inflection – aimed at making AI systems and products safer and more trustworthy while Congress and the White House develop more comprehensive regulations to govern the rapidly growing industry. President Joe Biden met with top executives from all seven companies at the White House on Friday.

    In a speech Friday, Biden called the companies commitments “real and concrete,” adding they will help fulfill their “fundamental obligations to Americans to develop safe, secure and trustworthy technologies that benefit society and uphold our values and our shared values.”

    “We’ll see more technology change in the next 10 years, or even in the next few years, than we’ve seen in the last 50 years. That has been an astounding revelation,” Biden said.

    White House officials acknowledge that some of the companies have already enacted some of the commitments but argue they will as a whole raise “the standards for safety, security and trust of AI” and will serve as a “bridge to regulation.”

    “It’s a first step, it’s a bridge to where we need to go,” White House deputy chief of staff Bruce Reed, who has been managing the AI policy process, said in an interview. “It will help industry and government develop the capacities to make sure that AI is safe and secure. And we pushed to move so quickly because this technology is moving farther and faster than anything we’ve seen before.”

    While most of the companies already conduct internal “red-teaming” exercises, the commitments will mark the first time they have all committed to allow outside experts to test their systems before they are released to the public. A red team exercise is designed to simulate what could go wrong with a given technology – such as a cyberattack or its potential to be used by malicious actors – and allows companies to proactively identify shortcomings and prevent negative outcomes.

    Reed said the external red-teaming “will help pave the way for government oversight and regulation,” potentially laying the groundwork for that outside testing to be carried out by a government regulator or licenser.

    The commitments could also lead to widespread watermarking of AI-generated audio and visual content with the aim of combating fraud and misinformation.

    The companies also committed to investing in cybersecurity and “insider threat safeguards,” in particular to protect AI model weights, which are essentially the knowledge base upon which AI systems rely; creating a robust mechanism for third parties to report system vulnerabilities; prioritizing research on the societal risks of AI; and developing and deploying AI systems “to help address society’s greatest challenges,” according to the White House.

    Asked by CNN’s Jake Tapper Friday about worries he has when it comes to AI, Microsoft Vice Chair and President Brad Smith pointed to “what people, bad actors, individuals or countries will do” with the technology.

    “That they’ll use it to undermine our elections, that they will use it to seek to break in to our computer networks. You know, that they’ll use it in ways that will undermine the security of our jobs,” he said.

    But, Smith argued, “the best way to solve these problems is to focus on them, to understand them, to bring people together, and to solve them. And the interesting thing about AI, in my opinion, is that when we do that, and we are determined to do that, we can use AI to defend against these problems far more effectively than we can today.”

    Pressed by Tapper about AI and compensation concerns listed in a recent letter signed by thousands of authors, Smith said: “I don’t want it to undermine anybody’s ability to make a living by creating, by writing. That is the balance that we should all want to strike.”

    All of the commitments are voluntary and White House officials acknowledged that there is no enforcement mechanism to ensure the companies stick to the commitments, some of which also lack specificity.

    Common Sense Media, a child internet-safety organization, commended the White House for taking steps to establish AI guardrails, but warned that “history would indicate that many tech companies do not actually walk the walk on a voluntary pledge to act responsibly and support strong regulations.”

    “If we’ve learned anything from the last decade and the complete mismanagement of social media governance, it’s that many companies offer a lot of lip service,” Common Sense Media CEO James Steyer said in a statement. “And then they prioritize their profits to such an extent that they will not hold themselves accountable for how their products impact the American people, particularly children and families.”

    The federal government’s failure to regulate social media companies at their inception – and the resistance from those companies – has loomed large for White House officials as they have begun crafting potential AI regulations and executive actions in recent months.

    “The main thing we stressed throughout the discussions with the companies was that we should make this as robust as possible,” Reed said. “The tech industry made a mistake in warding off any kind of oversight, legislation and regulation a decade ago and I think that AI is progressing even more rapidly than that and it’s important for this bridge to regulation to be a sturdy one.”

    The commitments were crafted during a monthslong back-and-forth between the AI companies and the White House that began in May when a group of AI executives came to the White House to meet with Biden, Vice President Kamala Harris and White House officials. The White House also sought input from non-industry AI safety and ethics experts.

    White House officials are working to move beyond voluntary commitments, readying a series of executive actions, the first of which is expected to be unveiled later this summer. Officials are also working closely with lawmakers on Capitol Hill to develop more comprehensive legislation to regulate AI.

    “This is a serious responsibility. We have to get it right. There’s an enormous, enormous potential upside as well,” Biden said.

    In the meantime, White House officials say the companies will “immediately” begin implementing the voluntary commitments and hope other companies sign on in the future.

    “We expect that other companies will see how they also have an obligation to live up to the standards of safety, security and trust. And they may choose – and we would welcome them choosing – joining these commitments,” a White House official said.

    This story has been updated with additional details.

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