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Biden targets America’s wealthiest with proposed minimum tax on billionaires
Biden targets America’s wealthiest with proposed minimum tax on billionairesTax on households over $100m aims to ensure wealthiest Americans no longer pay lower rate than teachers and firefighters Joe Biden proposed a new tax on America’s richest households when he unveiled his latest budget on Monday.The Biden administration wants to impose a 20% minimum tax on households worth more than $100m. The proposal would raise more than $360bn over the next decade and “would make sure that the wealthiest Americans no longer pay a tax rate lower than teachers and firefighters”, according to a factsheet released by the White House.‘I make no apologies’: Biden stands by ‘Putin cannot remain in power’ remarkRead moreThe plan – called the “billionaire minimum income tax” – is the administration’s most aggressive move to date to tax the very wealthiest Americans.The tax is part of Biden’s $5.8tn budget proposal for 2023, which also sets aside billions for the police and military as well as investments in affordable housing, plans to tackle the US’s supply chain issues and gun violence.“Budgets are statements of values, and the budget I am releasing today sends a clear message that we value fiscal responsibility, safety and security at home and around the world, and the investments needed to continue our equitable growth and build a better America,” Biden said in a statement.Billionaire wealth grew significantly during the coronavirus pandemic, helped by soaring share prices and a tax regime that charges investors less on their gains than those taxed on their income.“In 2021 alone, America’s more than 700 billionaires saw their wealth increase by $1tn, yet in a typical year, billionaires like these would pay just 8% of their total realized and unrealized income in taxes. A firefighter or teacher can pay double that tax rate,” the White House factsheet notes.Under the plan households worth more than $100m would have to give detailed accounts to the Internal Revenue Service of how their assets had fared over the year. Those who pay less than 20% on those gains would then be subject to an additional tax that would take their rate up to 20%.The Biden administration calculates that the tax would affect only the top 0.01% of American households, those worth over $100m, and that more than half the revenue would come from households worth more than $1bn.The budget also looks set to tackle another issue that some economists have argued contributes to widening income inequality: share buybacks.In recent years cash-rich companies including Apple, Alphabet, Meta and Microsoft, have used their funds to buy back huge quantities of their own shares, boosting their share price. Last year companies in the S&P 500 bought back a record $882bn of their own shares and Goldman Sachs estimates that figure will rise to $1tn this year.Critics say that the purchases divert money from hiring new staff, raising wages and research and development.Research by the Securities and Exchange Commission (SEC) shows that there is “clear evidence that a substantial number of corporate executives today use buybacks as a chance to cash out”.The Biden proposal would stop executives from selling their shares for three years after a buyback is announced.Biden attempted to impose a 1% tax on share buybacks last year but the proposal failed in Congress. Both Biden’s billionaire tax and the share buyback proposal will also face tough opposition in Congress.TopicsUS taxationBiden administrationUS politicsUS economyJoe BidenUS domestic policynewsReuse this content More
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Republican senator says tax rises in own plan are ‘Democratic talking points’
Republican senator says tax rises in own plan are ‘Democratic talking points’Rick Scott of Florida grilled on Fox News Sunday about suggested income tax rise and letting social security and Medicare fall A Republican senator and reputed presidential hopeful found himself in a tough spot when he claimed tax rises contained in his own “11 point plan to rescue America” were “Democratic talking points” instead.‘Rick Scott had us on lockdown’: how Florida said no to $70m for HIV crisisRead more“No, no, it’s in the plan!” his interviewer exclaimed, on Fox News Sunday. “It’s in the plan!”Rick Scott, from Florida, is a former healthcare chief executive whose company admitted 14 felonies related to fraudulent practices. As the South Florida Sun-Sentinel put it, “most happened under Scott’s leadership”.As the Guardian reported, when Scott was governor of Florida “his administration presided over the effective blocking of $70m in federal funds available for fighting the state’s HIV crisis”.Scott beat an incumbent Democrat for a Senate seat in 2018 and is now chair of the National Republican Senatorial Committee (NRSC) as the party eyes a Senate takeover in the midterm elections.Last month, Scott released an “11 Point Plan to Rescue America”. It proposes that more Americans pay federal income tax and says Congress could “sunset” social security and Medicare within five years, meaning allow them to lapse.The plan immediately came under fire.The non-partisan Institution on Taxation and Economic Policy (Itep) said Scott’s plan “would increase taxes by more than $1,000 on average for the poorest 40% of Americans”.Itep also noted the effect Scott’s plan would have on Republican heartlands, saying the states most affected, “where more than 40% of residents would face tax increases, are … Mississippi, West Virginia, Arkansas, Louisiana, Alabama, Kentucky, Oklahoma, Georgia, New Mexico, South Carolina and … Florida”.Mitch McConnell, the Republican leader in the Senate, disowned the plan, saying: “We will not have as part of our agenda a bill that raises taxes on half the American people and sunsets social security and Medicare within five years.”Dana Milbank, a Washington Post columnist, said Scott had given Democrats a much-needed election-year gift.