Michele Carew, an elections administrator with 14 years of experience, has resigned after a monthslong campaign by Trump loyalists to oust her. “I’m leaving on my own accord,” she said.
An elections administrator in North Texas submitted her resignation Friday, following a monthslong effort by residents and officials loyal to former President Donald Trump to force her out of office.
Michele Carew, who had overseen scores of elections during her 14-year career, had found herself transformed into the public face of an electoral system that many in the heavily Republican Hood County had come to mistrust, which ProPublica and The Texas Tribune covered earlier this month.
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Her critics sought to abolish her position and give her duties to an elected county clerk who has used social media to promote baseless allegations of widespread election fraud.
Carew, who was hired to run elections in Hood County two-and-a-half months before the contested presidential race, said in an interview that she worried that the forces that tried to drive her out will spread to other counties in the state.
“When I started out, election administrators were appreciated and highly respected,” she said. “Now we are made out to be the bad guys.”
Critics accused Carew of harboring a secret liberal agenda and of violating a decades-old elections law, despite assurances from the Texas secretary of state that she was complying with Texas election rules.
Carew said she is joining an Austin-based private company and will work to help local elections administrator offices across the country run more efficiently. She will oversee her final election in early November before leaving Nov. 12.
David Becker, executive director of the Center for Election Innovation and Research, a nonprofit that seeks to increase voter participation and improve the efficiency of elections administration, said Carew’s departure is the latest example of an ominous trend toward independent election administrators being forced out in favor of partisan officials.
“She is not the first and won’t be the last professional election official to have to leave this profession because of the toll it is taking, the bullies and liars who are slandering these professionals,” said Becker, a former Department of Justice lawyer who helped oversee voting rights enforcement under presidents Bill Clinton and George W. Bush. “We are losing a generation of professional expertise. We are only beginning to feel the effects.”
Though experts say it is difficult to determine how many elections officials have left their positions nationally, states like Pennsylvania and Ohio have seen numerous departures. According to the AP, about a third of Pennsylvania’s county election officials have left in the last year and a half; in Ohio, one in four directors or deputy auditors of elections have left in the southwestern part of the state, according to The New York Times.
Hood County would seem an unlikely place for disputes over the last presidential election given that Trump won 81% of the vote there, one of his largest margins of victory in the state. Across the country, partisans’ demands for audits have mostly focused on counties and states carried by President Joe Biden, particularly those that went for Trump four years earlier.
But Texas, despite going for Trump by 6 percentage points, has seen its fair share of blowback. Last month, the Texas secretary of state announced a “comprehensive forensic audit” of four of the state’s largest counties hours after Trump issued a public letter demanding audits of the state’s results.
Before that, in July, Texas passed sweeping voting legislation that critics say disenfranchises vulnerable voters and unfairly targets administrators and other elections officials. Among the law’s provisions are new criminal penalties for election workers accused of interfering with expanded powers given to poll watchers.
On Saturday, after blasting the four-county audit plan as “weak,” Trump threatened the speaker of the Texas House of Representatives with a primary challenge if the speaker didn’t advance a bill that would allow audits in more counties.
In Hood County, the local GOP executive committee likewise issued warnings to Republican officials who defended Carew. In July, the committee threatened County Judge Ron Massingill with a social media campaign that would tell voters he was “incapable of providing them with free and fair elections” if he didn’t convene the county’s elections commission to discuss Carew’s termination.
Massingill refused, arguing that no political party should be able to direct the activities of the independent elections administrator. Katie Lang, the county clerk and vice chair of the county’s election commission, convened the meeting and moved to fire Carew. Carew survived the vote by a 3-2 margin, with Massingill and the county tax assessor, both Republicans, joining the Hood County Democratic chair.
Republican County Chair David Fischer called on county commissioners to dissolve the independent office of elections administrator and transfer election duties to Lang, which he said would make the election administration process more accountable to the county’s Republican majority.
Counties in Texas can choose between hiring an independent elections administrator, who is meant to be insulated from political pressures, or letting a county official, often an elected county clerk, run elections. County clerks, who manage functions like property records and birth certificates, run elections in many of the state’s smallest counties.
Fischer has declined to speak with ProPublica and The Texas Tribune.
On social media, Lang has shared “Stop the Steal” and “Impeach Biden” memes and videos. Lang made national headlines in 2015 after refusing to issue a marriage license to a gay couple following the U.S. Supreme Court’s landmark decision legalizing same-sex marriage. Lang did not respond to a request for comment on Monday, but she previously told the Hood County News she wished Carew “the best in her future endeavors.”
Over the last year, Carew has come under fire for everything from her connection with the League of Women Voters, which critics say is anti-Trump, to her interest in a $29,000 grant, funded in part by Facebook founder Mark Zuckerberg, that would have been used to pay for costs related to the pandemic.
She was also accused of harboring a hidden agenda after refusing to allow a reporter with the fervently pro-Trump One America News Network into a private training for election professionals in March when she headed the Texas Association of Elections Administrators.
The most sustained criticism of Carew came from critics who accused her of violating the law by not adhering to an obscure election law that requires ballots to be consecutively numbered.
But seven election experts and administrators told ProPublica and the Tribune that consecutively numbering ballots is out of step with best practices in election security and voter privacy, and that consecutive numbering is not required to conduct effective election audits.
Despite the toll the last year has taken on her, Carew on Monday remained defiant. “I’m leaving on my own accord,” she said. “I’m the one who wins in the end.”
Leaked documents reveal the e-commerce company’s private-brands team in India “secretly exploited internal data” to copy products from other sellers and rigged search results.
U.S. Sen. Elizabeth Warren on Wednesday renewed her call to break up Amazon after internal documents obtained by Reutersrevealed that the e-commerce giant engaged in anti-competitive behavior in India that it has long denied, including in testimonies from company leaders to Congress.
“These documents show what we feared about Amazon’s monopoly power—that the company is willing and able to rig its platform to benefit its bottom line while stiffing small businesses and entrepreneurs,” tweeted Warren (D-Mass.) “This is one of the many reasons we need to break it up.”
Warren is a vocal advocate of breaking up tech giants including but not limited to Amazon. The company faces investigations regarding alleged anti-competitive behavior in the United States as well as Europe and India. The investigative report may ramp up such probes.
Aditya Karla and Steve Stecklow report that “thousands of pages of internal Amazon documents examined by Reuters—including emails, strategy papers, and business plans—show the company ran a systematic campaign of creating knockoffs and manipulating search results to boost its own product lines in India, one of the company’s largest growth markets.”
“The documents reveal how Amazon’s private-brands team in India secretly exploited internal data from Amazon.in to copy products sold by other companies, and then offered them on its platform,” according to the reporters. “The employees also stoked sales of Amazon private-brand products by rigging Amazon’s search results.”
In India, Amazon stoked sales of private-brand products by manipulating its search results so that the products would appear ‘in the first 2 or three … search results’ when customers were shopping on https://t.co/OA0tY09fhk, an internal document shows https://t.co/1FMsAX0pza
In sworn testimony before the U.S. Congress in 2020, Amazon founder Jeff Bezos explained that the e-commerce giant prohibits its employees from using the data on individual sellers to help its private-label business. And, in 2019, another Amazon executive testified that the company does not use such data to create its own private-label products or alter its search results to favor them.
But the internal documents seen by Reuters show for the first time that, at least in India, manipulating search results to favor Amazon’s own products, as well as copying other sellers’ goods, were part of a formal, clandestine strategy at Amazon—and that high-level executives were told about it. The documents show that two executives reviewed the India strategy—senior vice presidents Diego Piacentini, who has since left the company, and Russell Grandinetti, who currently runs Amazon’s international consumer business.
While neither Piacentini nor Grandinetti responded to Reuters‘ requests for comment, Amazon provided a written response that did not address the reporters’ questions.
“As Reuters hasn’t shared the documents or their provenance with us, we are unable to confirm the veracity or otherwise of the information and claims as stated,” Amazon said. “We believe these claims are factually incorrect and unsubstantiated.”
“We display search results based on relevance to the customer’s search query, irrespective of whether such products have private brands offered by sellers or not,” the company said, adding that it “strictly prohibits the use or sharing of nonpublic, seller-specific data for the benefit of any seller, including sellers of private brands.”
Warren was not alone in calling for the breakup of Amazon following the report.
“This is not shocking. But it is appalling,” the American Economic Liberties Project said in a series of tweets. “Independent businesses have sounded the alarm for years—providing evidence that Amazon stole their intellectual property.”
4/ Months later, in April 2020, @WSJ revealed that Amazon had been stealing from independent businesses to create competing products.https://t.co/ZgsNmtExIJ
— American Economic Liberties Project (@econliberties) October 13, 2021
“We said back in 2020 that a perjury referral was in order—and it still is,” the group added, highlighting testimony from Bezos and Nate Sutton, Amazon’s associate general counsel. “But Amazon will remain an anti-business behemoth, flagrantly breaking the law and daring policymakers to stop them.”
Highlighting a report from a trio of its experts, Economic Liberties added that “it’s time to break Amazon up.”
Originally published on Common Dreams by JESSICA CORBETT and republished under a Creative Commons license (CC BY-NC-ND 3.0).
The online giant gives a leg up to hundreds of house brand and exclusive products that most people don’t know are connected to Amazon
It took Robert Gomez about five months to get his Kaffe coffee grinder to the big leagues in e-commerce: among the first three search results for “coffee grinder” on Amazon.com.
Gomez, founder of Atlanta-based consumer goods startup 4Q Brands, said he obsessively refined his photos and description, amassed reviews from happy customers, and paid Amazon $40,000 a month on advertising to boost sales, one of the elements Amazon tells sellers will increase search ranking.
Then Amazon introduced a competitor from house brand Amazon Basics and another from a brand that sells exclusively on Amazon, DR Mills.
“They ranked well right away,” Gomez said, each of them appearing among the top-three results for “coffee grinder” searches immediately. The reason, he said, was clear: “Their search ranking is high because they’re an Amazon brand.”
An investigation by The Markup found that Amazon places products from its house brands and products exclusive to the site ahead of those from competitors—even competitors with higher customer ratings and more sales, judging from the volume of reviews.
We found that knowing only whether a product was an Amazon brand or exclusive could predict in seven out of every 10 cases whether Amazon would place it first in search results. These listings are not visibly marked as “sponsored” and they are part of a grid that Amazon identifies as “search results” in the site’s source code. (We only analyzed products in that grid, ignoring modules that are strictly for advertising.)
When we analyzed star ratings and number of reviews, neither could predict much better than a coin toss which product Amazon placed first in search results.
Amazon told Congress in 2019 that its search results do not take into account whether a product is an Amazon-owned brand.
Sellers say it doesn’t seem that way to them. Gomez said Amazon’s brands have “unfair advantages” that make it harder for small merchants like him to compete” on its open marketplace. “Who bears the cost are those entrepreneurs and small businesses that don’t have the means to fight.”
The Markup found Amazon placed its Happy Belly Cinnamon Crunch cereal, with four stars and 1,010 reviews, in the number one spot ahead of cereals with better and more reviews including Cap’n Crunch (five stars, 14,069 reviews), Honey Bunches of Oats (five stars, 5,205 reviews), and Honey Nut Cheerios (five stars, 11,702 reviews). A vacuum cleaner from Amazon’s exclusive Noisz brand was placed on top, ahead of models from Bissell, Eureka, and Hoover with higher ratings and more reviews. And the Amazon-exclusive Concept 3sneaker from Skechers placed number one, four spots ahead of a similar but not exclusive to Amazon Skechers sneaker with the same star rating but 77 times more reviews.
A former Amazon employee told The Markup that the company used to give its new house brand products an unearned place at the top of search rankings when they first launched. He said the practice has since stopped.
However, we found that Amazon brands and exclusive products overall received an outsized portion of the top spot on search results, one that was far out of line with their proportion of the sample.
That’s not what shoppers expect.
In a national survey we commissioned from YouGov, only 17 percent of respondents said they assumed Amazon put its own products first. Half said they expected the first nonsponsored product on Amazon’s search results page to be the cheapest, highest rated, or bestselling.
By giving its brands top billing, Amazon is giving itself a significant leg up in sales. The first three items on the search results page get 64 percent of clicks, according to one ex-Amazon-employee-turned-consultant.
In a short, written statement, Amazon spokesperson Nell Rona said that the company does not favor its brands in search results and declined to answer any of the dozens of specific questions posed by The Markup.
She said the company identified its brands to shoppers by adding “Amazon brand” to the list of product features on the product page and sometimes to the listing title as well. We only found this to be the case in 23 percent of products in our sample that were Amazon-owned brands. She said brands that are exclusive to Amazon would not carry the disclosure because they are not owned by the company.
Invisible Tags
A signal, invisible to the public but coded into the listings, suggests that most of the Amazon brand and exclusive products that were listed first were ads. In 87 percent of cases, the listing’s source code identified them as “sponsored”—though that label isn’t shown to the public. Instead, Amazon labels the products “featured from our brands.”
Rona, the Amazon spokesperson, said the company considers “featured from our brands” listings “merchandising placements” and not “search results,” despite their presence in the search results grid. She also said they are not ads, despite the “sponsored” label in the source code. Rona said they are “clearly labeled to distinguish them from search results” but did not respond to questions about whether the company believes such disclosures were clear enough under Federal Trade Commission requirements.
Mary Engle, who retired as the FTC advertising practices associate director last year, said that what Amazon calls “merchandising” is actually advertising.
“Amazon’s placement of its own products on its own site is advertising, whether or not money changes hands,” she said. She said it would require an investigation to determine whether “featured from our brands” is sufficient disclosure under the FTC’s rules.
Bill Baer, a former assistant attorney general in charge of the antitrust division of the U.S. Department of Justice and former director of the Bureau of Competition at the FTC, said if consumers expect Amazon’s product search results to be neutral, but they are not, and the site is essentially a monopoly, that could be a violation of the FTC Act of 1914, which prohibits unfair competition and unfair or deceptive practices in commerce, or the U.S. Sherman Antirust Act, which prohibits monopolies from using their market power to harm competition.
“If basically you’ve got somebody with market power that is restraining competition both in terms of site access or where things appear on the site,” he said, “that is potentially problematic.”
Amazon’s online marketplace garners more than five times more sales than its closest online competitor, Walmart, which also allows third-party sales.
Congress is considering a package of anti-monopoly bills aimed at big tech, including the Ending Platform Monopolies Act, which would make the practice of platforms giving their brands a leg up explicitly illegal.
Amazon refers to its own brands and brands developed by others that sell exclusively on Amazon as “our brands.” They peddle everything from snack chips and vitamins to fashion and furniture.
Using public records from the U.S. Patent and Trademark Office and Amazon’s own statements, we identified more than 150 brands registered by or owned by Amazon. These include both brands with an obvious connection, such as Amazon Basics and Amazon Commercial, and those that are generally known to be owned by the company, including Kindle and Zappos. But they also include dozens more, such as Happy Belly, Daily Ritual, and Society New York, where the connection to the company is not obvious. Those are in addition to the estimated hundreds of third-party brands that are exclusive to the site.
We analyzed search results on Amazon for 3,492 popular internet product queries in January 2021 and looked closely at what Amazon placed in the first spot. In 60 percent of cases, Amazon sold this spot to an advertiser and added a public label indicating the listing was “sponsored.” Of the rest, Amazon gave half to its own brands and brands exclusive to the site, and the other half to competing brands. But Amazon brands and exclusives made up only 6 percent of all products in the sample, and competitors made up 77 percent. In short, Amazon was hogging the top spot.
In more than a quarter of searches in which Amazon gave its brands the top spot, it placed its products above competitors that had both better ratings and more reviews than the Amazon brand or exclusive product.
‘They Would Shut Us Down’
Sellers said there’s no mistaking the effect on sales of Amazon’s choices in search results.
“If the customers are not seeing [our products] in the top five offers, then it makes it really hard for us to reach customers,” said Gabriela Mekler, a Miami mom who co-founded the organizational products company Mumi in 2014.
Mumi’s top product—a set of color-coded packing cubes—struggles for visibility on Amazon, even after more than two years on the site. She said the coronavirus pandemic decimated her sales—they dropped by more than 68 percent—costing the company a hard-won “Amazon’s Choice” badge on its packing cubes.
Mumi has not placed on the first page of our search results for “packing cubes” for months. At the time of this writing, Amazon Basics took up eight spots on the first page; one was labeled “featured from our brands.” None were visibly marked “sponsored.”
“Their product will always show before yours,” Mekler said.
One Mumi product has still been selling well despite the pandemic, she said: reusable pill pouches. For now, there is no Amazon Basics pill pouch, and Mekler hopes there won’t be anytime soon.
“We’re a small company,” she said. “They would shut us down.”
The National Association of Wholesaler-Distributors, which represents more than 30,000 distributors, submitted a letter to members of Congress in July 2020, complaining that Amazon “abuses its position” to give preferential treatment to its house brands.
But when The Markup asked to speak to some of the sellers the group had quoted anonymously, NAW’s vice president of government relations, Blake Adami, demurred.
“Our members are still very hesitant to speak out against Amazon for fear of retaliation,” he said in an email, “even anonymously.”
Many sellers whose products we found were placed below Amazon products with fewer sales or ratings also declined a reporter’s request to be interviewed for this article, saying they were concerned it would negatively affect their livelihoods.