“All Democrats need do,” he wrote, regarding a plan which would also cut trade with China and slash tax-gathering resources, “is repeat Scott’s own words.”The Fox News Sunday host John Roberts asked Scott: “Why would you propose something like that in an election year?”Scott said Roberts was repeating “Democrat talking points”.“No, no, it’s in the plan!” Roberts said. “It’s in the plan!”Scott said: “But here’s the thing about reality for a second.”Roberts said: “But, Senator, hang on. It’s not a Democratic talking point! It’s in the plan!”Scott defended his plan, saying, “We ought to every year talk about exactly how we are going to fix Medicare and social security” but “no one that I know of wants to sunset” either.“Here’s what’s unfair,” he added, of his tax plan. “We have people that … could go to work and have figured out how to have government pay their way. That’s not right. They ought to have some skin in the game. I don’t care if it’s a dollar. We ought to all be in this together.”Scott is reportedly Donald Trump’s choice to replace McConnell as Senate leader – an effort that shows no sign of succeeding.Scott was asked if, with a Wall Street Journal column entitled “Why I’m Defying Beltway Cowardice”, he was calling McConnell a coward. He dodged the question, saying he wanted “to get something done”.Complaining about “the woke left” and Democratic policy on immigration and energy, he said: “We’ve got to change this. You don’t change it without having a plan.”TopicsUS midterm elections 2022RepublicansUS taxationUS domestic policyUS SenateUS CongressUS politicsnewsReuse this content More
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Big oil could bring US gas prices down but won’t – so hit it with a windfall tax | Robert Reich
Big oil could bring US gas prices down but won’t – so hit it with a windfall taxRobert ReichIn the US, in times of crisis, the poor pay the price and the rich cash in. Democrats know it doesn’t have to be this way This morning I filled my car with gas, costing almost six dollars a gallon. My car is a Mini Cooper I bought years ago, partly because it wasn’t a gas-guzzler. Now it’s guzzling dollars.Putin and Trump have convinced me: I was wrong about the 21st century | Robert ReichRead moreWhen I consider what’s happening in Ukraine, I say what the hell. It’s a small sacrifice.Yet guess who’s making no sacrifice at all – in fact, who’s reaping a giant windfall from this crisis?Big oil has hit a gusher. Even before Vladimir Putin’s war, oil prices had begun to rise due to the recovery in global demand and tight inventories.Last year, when Americans were already struggling to pay their heating bills and fill up their gas tanks, the biggest oil companies (Shell, Chevron, BP, and Exxon) posted profits totaling $75bn. This year, courtesy of Putin, big oil is on the way to a far bigger bonanza.How are the oil companies using this windfall? I can assure you they’re not investing in renewables. They’re not even increasing oil production.As Chevron’s top executive, Mike Wirth, said in September, “We could afford to invest more” but “the equity market is not sending a signal that says they think we ought to be doing that.”Translated: Wall Street says the way to maximize profits is to limit supply and push up prices instead.So they’re buying back their own stock in order to give their stock prices even more of a boost. Last year they spent $38bn on stock buybacks – their biggest buyback spending spree since 2008. This year, thanks largely to Putin, the oil giants are planning to buy back at least $22bn more.Make no mistake. This is a direct redistribution from consumers who are paying through the nose at the gas pump to big oil’s investors and top executives (whose compensation packages are larded with shares of stock and stock options).Though it’s seldom discussed in the media, lower-income earners and their families bear the brunt of the burden of higher gas prices. Not only are lower-income people less likely to be able to work from home, they’re also more likely to commute for longer distances between work and home in order to afford less expensive housing.Big oil companies could absorb the higher costs of crude oil. The reason they’re not is because they’re so big they don’t have to. They don’t worry about losing market share to competitors. So they’re passing on the higher costs to consumers in the form of higher prices, and pocketing record profits.It’s the same old story in this country: when crisis strikes, the poor and working class are on the frontlines while the biggest corporations and their investors and top brass rake it in.What to do? Hit big oil with a windfall profits tax.The European Union recently advised its members to seek a windfall profits tax on oil companies taking advantage of this very grave emergency to raise their prices.Democrats just introduced similar legislation here in the US. The bill would tax the largest oil companies, which are recording their biggest profits in years, and use the money to provide quarterly checks to Americans facing sticker shock as inflation continues to soar.It would require oil companies producing or importing at least 300,000 barrels of oil per day to pay a per-barrel tax equal to half the difference between the current price of a barrel and the average price from the years 2015 to 2019.This is hardly confiscatory. Those were years when energy companies were already recording large profits. Quarterly rebates to consumers would phase out for individuals earning more than $75,000 or couples earning $150,000.Republicans will balk at any tax increase on big oil, of course. They and the coal-industry senator Joe Manchin even tanked the nomination of Sarah Bloom Raskin to the Fed because she had the temerity to speak out about the systemic risks that climate change poses to our economy.But a windfall profits tax on big oil is exactly what Democrats must do to help average working people through this fuel crisis. It’s good policy, it’s good politics and it’s the right thing to do.