“Everybody’s so scared of Amazon,” said Paul Rafelson, executive director of the Online Merchants Guild, which represents Amazon sellers. “Their whole livelihood relies on them.”
‘This Was a Knockoff’
Some of Amazon’s competitors have accused the company of knocking off their products to sell under its house brands.
Williams Sonoma settled a lawsuit that included the claim that Amazon was copying West Elm furniture and selling it under the Amazon house brand Rivet. Allbirds co-CEO Joey Zwillinger wrote an open letter to Jeff Bezos when Amazon’s 206 Collective brand copied his company’s wool sneaker, urging Amazon to adopt Allbirds’ sustainability practices in addition to its design.
In March, Amazon Basics started selling the Everyday Sling, a camera bag with a similar design, the same name but a much lower price than a product from Peak Design.
“It wasn’t like they took some styling cues from it. This was a knockoff,” CEO Peter Dering said in an interview. The smaller company produced a parody video that now has 4.6 million views on YouTube. Within hours, Amazon changed the product’s name.
Dering said he wasn’t worried about losing sales because Peak Design mainly targets wholesalers and customers who want a high-end brand. Still, he said he found the move “highly distasteful.”
Rona, the Amazon spokesperson, said the company “did not infringe” on Allbirds’ or Peak Design’s “design rights” and “strictly prohibit[s] our employees from using nonpublic, seller-specific data to determine which store brand products to launch.”
Hard to Spot
Identifying all of Amazon’s brands and brand exclusives to the site for this investigation was cumbersome. The company does not provide a complete list. The Markup’s reporting team used various filters on the site, reviewed the U.S. Patent and Trademark Office records, and reviewed Amazon bestseller lists—but even then we likely missed some.
Consumers would have an even harder time. We found Amazon does not consistently label its brands and exclusives.
Of the products in our sample that Amazon considered “our brands,” about two in five were not labeled as such in search results nor did they carry a name that many people would understand was connected to the company, such as Amazon Basics, Kindle, or Whole Foods.
Inconsistent labeling, combined with an almost endless stream of its own private brands, leaves customers in the dark to decide whether Amazon highly ranked a particular product because it was a good buy or because it benefited the company’s bottom line.
Nine in 10 respondents to the national survey The Markup commissioned in July didn’t know that Amazon’s highest-selling house brands, apart from Amazon Basics, were owned by the company.
Even there, 24 percent of respondents could not identify Amazon Basics as an Amazon brand, and half didn’t know Amazon owned Whole Foods.
Alex Harman, competition policy advocate at Public Citizen who has studied Amazon’s marketplace, said that to him, the strategy of creating a stream of brands without a clear affiliation to Amazon feels “deceptive.”
Large brick-and-mortar retailers also have house brands. Costco has Kirkland Signature. Target has Up&Up, among others. Historically, he said, when large stores create brands they have been clearly affiliated with the store.
And Amazon’s search results are different from a store shelf.
“Unlike a retail store where you see everything on the shelf, the platform may be in a position to elevate its goods in a way that is harder to do in a retail outlet,” said Baer, the former FTC official and assistant attorney general at the Justice Department.
By creating more than a hundred trademarked brands, most without an obvious connection to the company, Amazon can preserve its reputation if one of its homegrown products flops. This happened in 2015 when customer reviews for its newly launched Amazon Elements diapers included complaints about leaks and “sagginess.” Amazon pulled the products after just seven weeks to make “design improvements.”
Stacy Mitchell, co-director of the small business advocacy group Institute for Local Self-Reliance, and a frequent Amazon critic, said that as Amazon’s brands squeeze competitors, those competitors have less money to spend on innovation—and consumers lose.
“Consumers don’t even know what’s missing,” she said.
Case in point: Brandon Fuhrmann, who runs the New York Amazon Seller Meetup. He was considering expanding his kitchenware brand into a new type of dishware. While checking trademark registrations and U.S. import logs for sellers with similar products, he realized that the majority of his competition would come from Amazon brands.
“When that happened, we realized we couldn’t even compete,” he said. He decided not to launch the product.
Rise of Amazon Brands
Amazon has continually set its sights on dizzying growth.
It launched in 1995, with the goal of becoming “Earth’s Biggest Bookstore.” Four years later, it declared its intention to become “Earth’s Biggest Selection.”
To reach this point, it took a page from rival eBay’s playbook, inviting individuals and business owners to list rare, used, and collectible items—which quickly transitioned to third parties selling mainstream, new wares on Amazon.
In 2003, Jason Boyce got a call from Amazon asking him to list his company’s basketball products on the nascent marketplace.
“We’re like, what are you talking about? You guys sell books,” he said. “What do you mean you’re selling sporting goods?”
Boyce took the plunge and his company’s basketball sales took off on Amazon.
By 2018, third-party sellers like Boyce were responsible for 58 percent of physical goods sales on Amazon. They helped boost Amazon’s North American sales by more than an order of magnitude, from $24.5 billion in 2009 to $386.1 billion in 2018.
The volume created fortunes for small businesses across the world. It also created a deep reliance on Amazon. A 2021 report by JungleScout, which provides software for Amazon sellers, found that Amazon was the only source of income for 22 percent of Amazon’s third-party sellers.
“Within two years of getting on Amazon, most of my clients, whether they want to or not, it becomes their single biggest sales channel,” said James Thomson, who was a manager at Amazon from 2007 to 2012 and now works at the e-commerce consulting firm Buy Box Experts.
And these new third-party sellers had lots of competition, eventually from Amazon itself.
Boyce said Amazon started undercutting his business, selling the same sporting goods—Spalding basketballs, for example—for less.
Unable to compete with Amazon on price for brand-name products, Boyce and his brothers launched their own brand, Harvil, in 2007, to sell sporting goods and home recreation equipment on Amazon. They figured Amazon couldn’t undercut their prices if he and his brothers owned the brand.
They had no idea Amazon was also beginning to launch its own brands and to enter into deals with companies to develop brands exclusive to the platform.
Among the first Amazon brands was Pinzon (a likely nod to the first conquistador to stumble across the Amazon River), which Amazon registered as a trademark in 2007 to sell bedding. Then came Denali for tools, and Amazon Basics for a slew of products, including household appliances and office supplies.
Sometime in 2017, Boyce was searching keywords related to his products on Amazon—”bocce ball,” “air hockey table”—when he noticed a new brand, Rally and Roar, peddling very similar products to his own. They showed up at the top of search results.
Rally and Roar is exclusive to Amazon, labeled as “our brands.” The company was moving in on his territory, again.
The speed of Amazon’s expansion of its own brands has been accelerating, according to several e-commerce and retail research firms. TJI Research counted 598 Amazon-exclusive brands in 2019. Coresight Research said Amazon brand products on the site tripled in the two years between 2018 and 2020 alone.
Amazon invites companies and individuals to join its “our brands” family through programs like Amazon Accelerator, which promises increased exposure for products sold exclusively on Amazon in exchange for extra fees, and sets a sales price if Amazon chooses to later buy the brand.
Boyce and his brothers had already been talking about getting off Amazon’s platform when they noticed Rally and Roar pop up. That settled it.
“We’re like, we’re not going to sit around and wait for Amazon to knock off the rest of our private-label products as well,” he said.
They sold the business.
A Leg Up
For years, Amazon gave items from its own brands multiple advantages when they first launched, said JT Meng, a former house brand manager at Amazon—though he said the practice has since stopped.
Employees manually applied the Amazon’s Choice label to a new Amazon brand product, even if it didn’t meet the usual criteria, he said.
And instead of starting from scratch in search results with zero reviews, sales, and stars, Meng said employees used a tactic called “search seeding” for new products, “cloning” a competing product’s search ranking and allowing the new Amazon product to appear immediately below that competitor in search results.
“We would use that for all of our products from the get-go for the first six months or longer,” he said.
Meng worked on the launch for Amazon Elements baby wipes, which he said were seeded against similar products from Huggies, Pampers, and others.
Sales spiked so quickly that his team had to stop promoting the Amazon Elements wipes so they didn’t take too much market share, he said.
Once a new house brand product was established, Meng said employees would turn off search seeding. “Without fail, your product would drop in ranking,” he said, “but the hope was that it would drop a small amount.”
By the time Meng left Amazon in 2016, he said search seeding and adding the Amazon’s Choice label to new Amazon brand products were no longer allowed.
Sellers who do try to compete with Amazon brands today said they feel compelled to pay for sponsored listings in order to get a higher result for nonsponsored listings on Amazon. On its Seller Central site, Amazon underlines to sellers how important sales are, stating that “better-selling products tend to list towards the beginning of search” and that as sales increase “so does your placement.”
“You can’t not advertise anymore,” said Boyce, who after selling his sporting goods line founded a consulting firm, Avenue7Media, which advises companies and individuals who want to sell on Amazon.
“You turn off the ads and you lose organic rank within days,” Boyce said. “It’s pay to play.”
Lots of companies are paying.
We found that inside the search results alone, 17 percent of products were paid listings. That doesn’t include entire rows of sponsored products that appear as special modules on about a third of search result pages. (Including those would roughly double the ad percentage on the first results page.)
Amazon is the third-largest seller of online advertising in the U.S., after Google and Facebook, and is growing fast. “Other” revenue, which the company says “primarily includes sales of advertising services,” jumped 52 percent from 2019 to 2020, to $21.4 billion a year.
Struggling for Visibility
“If you’re willing to spend a ton of money, you can sell a ton of product,” said Evan Patterson, vice president of business development at California-based Linco, which is one of Boyce’s clients.
The 47-year-old family-owned institution makes casters, the small wheels that attach to office chairs and industrial gear—and has a solid reputation in the offline world for premium products. It competes against a product from Amazon Commercial, among others.
It’s so well known in industrial circles that Linco’s competitors advertise against its name within Amazon’s search results, Patterson said.
Still, Linco hasn’t consistently listed on the first page of search results for “caster wheels,” despite selling on Amazon for years. It will appear on the first page for Patterson, but did not in repeated searches by The Markup.
The only thing that seems to help Linco’s search ranking, Patterson said, is to spend more money for paid listings on Amazon. The company now pays about $10,000 a month for advertising.
“Our search ranking has improved dramatically,” Patterson said.
But it still has a ways to go. When The Markup searched for “caster wheels” at the time of writing, Linco appeared in the middle of the fifth page.
Above: Photo / Lynxotic Collage / Images from Twitter @parents_4future
“Johnson’s failure to act has left us with petrol queues, energy companies going bust, offshore workers unemployed for months on end, and a deepening climate crisis.”
The Metropolitan Police arrested at least seven Greenpeace activists in London on Monday for disrupting traffic outside Downing Street by locking themselves to barrels and a 12-foot oil-splattered statue of U.K. Prime Minister Boris Johnson.
“Johnson must stop Cambo, and instead prioritize a just transition to renewable energy to protect consumers, workers, and the climate from future shocks.”
Though Johnson is not currently at his London residence—he is vacationing with family in Spain—the action comes less than three weeks before the United Kingdom is set to host a global climate summit known as COP 26 in Glasgow, Scotland.
Some demonstrators toted posters and banners that read “Stop Cambo,” referring to a new oil field near Shetland that Greenpeace expects the government to approve “any day now,” spokesperson James Hanson toldAgence France-Presse.
A sign protesters propped up by the statue of Johnson declared the oil field his “monumental climate failure.” The Conservative prime minister, Greenpeace U.K. highlighted Monday, “has said he backs 16 new North Sea oil and gas projects going ahead.”
Greenpeace U.K. also pointed to recent comments from a fellow Tory. Secretary of State for Business Kwasi Kwarteng said last month that “the U.K. is still too reliant on fossil fuels. Our exposure to volatile global gas prices underscores the importance of our plan to build a strong, home-grown renewable energy sector to strengthen our energy security into the future.”
The advocacy group explained Monday that “when it comes to Cambo, 80% of oil extracted is likely to be exported, and production won’t start for a few years—so the project would do very little to shore up the U.K.’s energy supply and won’t fix the current gas price crisis.”
In a statement, Greenpeace U.K. oil campaigner Philip Evans also noted the current prices.
“People across the U.K. are feeling the stresses of a gas price crisis as well as a climate crisis,” he said, “and the government acknowledges that our reliance on fossil fuels has left the U.K. vulnerable and exposed. People are right to feel angry and upset.”
Evans asserted that “Johnson’s failure to act has left us with petrol queues, energy companies going bust, offshore workers unemployed for months on end, and a deepening climate crisis.”
“Johnson must stop Cambo, and instead prioritize a just transition to renewable energy to protect consumers, workers, and the climate from future shocks,” the campaigner declared. “If he doesn’t, he will be remembered as a monumental climate failure.”
Early start to support the @GreenpeaceUK protest against the Cambo oil field this morning.
On the same morning Peter Capaldi writes in the @guardian 'Johnson's backing for the Cambo oilfield is unscientific and potentially disastrous'.#StopCambopic.twitter.com/TXVRTEiGXT
The protest in London came just days after Greenpeace lost a court case challenging the U.K. government’s decision to grant a permit to BP for another North Sea drilling operation.
After the loss, Greenpeace U.K. executive director John Sauven pointed out that “now the prime minister is poised to sign off even more oil if he approves a new oil field at Cambo—against official guidance from climate experts.”
“In just a few weeks’ time Boris Johnson will be opening global climate talks where his actions, not his words, will be what counts,” said Sauven. “And right now his actions are covered in oil. We will not give up the fight for the climate. Our intention is to appeal this ruling before the Supreme Court.”
The U.K. government announced in April a new climate target of cutting planet-heating emissions by 78% by 2035 compared to 1990 levels, which would bring the nation more than three-quarters of the way to its goal of net-zero by 2050.
Rebecca Newsom, head of politics at Greenpeace U.K., said at the time that “in order to actually deliver on this commitment, new measures to slash emissions from homes and transport should already be well underway.”
“So unless the government’s policies and spending commitments urgently fall in line with its ambitions,” she added, “there will still be awkward questions for Boris Johnson at the global climate talks in the autumn.”
The Climate Change Committee—an independent body that advises the U.K. on emissions targets and provides progress reports to Parliament—noted in June that a large share of reductions has come from decarbonizing the power sector and warned if progress does not extend beyond that sector going forward, the new targets “will be missed by a huge margin.”
Originally published on Common Dreams by JESSICA CORBETT and republished under a Creative Commons License (CC BY-NC-ND 3.0).
“What do we do when we destroy the planet?” asked one demonstrator. “We have nothing else.”
Tens of thousands of people marched through the streets of Brussels on Sunday to demand Belgium’s elected leaders and others from around the world finally dispense with proclamations, broken promises, and half-measures and instead “act” on the climate emergency.
“We need a Belgian Green New Deal and we propose more than 100 concrete solutions to make it happen.”
With U.N. climate conference (COP26) set for next month in Glasgow, the estimated 70,000 or more people who took part in the march offered a dramatic show of force for the nation’s climate movement.
Zanna Vanrenterghem of Greenpeace Belgium toldThe Brussels Times on Sunday that her government’s climate pledges so far “are not ambitious enough,” but that words are no longer enough. “It is one thing to talk about climate,” she said, “and another to take concrete action.”
Ahead of the march, Vanrenterghem said the message from the Klimaatcoalitie (Climate Coalition), which she co-chairs and that organized the march, was a simple one: “We demand ambitious, solidarity-based and coherent measures. We need a Belgian Green New Deal and we propose more than 100 concrete solutions to make it happen.”
Up to 70 000 people took on the streets of #Brussels today for the #climate strike.
The first mobilization since the pandemic exceeded all expectations and sent a strong message to leaders ahead of #COP26 🌍
Thousands of people and 80 organizations took part in the protest, aiming for the biggest such event in the European Union’s capital since the start of the coronavirus pandemic, which stopped the climate movement’s weekly marches in its tracks.
Cyclists, families with children and white-haired demonstrators filled city streets, chanting slogans demanding climate justice and waving banners in English, French and Dutch. One carried a stuffed polar bear on her head, and others were dressed as animals endangered by human-caused climate change.
The crowds was large—with the march often stretching further than the eye could see—and participants each sharing their various reasons for attending. Signs and banners said things like “Destroy the System/Not the Planet”; “Walk the Talk”; and “Protect What You Love.”
Lucien Dewanaga, a marcher who spoke with AP, asked the question: “What do we do when we destroy the planet? We have nothing else. Human beings have to live in this world. And there is only one world.”
According to Vanrenterghem, extreme weather within Belgium and elsewhere in the world over the past year have offered only more reasons for leaders to turn lofty rhetoric into the concrete policies that scientists say are necessary to stave off the worst impacts.
“The tough climate actions of the past few years have put the climate crisis high on the political agenda,” she said. “Now is the time for politicians to turn their promises into concrete action.”
Originally published on Common Dreams by COMMON DREAMS STAFF and republished under a Creative Commons License (CC BY-NC-ND 3.0).
“Our nation’s infrastructure is not built to a standard that protects against the level of flood risk we face today, let alone how those risks will grow over the next 30 years as the climate changes,” said one expert.
Underscoring the need to slash greenhouse gas emissions and invest in public goods to better prepare communities across the United States for escalating extreme weather, a new report released Monday finds that one-quarter of the nation’s “critical” infrastructure is already susceptible to flooding that renders it inaccessible, with risks projected to increase in the coming decades.