Robert Reich, a former US secretary of labor, is professor of public policy at the University of California at Berkeley and the author of Saving Capitalism: For the Many, Not the Few and The Common Good. His new book, The System: Who Rigged It, How We Fix It, is out now. He is a Guardian US columnist. His newsletter is at robertreich.substack.com
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Share the Profits! Why US business must return to rewarding workers properly | Robert Reich
Share the profits! Why US businesses must return to rewarding workers properlyRobert ReichThe economy is booming and corporate profits are huge, but American wages still stagnate. History provides the answer According to this week’s release from the commerce department, the US economy has been growing at its fastest pace in almost 40 years. Corporate profits are their highest in 70 years. And the stock market, although gyrating wildly of late, is still scoring record gains.Where egos dare: Manchin and Sinema show how Senate spotlight corrupts | Robert ReichRead moreSo why do most Americans remain gloomy about the economy? Mainly because their real (inflation-adjusted) wages continue to go nowhere.Steeply-rising profits, economic growth and stock market highs – coupled with near-stagnant wages – has been the story of the American economy for decades. Most economic gains have gone to the top.So why not share the profits?Profit-sharing was tried with great success in the early decades of the 20th century but is now all but forgotten. In 1916, Sears, Roebuck & Co, then one of America’s largest corporations with more than 30,000 employees, announced it would begin to share profits with its employees, giving workers shares of stock and thereby making them part-owners.The idea caught on. Other companies that joined the profit-sharing bandwagon included Procter & Gamble, Pillsbury, Kodak and US Steel.The Bureau of Labor Statistics suggested profit-sharing as a means of reducing “frequent and often violent disputes” between employers and workers. Profit-sharing gave workers an incentive to be more productive, since the success of the company meant higher profits would be shared. It also reduced the need for layoffs during recessions because payroll costs dropped as profits did.By the 1950s, Sears workers had accumulated enough stock that they owned a quarter of the company. And by 1968, the typical Sears salesperson could retire with a nest egg worth well over $1m, in today’s dollars.The downside was that when profits went down, workers’ paychecks would shrink. And if a company went bankrupt, workers would lose all their investments in it. The best profit-sharing plans took the form of cash bonuses that employees could invest however they wish, on top of predictable wages.But profit-sharing with regular employees all but disappeared in large US corporations. Ever since the early 1980s when corporate “raiders” (now private-equity managers) began demanding high returns, corporations stopped granting employees shares of stock, presumably because they didn’t want to dilute share prices. Sears phased out its profit-sharing plan in the 1970s.Yet, just as profit-sharing with regular employees disappeared, profit-sharing with top executives took off, as big Wall Street banks, hedge funds, private equity funds and high-tech companies began doling out huge wads of stock and stock options to their MVPs.The result? Share prices and chief executive pay (composed increasingly of shares of stock and options to buy stock) have gone into the stratosphere, while the wages of the typical worker have barely risen.Researchers have found that before the 1980s, almost all the increases in share prices on the US stock market could be accounted for by overall economic growth. But since then, a large portion of the increases have come out of what used to go into wages.Jeff Bezos, who now owns around 10% of Amazon’s shares, is worth $170.4bn. Other top Amazon executives hold hundreds of millions of dollars of shares. But most of Amazon’s employees, such as warehouse workers, haven’t shared in the bounty.Amazon used to give out stock to hundreds of thousands of its employees. But in 2018 it stopped the practice and instead raised its minimum hourly wage to $15. The wage raise got headlines and was good PR – Amazon is still touting it – but the decision to end stock awards was more significant. It hurt employees far more than the increased minimum helped them.Corporate sedition is more damaging to America than the Capitol attack | Robert ReichRead moreIf Amazon’s 1.2 million employees together owned the same proportion of Amazon’s stock as Sears workers did in the 1950s – a quarter of the company – each Amazon worker would now own shares worth an average of more than $350,000.America’s trend toward higher profits, higher share prices, mounting executive pay but near stagnant wages is unsustainable, economically and politically.Profit-sharing is one answer. But how can it be encouraged? Reduce corporate taxes on companies that share profits with all their workers, and increase taxes on those that do not.Sharing profits with all workers is a logical and necessary step to making the system work for the many, not the few.