Described as the first-ever nationwide evaluation of community-level vulnerability to flooding, the report—Infrastructure on the Brink, compiled by the First Street Foundation, a nonprofit research group that specializes in environmental risk assessment—highlights localities where housing, commercial real estate, transportation networks, schools, hospitals, power plants, and other pieces of infrastructure face operational flood risk in 2021.
The analysis also explores how spatial patterns of flood risk are expected to change over the next 30 years, as the fossil fuel-driven climate emergency exacerbates sea-level rise and extreme rainfall events, which pose direct and indirect threats to the safety and well-being of people throughout the U.S.
“It is clear, now more than ever,” the report states, “that the ways and places in which we live are likely to continue to be impacted by our changing environment. One of the most important implications in this development is the vulnerability of our national infrastructure.”
Using a unique national database that contains parcel-level flood risk information—combining hazards, exposure, and vulnerability—as well as over 20,000 flood adaptation measures, the report maps Americans’ current and future flood risks based on their proximity to coasts and flood plains plus the estimated impacts of flood-damaged infrastructure at the broader scales of neighborhoods, zip codes, cities, and counties.
As the authors note, “Individuals whose homes were spared the impact of a particular flood event are increasingly likely to find their local roads, businesses, critical infrastructure, utilities, or emergency services affected.”
The report assesses risk to (1) residential properties; (2) roads; (3) commercial properties; (4) critical infrastructure (airports, fire stations, hospitals, police stations, ports, power stations, superfund/hazardous waste sites, water outfalls, and wastewater treatment facilities); and (5) social infrastructure (government buildings, historic buildings, houses of worship, museums, and schools).
Defining risk as “the unique level of flooding for each infrastructure type relative to operational thresholds,” the report finds:
Risk to residential properties is expected to increase by 10% over the next 30 years with 12.4 million properties at risk today (14%) and 13.6 million at risk of flooding in 2051 (16%);
Two million miles of road (25%) are at risk today and that is expected to increase to 2.2 million miles of road (26%) over the next 30 years (a 3% increase over the next 30 years);
Commercial properties are expected to see a 7% increase in risk of flooding from 2021 to 2051, with 918,540 at risk today (20%) and 984,591 at risk of flooding in 30 years (21%);
Currently, 35,776 critical infrastructure facilities are at risk today (25%), increasing to 37,786 facilities by 2051 (26%), a 6% increase in risk; and
Compounding that risk, 71,717 pieces of social infrastructure facilities are at risk today (17%), increasing to 77,843 by 2051 (19%), an increase of 9% over that time period.
The report comes in the wake of several highly destructive flooding events that affected various parts of the U.S. this summer, including one in Tennessee in August as well as the inundation of New York City’s subway system in July and again in September during Hurricane Ida—deadly and costly disasters that exposed how ill-prepared the country is to reduce extreme weather-related infrastructure damage and the ensuing consequences.
The new analysis also points to earlier catastrophes, such as Hurricane Sandy, which hit the New York City metropolitan area in 2012 and “flooded hospitals, crippled electrical substations, overwhelmed wastewater treatment centers, and shut down power and water to tens of millions of people.”
“Our nation’s infrastructure is not built to a standard that protects against the level of flood risk we face today, let alone how those risks will grow over the next 30 years as the climate changes,” Matthew Eby, founder and executive director of the First Street Foundation, said in a statement.
“This report highlights the cities and counties whose vital infrastructure are most at risk today and will help inform where investment dollars should flow in order to best mitigate against that risk,” Edy added.
According to the report:
There are significant differences at the county and city level in the amount of risk that exists today and into the future. Most importantly, there are a group of counties and cities that have persistent patterns of vulnerability across multiple dimensions of physical risk from flooding. These areas tend to be in regions with well-established flood risk, such as coastal flood plains along the Gulf and Southeastern coasts of the U.S., but also in less well-known flood zones, such as in the Appalachian Mountain regions of West Virginia and Kentucky.
To that point, 17 of the top 20 counties in the U.S. which are most at risk (85%) are in the states of Louisiana, Florida, West Virginia, and Kentucky. Additionally, the top cities at risk of flooding persistently show up in the states of Louisiana, Florida, Texas, and South Carolina. The analysis further uncovered a high degree of vulnerability in some of the major population centers in the U.S., including New Orleans, Miami, Tampa, Charleston, Chicago, and Los Angeles.
Even as extreme storms and material insecurity become more common and severe—rendering continued inaction far more expensive than prevention—congressional Republicans and a handful of conservative Democratic lawmakers swimming in corporate cash continue to fight against the Build Back Better Act, a President Joe Biden-endorsed proposal to invest trillions in strengthening climate action and expanding the nation’s relatively underdeveloped welfare state.
Opposition to greening the nation’s physical infrastructure and improving its social infrastructure increases disaster vulnerabilities and worsens impacts, particularly in marginalized communities, experts say, although the inverse—simultaneously addressing the intensifying crises of climate and inequality—is also possible.
“The decarbonization question, the infrastructure question, and the inequalities question are the same question,” Daniel Aldana Cohen, assistant professor of sociology at the University of California, Berkeley, tweeted last week. “Only an epic struggle from the left, combining mass organization, mobilization, and technical expertise—across borders—can provide a good answer in the 2020s.”
Originally published on Common Dreams by KENNY STANCIL and republished under a Creative Commons license (CC BY-NC-ND 3.0).
Both the Republicans and the Democrats vote as if the nation’s middle-class taxpayer is a sleeping sucker.
by Ralph Nader
“Polarization” is the word most associated with the positions of the Republicans and Democrats in Congress. The mass media and the commentators never tire of this focus, in part because such clashes create the flashes conducive to daily coverage.
Politicians from both parties exploit voters who don’t do their homework on voting records and let the lawmakers use the people’s sovereign power (remember the Constitution’s “We the People”) against them on behalf of the big corporate bosses.
The quiet harmony between the two parties created by the omnipresent power of Big Business and other powerful single-issue lobbyists is often the status quo. That’s why there are so few changes in this country’s politics.
In many cases, the similarities of both major parties are tied to the fundamental concentration of power by the few over the many. In short, the two parties regularly agree on anti-democratic abuses of power. Granted, there are always a few exceptions among the rank & file. Here are some areas of Republican and Democrat concurrence:
1. The Duopoly shares the same stage on a militaristic, imperial foreign policy and massive unaudited military budgets. Just a couple of weeks ago, the Pentagon budget was voted out of a House committee by the Democrats and the GOP with $24 billion MORE than what President Biden asked for from Congress. Neither party does much of anything to curtail the huge waste, fraud, and abuse of corporate military contractors, or the Pentagon’s violation of federal law since 1992 requiring annual auditable data on DOD spending be provided to Congress, the president, and the public.
2. Both Parties allow unconstitutional wars violating federal laws and international treaties that we signed onto long ago, including restrictions on the use of force under the United Nations Charter.
3. Both Parties ignore the burgeoning corporate welfare subsidies, handouts, giveaways, and bailouts turning oceans of inefficient, mismanaged, and coddled profit-glutted companies into tenured corporate welfare Kings.
4. Both Parties decline to crack down on the nationwide corporate crime spree. They don’t even like to use the phrase “corporate crime” or “corporate crime wave.” They prefer to delicately allude to “white-collar crime.”
Trillions of dollars are at stake every year, yet neither party holds corporate crime hearings nor proposes an update of the obsolete, weak federal corporate criminal laws.
In some instances, there is no criminal penalty at all for willful and knowing violations of safety regulatory laws (e.g., the auto safety and aviation safety laws). Senator Richard Blumenthal (D-CT) is trying to find just one Republican Senator to co-sponsor the “Hide No Harm Act” that would make it a crime for a corporate officer to knowingly conceal information about a corporate action or product that poses the danger of death or serious physical injury to consumers or workers.
5. Both Parties allow Wall Street’s inexhaustibly greedy CEOs to prey on innocents, including small investors. They also do nothing to curb hundreds of billions of dollars in computerized billing fraud, especially in the health care industry. (See, License to Steal by Malcolm K. Sparrow and a GAO Report about thirty years ago).
6. The third leading cause of death in the U.S. is fatalities from preventable problems in hospitals and clinics. According to the Johns Hopkins School of Medicine study in 2015, a conservative estimate is that 250,000 people yearly are dying from preventable conditions. Neither Congress nor the Executive Branch has an effort remotely up to the scale required to reduce this staggering level of mortality and morbidity. Nor is the American Medical Association (AMA) engaging with this avoidable epidemic.
7. Both Parties sped bailout of over $50 billion to the airline industry during Covid-19, after the companies had spent about $45 billion on unproductive stock buybacks over the last few years to raise the metrics used to boost executive pay.
8. Both Parties starve corporate law enforcement budgets in the Justice Department, the regulatory agencies, and such departments as Labor, Agriculture, Interior, Transportation, and Health and Human Services. The Duopoly’s view is that there be no additional federal cops on the corporate crime beat.
9. Both Parties prostrate themselves before the bank-funded Federal Reserve. There are no congressional audits, no congressional oversight of the Fed’s secret, murky operations, and massive printing of money to juice up Wall Street, while keeping interest rates near zero for trillions of dollars held by over one hundred million small to midsize savers in America.
10. Both Parties are wedded to constant and huge bailouts of the risky declining, uncompetitive (with solar and wind energy) nuclear power industry. This is corporate socialism at its worst. Without your taxpayer and ratepayer dollars, nuclear plants would be closing down faster than is now the case. Bipartisan proposals for more nukes come with large subsidies and guarantees by Uncle Sam.
11. Both Parties hate Third Parties and engage in the political bigotry of obstructing their ballot access (See: Richard Winger’s Ballot Access News), with hurdles, harassing lawsuits, and exclusions from public debates. The goal of both parties is to stop a competitive democracy.
12. Both Parties overwhelmingly rubber-stamp whatever the Israeli government wants in the latest U.S. military weaponry, the suppression of Palestinians and illegal occupation of the remaining Palestinian lands, and the periodic slaughter of Gazans with U.S. weapons. The Duopoly also supports the use of the U.S. veto in the UN Security Council to insulate Israel from UN sanctions.
13. Continuing Republican Speaker Newt Gingrich’s debilitating internal deforms of congressional infrastructures, the Democrats have gone along with the GOP’s shrinking of committee and staff budgets, abolition of the crucial Office of Technology Assessment’s (OTA) budget, and concentration of excessive power in the hands of the Speaker and Senate leader. This little noticed immolation reduces further the legislature’s ability to oversee the huge sprawling Executive Branch. The erosion of congressional power is furthered by the three-day work week Congress has reserved for itself.
14. Even on what might seem to be healthy partisan differences, the Democrats and the GOP agree not to replace or ease out Trump’s Director of the Internal Revenue Service, a former corporate loophole tax lawyer, or the head of the U.S. Postal Service, a former profiteer off the Post Office who will shortly curtail service even more than he did in 2020 (See: First Class: The U.S. Postal Service, Democracy, and the Corporate Threat, by Christopher W Shaw).
Right now, both Parties are readying to give over $50 billion of your tax money to the very profitable under-taxed computer chip industry companies like Intel and Nvidia, so they can make more profit-building plants in the U.S. These companies are loaded with cash. They should invest their own money and stop the stock buyback craze. Isn’t that what capitalism is all about?
Both Parties vote as if the American middle-class taxpayer is a sleeping sucker. Politicians from both parties exploit voters who don’t do their homework on voting records and let the lawmakers use the people’s sovereign power (remember the Constitution’s “We the People”) against them on behalf of the big corporate bosses.
Sleep on America, you have nothing to lose but your dreams.
Originally published on Common Dreams by RALPH NADER and republished under a Creative Commons license (CC BY-NC-ND 3.0).
These disclosures about the how the world’s wealthy and powerful hide their vast fortunes will hopefully turn up the heat on the politicians that maintain the wealth-hiding status quo.
This week we are closely watching the disclosures emerge from the Pandora Papers, a massive leak of secret data about the illicit financial activities of the super-wealthy from 200 countries. In the days to come, we will learn more about the tax avoidance of billionaires and the ways states like South Dakota and Florida have become U.S. tax havens.
Here are Five Things You Need to Know:
1. The Largest-Ever Journalistic Collaborative, More Significant Than the Panama Papers
The Pandora papers are a massive expose about the secret shell games and tax avoidance schemes of the world’s ultra-wealthy, from over 200 countries. This massive undertaking involved 600 journalists from 117 countries and was coordinated by the International Consortium of Investigative Journalists(ICIJ) in what they describe as the “largest-ever journalistic collaborative.” See initial coverage here in The Washington Post and The Guardian, two of the key media outlets part of the consortium.
Five and a half years ago, the ICIJ released the Panama Papers, which focused on a leak from a single law firm, Mossack Fonseca. According to Gerald Ryle, director of the ICIJ, the Pandora Papers are the “Panama Papers on steroids.” See a summary prepared by the ICIJ here.
The Pandora papers draws on leaks from confidential records at 14 different offshore wealth service firms in Switzerland, Singapore, Cyprus, Samoa, Vietnam, Hong Kong, as well as firms in well-known tax havens such as Belize, Seychelles, Bahamas and the British Virgin Islands (BVI). These firms help wealthy individuals and corporations to form trusts, foundations, incorporate companies, and establish other entities in low- or no-tax jurisdictions.
The Pandora Papers analyzed 12 million files from these firms including leaked emails, memos, tax declarations, bank statements, passport scans, diagrams of corporate structures, secret spreadsheets and clandestine real estate contracts. Some reveal the real owners of opaque shell companies for the first time.
2. The Global Implications Are Huge and Politicians Will Be Embarrassed
The Pandora Papers are truly a global story, with major implications for many countries. Some of the largest revelations involve Russian nationals with connections to Vladimir Putin and elites from Latin America. For example, journalists from the Spanish dailyEl Pais, exposed the “Secret Vault of Mexican Billionaires.” In Mexico they found over 3,000 wealthy and powerful Mexicans in the 11.9 million leaked files, with connections to current and previous presidents. They discovered a common pattern of wealthy Mexican elites using a single Panamanian law firm, Alcogal (Aleman, Cordero, Galindo & Lee), along with shell companies and trusts in the British Virgin Islands, and real estate purchases in Miami and around the US.
The Pandora Papers will hopefully turn up the heat on the politicians that maintain the wealth-hiding status quo. The files list over 330 current and former politicians and world leaders from 91 countries that are implicated in transactions. This is twice the number implicated in the 2016 Panama Papers.
Political leaders include King Abdullah II from Jordan and former British Prime Minister Tony Blair (according to The Guardian, Jordan blocked the ICIJ web site hours before the Pandora papers release). This explains why existing political bodies seem incapable of closing down systems that enable wealth hiding and tax dodging.
“It demonstrates that the people that could end the secrecy of offshore systems… are themselves benefiting from it,” said Gerald Ryle, director of the ICIJ. “So there’s no incentive for them to end it.”
3. The US is Exposed as a Global Tax Haven
U.S. citizens are under-represented in these leaks, largely due to where the service providers are located. No U.S. wealth-advisory firms were part of the leaks. Nonetheless over 700 companies revealed in the Pandora papers have ties to beneficial owners connected to the United States.
The Pandora Papers do, however, expose how the U.S. has become a global destination for global wealth, some of it ill-gotten. The Panama Papers, the Paradise Papers (Bermuda and Singapore) and Luanda Leaks (Angola) all reinforced the misperception that most of these financial shell games take place “off shore,” in secrecy jurisdictions and tax havens in small countries with weak banking laws.
But the Pandora Papers show that the U.S. and states like South Dakota now rival notoriously opaque jurisdictions in Europe and the Caribbean in financial secrecy. The states with the most active trusts revealed in the files were South Dakota (81), Florida (37), Delaware (35), Texas (24), and Nevada (14).
4. Shady Billionaires from Around the World Are Going to South Dakota
Findings suggest that South Dakota has sheltered billions in wealth linked to wealthy individuals previously accused of serious financial crimes and labor violations. Two examples: Brazilian orange juice baron, Horst Happel, was fined $88 million in 2016 for underpaying his workers. In 2017, he moved substantial wealth to a trust in South Dakota. Carlos Morales Troncoso was the former vice-president of the Dominican Republic. He ran a sugar company called Central Romana sugar company that was accused of human rights violations. He set up trusts for his daughters in the Bahamas that were moved, after his death, to South Dakota. The reason global money is flowing to the “Mount Rushmore State” is because of their low taxes and advantageous dynasty trusts.
5. The Pandora Papers Will Boost the Case for US Tax Reform
The Pandora Papers will hopefully give a boost to the US Congress in passing a progressive tax plan to fund the Build Back Better program—and that includes money for IRS enforcement to ensure the wealthy pay their fair share.
As The Guardian reports: “The Pandora papers also place a revealing spotlight on the offshore system itself. In a development likely to prove embarrassing for US President, Joe Biden, who has pledged to lead efforts internationally to bring transparency to the global finance system, the US emerges from the leak as a leading tax haven. The files suggest the state of South Dakota, in particular, is shelter billions of dollars in wealth linked to individuals previously accused of serious financial crimes.”
Originally published on Common Dreams by CHUCK COLLINS and republished under a Creative Commons license (CC BY-NC-ND 3.0).
Above:Photo Collage / Lynxotic / Original Image by ICIJ
“U.S. President Biden must match his own rhetoric on shutting down global illicit finance, and start with the biggest offender—his own country.”