Robert Reich, a former US secretary of labor, is professor of public policy at the University of California at Berkeley and the author of Saving Capitalism: For the Many, Not the Few and The Common Good. His new book, The System: Who Rigged It, How We Fix It, is out now. He is a Guardian US columnist. His newsletter is at robertreich.substack.com
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New York attorney general alleges Trump firm misled banks and tax officials
New York attorney general alleges Trump firm misled banks and tax officialsCourt filing says investigators are seeking to question Donald Trump and his two eldest children The New York attorney general’s office has told a court that its investigators have uncovered evidence that Donald Trump’s company used “fraudulent or misleading” asset valuations to get loans and tax benefits.The court filing late on Tuesday said state authorities had not yet decided whether to bring a civil lawsuit in connection with the allegations, but that investigators needed to question Trump and his two eldest children as part of their inquiries.The former US president and his lawyers say the investigation is politically motivated.In the court documents, the office of the attorney general, Letitia James, gave its most detailed accounting yet of its investigation into allegations that Trump’s company repeatedly misstated the value of assets to get favourable loan terms or reduce its tax burden.Using personal financial statements from 2004 to 2020 that were filed by Trump’s accounting firm, Mazars, the attorney general’s office said the Trump Organization overstated the value of land donations made in New York and California on paperwork submitted to the IRS to justify several million dollars in tax deductions.New York attorney general subpoenas Donald Trump Jr and Ivanka Trump – reportRead moreThe company misreported the size of Trump’s Manhattan penthouse, saying it was nearly three times its actual size – a difference in value of about $200m (£147m), James’s office alleged, citing deposition testimony from Trump’s longtime financial chief Allen Weisselberg, who was charged last year with tax fraud in a parallel criminal investigation.Valuations of Trump golf clubs in Westchester county, New York and Scotland were inflated, the attorney general’s office says, with the Trump Organization claiming that multiple, ultimately nonexistent mansions worth millions of dollars had been built on the family’s family estate. The company also claimed that there were $150,000 initiation fees into Trump’s Westchester golf course that were never collected.Citing this new additional evidence that Trump and the Trump Organization made fraudulent and misleading asset valuations to boost their appearance to potential lenders and investors, James’ office detailed its findings in a court motion seeking to force Trump, his daughter Ivanka Trump and his son Donald Trump Jr to comply with subpoenas seeking their testimony.Messages seeking comment were left with lawyers for the Trumps.Trump’s legal team has sought to block the subpoenas, calling them “an unprecedented and unconstitutional manoeuvre”. They say James is improperly attempting to obtain testimony that could then be used in the parallel criminal investigation, being overseen by the Manhattan district attorney, Alvin Bragg.Trump sued James in federal court last month, seeking to put an end to her investigation. In the suit, his lawyers claimed the attorney general, a Democrat, had violated the Republican’s constitutional rights in a “thinly veiled effort to publicly malign Trump and his associates”.In the past, the Republican ex-president has decried James’s and Bragg’s investigations as part of a “witch-hunt”.In a statement late on Tuesday, James’s office said it had not decided whether the evidence outlined in the court papers merited legal action, but the investigation should proceed unimpeded.How Trump’s $50m golf club became $1.4m when it came time to pay taxRead more“For more than two years, the Trump Organization has used delay tactics and litigation in an attempt to thwart a legitimate investigation into its financial dealings,” James said.“No one in this country can pick and choose if and how the law applies to them. We will not be deterred in our efforts to continue this investigation and ensure that no one is above the law.”Although James’s civil investigation is separate from the criminal investigation, her office has been involved in both, sending several lawyers to work side by side with prosecutors from the Manhattan DA’s office.One judge has previously sided with James on other matters relating to the investigation, including making another Trump son, the Trump Organization executive Eric Trump, testify after his lawyers abruptly cancelled a scheduled deposition.Last year, the Manhattan district attorney brought tax fraud charges against the Trump Organization and Weisselberg. Weisselberg pleaded not guilty to charges alleging he and the company evaded taxes on lucrative fringe benefits paid to executives.Both investigations are at least partly related to allegations made in news reports and by Trump’s former personal lawyer Michael Cohen that Trump had a history of misrepresenting the value of assets. Associated Press contributed to this reportTopicsDonald TrumpUS taxationNew YorkUS politicsnewsReuse this content More