The leak of an enormous trove of tax haven files over the weekend offered a further glimpse into the secretive world of offshore finance—a system facilitated by the U.S. and other rich nations—and prompted calls for immediate changes to global rules that let the powerful hide their wealth, skirt their obligations, and starve governments of crucial revenue.
“This is where our missing hospitals are,” Susana Ruiz, the tax policy lead at Oxfam International, said in a statement. “This is where the pay-packets sit of all the extra teachers and firefighters and public servants we need. Whenever a politician or business leader claims there is ‘no money’ to pay for climate damage and innovation, for more and better jobs, for a fair post-Covid recovery, for more overseas aid, they know where to look.”
“Tax havens cost governments around the world $427 billion each year,” Ruiz added. “That is the equivalent of a nurse’s yearly salary every second of every hour, every day. Ordinary taxpayers have to pick up the pieces. Developing countries are being hardest hit, proportionately. Corporations and the wealthiest individuals that use tax havens are out-competing those who don’t. Tax havens also help crime and corruption to flourish.”
Like the 2016 Panama Papers, the International Consortium of Investigative Journalists’ (ICIJ) Pandora Papers shine additional light on the functioning of a “shadow economy” that world leaders, celebrities, and billionaire business moguls—including some accused of egregious crimes—are exploiting to shield trillions of dollars in assets from transparency and taxation.
The 11.9 million files obtained, analyzed, and leaked by the ICIJ reveal the closely-guarded financial maneuverings of more than 330 politicians and top public officials from nearly 100 countries and territories, including dozens of current national leaders.
“The secret documents expose offshore dealings of the King of Jordan, the presidents of Ukraine, Kenya, and Ecuador, the prime minister of the Czech Republic, and former British Prime Minister Tony Blair,” ICIJ notes in a summary of its sprawling cache of documents. “The files also detail financial activities of Russian President Vladimir Putin’s ‘unofficial minister of propaganda’ and more than 130 billionaires from Russia, the United States, Turkey, and other nations.”
The trove also links prominent athletes, models, and artists to offshore assets, including India’s famous cricketer Sachin Tendulkar, pop music star Shakira, and supermodel Claudia Schiffer.
But Alex Cobham, chief executive of the Tax Justice Network, cautioned that a narrow focus on the individuals who have made use of an international tax system rigged in their favor diverts attention from the institutions and countries that have done the rigging.
“These personal actions are shameful and will no doubt come under great scrutiny in the coming days, but it’s important that we don’t lose sight of one crucial fact: few of the individuals had any role in turning the global tax system into an ATM for the superrich,” Cobham wrote in a blog post on Sunday. “That honor goes to the professional enablers—banks, law firms, and accountants—and the countries that facilitate them.”
Cobham observed that the Pandora Papers—the product of a nearly two-year investigation by more than 600 journalists in 117 countries and territories—confirm that the United States is “the world’s biggest peddler of financial secrecy.”
“The biggest blockers to transparency are the U.S. … and the U.K., the leader of the world’s biggest tax haven network,” Cobham wrote. “We need full transparency so we can hold tax abusers accountable, especially when our politicians are among them. U.S. President Biden must match his own rhetoric on shutting down global illicit finance, and start with the biggest offender—his own country.”
This is fundamental – every government leader should match this commitment, and then hold themselves publicly accountable by publishing results of each investigation https://t.co/2MiospKxuR
— Alex Cobham @alexcobham@mastodon.social (@alexcobham) October 3, 2021
As the ICIJ notes, the new files show in some detail “how the United States, in particular, has become an increasingly attractive destination for hidden wealth, although the U.S. and its Western allies condemn smaller countries for allowing the flow of money and assets tied to corruption and crime.”
“The Pandora Papers include documents from 206 U.S. trusts in 15 states and Washington, D.C., and 22 U.S. trustee companies,” the ICIJ points out. “The documents provide details about the movement of hundreds of millions of dollars from offshore havens in the Caribbean and Europe into South Dakota, a sparsely populated American state that has become a major destination for foreign money.”
“We in the U.S. should be embarrassed that we’ve become a magnet for kleptocratic funds,” said Chuck Collins, director of the Program on Inequality and the Common Good at the Institute for Policy Studies.
Conspicuously absent from the Pandora Papers is any mention of the wealthiest people in the U.S., including Bill Gates, Elon Musk, Warren Buffett, and Jeff Bezos—the richest man in the world. But as the Washington Postexplains, that could be because “the uber-rich in the United States tend to pay such low tax rates that they have less incentive to seek offshore havens.”
In response to the Pandora Papers revelations, Oxfam called on world governments to crack down on tax havens by taking a number of steps, including:
Ending tax secrecy on individuals, offshores, and multinational corporations. Set up a public register on the real owners of bank accounts, trusts, shell companies, and assets. Require multinational corporations to publicly report their accounts where they do business, country-by-country.
Increasing the use of automatic exchange, allowing revenue authorities access to information they need to track the money.
Ending corporate profit shifting to tax havens via new rules, and by setting a global minimum tax under the OECD’s BEPS deal, ideally of around 25%.
Agreeing a global blacklist of tax havens and taking counter measures, including sanctions, to limit their use.
Setting a new global agenda on taxing wealth and capital fairly; addressing tax competition between countries on high-net-worth-individuals, either on income or wealth, against agreed standards.
“Governments’ promises to end tax havens are still a long way from being realized,” said Ruiz. “We cannot allow tax havens to continue to stretch global inequality to breaking point while the world experiences the largest increase in extreme poverty in decades.”
Originally published on Common Dreams by JAKE JOHNSON and republished under a Creative Commons License (CC BY-NC-ND 3.0).
Above: Photo Collage /Lynxotic / Original Image by ICIJ
“This is the Panama Papers on steroids.”
In what’s being called the “biggest-ever leak of offshore data,” a cache of nearly 12 million documents published Sunday laid bare the hidden wealth, secret dealings, and corruption of hundreds of world leaders, billionaires, public officials, celebrities, and others.
The bombshell revelations—known as the Pandora Papers—were published by the International Consortium of Investigative Journalists (ICIJ) and include private emails, secret contracts, and other records obtained during a two-year investigation involving more than 600 journalists in 117 countries and territories.
“This is the Panama Papers on steroids,” said ICIJ director Gerard Ryle, referring to the 2016 exposé of the tax-evading secrets of the super-rich. “It’s broader, richer, and has more detail.”
NEW: #PandoraPapers reveals the inner workings of a shadow economy that benefits the wealthy and well-connected at the expense of everyone else.
Brought to you by ICIJ and 600+ journalists, the largest collaboration in journalism history. 🧵 https://t.co/qXMuUcqPc4
More than 100 billionaires feature in the leaked data, as well as celebrities, rock stars, and business leaders. Many use shell companies to hold luxury items such as property and yachts, as well as incognito bank accounts. There is even art ranging from looted Cambodian antiquities to paintings by Picasso and murals by Banksy.
“There’s never been anything on this scale and it shows the reality of what offshore companies can offer to help people hide dodgy cash or avoid tax,” said ICIJ’s Fergus Shiel, who added that the people in the files “are using those offshore accounts, those offshore trusts, to buy hundreds of millions of dollars of property in other countries, and to enrich their own families, at the expense of their citizens.”
The leaked documents reveal how some of the world’s wealthiest people avert the financial consequences of their misdeeds by using offshore entities. Dozens of current and former world leaders feature prominently in the files, including Russian President Vladimir Putin, Jordanian King Abdullah II, and former British Prime Minister Tony Blair.
While most of the richest Americans do not appear in the files, The Washington Postreports that “perhaps the most troubling revelations for the United States… center on its expanding complicity in the offshore economy.”
Why so few US names in Pandora Papers? Largely because US is itself a spectacularly corrupt tax haven. “Financial experts said the uber-rich in the United States tend to pay such low tax rates that they have less incentive to seek offshore havens.” https://t.co/YaUH86VBEE
Chuck Collins, author of The Wealth Hoarders: How https://bookshop.org/a/565/9781509543496Billionaires Pay Millions to Hide Trillions, and co-editor of Inequality.org at the Institute for Policy Studies, said in a statement that “the U.S. has become the weak link in stopping global crime and wealth hiding.”
“States like South Dakota and Delaware have morphed their laws to attract billions, sometimes illicitly obtained, from around the world,” he said. “We in the U.S. should be embarrassed that we’ve become a magnet for kleptocratic funds.”
Collins added that the Pandora Papers show “it is time for U.S. lawmakers to shut down the hidden wealth system that allows for such aggressive tax avoidance and the sequestering of wealth.”