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The US jobs report was a warning sign – even before the Omicron surge | Robert Reich
The US jobs report was a warning sign – even before the Omicron surgeRobert ReichThe Fed wants to raise interest rates and coronavirus support programs are ending. Millions of families stand to suffer Friday’s jobs report from the Department of Labor was a warning sign about the US economy. It should cause widespread concern about the Fed’s plans to raise interest rates to control inflation. And it should cause policymakers to rethink ending government supports such as extended unemployment insurance and the child tax credit. These will soon be needed to keep millions of families afloat.US workforce grows by just 199,000 in disappointing DecemberRead moreEmployers added only 199,000 jobs in December. That’s the fewest new jobs added in any month last year. In November, employers added 249,000. The average for 2021 was 537,000 jobs per month. Note also that the December survey was done in mid-December, before the latest surge in the Omicron variant of Covid caused millions of people to stay home.But the Fed is focused on the fact that average hourly wages climbed 4.7% over the year. Central bankers believe those wage increases have been pushing up prices. They also believe the US is nearing “full employment” – the maximum rate of employment possible without igniting even more inflation.As a result, the Fed is about to prescribe the wrong medicine. It’s going to raise interest rates to slow the economy – even though millions of former workers have yet to return to the job market and even though job growth is slowing sharply. Higher interest rates will cause more job losses. Slowing the economy will make it harder for workers to get real wage increases. And it will put millions of Americans at risk.The Fed has it backwards. Wage increases have not caused prices to rise. Price increases have caused real wages (what wages can actually purchase) to fall. Prices are increasing at the rate of 6.8% annually but wages are growing only between 3-4%.The most important cause of inflation is corporate power to raise prices.Yes, supply bottlenecks have caused the costs of some components and materials to rise. But large corporations have been using these rising costs to justify increasing their own prices when there’s no reason for them to do so.Corporate profits are at a record high. If corporations faced tough competition, they would not pass those wage increases on to customers in the form of higher prices. They’d absorb them and cut their profits.But they don’t have to do this because most industries are now oligopolies composed of a handful of major producers that coordinate price increases.Yes, employers have felt compelled to raise nominal wages to keep and attract workers. But that’s only because employers cannot find and keep workers at the lower nominal wages they’d been offering. They would have no problem finding and retaining workers if they raised wages in real terms – that is, over the rate of inflation they themselves are creating.Astonishingly, some lawmakers and economists continue to worry that the government is contributing to inflation by providing too much help to working people. A few, including some Democrats like Joe Manchin and Kyrsten Sinema, are unwilling to support Biden’s Build Back Better package because they fear additional government spending will fuel inflation.Joe Biden needs to stand up and fight Manchin like our lives depend on it | Daniel SherrellRead moreHere again, the reality is exactly the opposite. The economy is in imminent danger of slowing, as the December job numbers (collected before the Omicron surge) reveal.Many Americans will soon need additional help since they can no longer count on extra unemployment benefits, stimulus payments or additional child tax credits. This is hardly the time to put on the fiscal brakes.Policymakers at the Fed and in Congress continue to disregard the elephant in the room: the power of large corporations to raise prices. As a result, they’re on the way to hurting the people who have been taking it on the chin for decades – average working people.
Robert Reich, a former US secretary of labor, is professor of public policy at the University of California at Berkeley and the author of Saving Capitalism: For the Many, Not the Few and The Common Good. His new book, The System: Who Rigged It, How We Fix It, is out now. He is a Guardian US columnist. His newsletter is at robertreich.substack.com
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