ICIJ said Sunday that the “publication of Pandora Papers stories comes at a critical moment in a global debate over the fairness of the international tax system, the role of Western professionals in the shadow economy, and the failure of governments to stanch the flow of dirty money into hidden companies and trusts,” and that the documents “are expected to yield new revelations for years to come.”
Originally published on Common Dreams by BRETT WILKINS and republished under a Creative Commons license (CC BY-NC-ND 3.0).
Recent White House Study on Taxes Shows the Wealthy Pay a Lower Rate Than Everybody Else
A decade ago, in an essay for The New York Times, Warren Buffett disclosed that he had paid nearly $7 million in federal taxes in 2010. “That sounds like a lot of money,” he wrote. “But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.”
The words “taxable income” are doing a lot of work in that sentence.
Buffett owns a substantial number of shares in Berkshire Hathaway, the fabulously successful holding company he founded decades ago. As the company’s shares have soared nearly every year, his wealth has grown by billions. Under the U.S. tax code, none of that is taxed until he sells shares at a profit.
A little math shows that Buffett’s 17.4% rate meant he reported roughly $40.2 million in income in a year where Forbes said his wealth grew by $3 billion. His revelation made it possible to compare how much he was paying the government to the increase in the size of his fortune.
No one did so, and Buffett became something of a folk hero for calling for any increase in taxes.
When we obtained access to a trove of tax data on the richest Americans, it quickly became clear to our reporters that Buffett’s comparison of his own tax rate to his employees’ vastly understates the inequity of our tax system. Buffett is far from unique; the documents showed that the amount of money people like Michael Bloomberg, Jeff Bezos or Elon Musk reported to the IRS as income was infinitesimal when measured against their annual gains in wealth.
And so the first story in our “Secret IRS Files” series set out a new concept that makes more sense in our 21st century Gilded Age; we called it “the true tax rate.” We compared the annual taxes paid by the ultrarich to their wealth gains to give readers a sense of how the system really works.
From 2014 to 2018, we pointed out, Buffett paid $125 million in federal taxes. As he said, that sounds like a lot. But according to Forbes, his riches rose $24.3 billion during that period, making his true tax rate 0.1%. In a detailed written response, Buffett defended his practices but did not directly address ProPublica’s true tax rate calculation.
When we published this story, howls of rage rang out from the freewheeling corners of Twitter to the ornate offices on Wall Street. Some of the most irate critics wrote to me directly and demanded to know whether I was so @#$!@ stupid that I didn’t understand the meaning of the word “income tax.”
“This story, sadly, reeks with ‘class envy,’” one angry reader wrote. “If this was intended to get clicks, you made your money.” We’re a nonprofit and our revenue from advertising adds almost nothing to our annual budget, but I understand this reader’s larger point, which we noted in the story: The ultrarich are doing only what the current tax code invites them to do.
The debate intensified, and the White House-backed proposals on taxes advanced by congressional Democrats largely followed the traditional approach of raising rates on income. A separate bill introduced by Sens. Elizabeth Warren and Bernie Sanders to impose a 3% tax on all wealth above $1 billion is seen as having little chance of passing.
The reluctance to embrace a wealth tax is deeply rooted. The biggest donors to both parties would be hit hard by such a law. And as we pointed out in our initial story, the complexities of taxing wealth are not trivial. Several countries have tried and struggled to figure out a fair way to tax stock gains. Does an entrepreneur whose stock skyrockets in one year, and pays a big tax, deserve a rebate if his company’s shares plummet the next year?
All of that said, we took note when White House economists issued a study that used publicly available data to estimate “the average Federal individual income tax rate paid by the 400 wealthiest American families’ in recent years, determined using a more comprehensive measure of income.” Their methodology was similar to ours, and their findings — that those families gained $1.8 trillion from 2010 to 2018 and paid 8.2% in taxes — are in line with what we found in the tax data.
The authors say their findings are evidence in support of President Joe Biden’s plan for tweaking the existing system; the words “wealth tax” are not mentioned. They point to the administration’s proposal to impose higher tax rates on stock dividends and on capital gains, the profit an investor reaps when selling a stock whose value has risen.
(The Biden administration has proposed getting rid of a provision in the tax code that shields heirs who inherit stock from paying capital gains tax on the growth in value that occurred before the shares were transferred.)
None of the proposed changes come close to addressing the biggest hole in the system, which is that an ultrarich person can live comfortably off gains in wealth while never selling a single share. As our initial story pointed out, the Buffetts and Bezos of the world can borrow against the value of their considerable holdings and live comfortably without selling stock or receiving any income from dividends, which new companies like Tesla and Amazon don’t pay.
The strategy, known as “buy, borrow and die,” allows the wealthy to amass fast fortunes, pay no taxes on those gains and pass on much of the wealth to their descendants.
Herb and Marion Sandler, the founders of ProPublica, made it clear from the outset that they hoped our journalism would spur real-world change. They were not particularly interested in stories whose biggest effect was that they had “started a conversation.”
We still measure our success by tangible effects. But over the years, we have seen that the road to impact on very complex issues can begin by changing the conversation.
Lawmakers have said that some of the most egregious tax loopholes we’ve exposed, notably multibillion-dollar Roth IRA accounts, will be scrutinized as Congress takes up tax legislation in coming months.
There’s no telling where the larger conversation about taxing wealth will lead. As the White House paper suggests, a new way of thinking about equality and taxation has taken center stage. Whether that ultimately results in change remains very much an open question.
As Congress launched a historic bailout to keep businesses afloat at the outset of the pandemic, government officials stressed that the loans were for mom-and-pop operations that didn’t have another easily available lifeline.
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“This was a program designed for small businesses,” then-Treasury Secretary Steven Mnuchin said, as companies like Shake Shack and Potbelly made headlines for grabbing millions from the newly created Paycheck Protection Program. “It was not a program that was designed for public companies that had liquidity.”
House Minority Leader Kevin McCarthy was even clearer. “We will go after those big companies that cheat the system,” he told Fox News that spring.
But the tough talk hasn’t translated into action. Instead, a ProPublica review has found, the government gave out generous loans to companies that may not have needed them. And it has often forgiven the loans, despite having said that publicly traded companies would be unlikely to merit such generous treatment.
Take Lazydays Holdings, a publicly traded collection of RV dealerships that got a nearly $9 million loan. The company had $31 million in cash on hand at the end of 2019, and then prospered as Americans turned to RVs for socially distanced vacations. Lazydays’ stock price has shot up more than 500% during the pandemic. (Lazydays did not respond to requests for comment.) The government has forgiven nearly all of it, allowing Lazydays to keep the money.
The ProPublica analysis of Securities and Exchange Commission filings found at least 120 publicly traded companies that received loans of more than $500,000, grew their revenues last year and have been allowed to keep the money.
In addition, at least 30 companies announced plans to go public after receiving their loans, bringing in truckloads of investor cash that they often used to pay off other debts — but not the ones they owed to the federal government, all of which were forgiven.
Overall, ProPublica found at least $250 million that went to publicly traded companies with growing revenues and that has already been forgiven by the government. That’s just a sliver of the $800 billion PPP program. But it’s also almost certainly a significant undercount of the amount of taxpayer dollars that went to well-heeled companies. The count, for instance, doesn’t include any of the billions of dollars that went to firms backed by giant private equity funds. Their finances are not publicly disclosed.
The government had no rules requiring companies to pay back loans if it turned out they didn’t need the money.
Instead, the government had one modest requirement particularly relevant to publicly traded companies: It made all applicants for loans attest that pandemic-related uncertainty made the loan “necessary.” And it warned in a follow-up advisory that having access to cash elsewhere — as public companies usually do via investors — would make it difficult to take that pledge in good faith.
But the government has rarely followed up. The Small Business Administration, which oversees the PPP, discarded a questionnaire it had begun sending companies to quiz them on their financial situations.
In response to questions from ProPublica, the SBA said that it is examining all forgiveness applications to make sure they comply with the rules. “We are continuously aware of our role in the stewardship of federal funds to ensure the integrity of our programs, and we have rigorous processes in place to ensure appropriate oversight of loans of all sizes,” spokesperson Christalyn Solomon said.
But the SBA declined to provide evidence of how it is evaluating whether public applicants were honest when they said their loans were “necessary.” Experts say that’s because lawmakers offered no specifics on what they meant by “necessary” from the outset, leaving the program’s administrators with no objective basis on which to demand repayment.
“Congress needed to say to the SBA, ‘This is what constitutes need,’” said Liz Hempowicz, director of public policy at the nonprofit Project on Government Oversight. “If you have access to excess capital in any form, that absolutely should’ve been baked into the program from the beginning.”
By many metrics, the federal government’s response to the pandemic succeeded in alleviating the worst effects of the most abrupt pause in economic activity America has ever experienced. Unlike most safety net programs, it did so by erring on the side of generosity. The government’s supplemental unemployment insurance and stimulus checks were enough to actually lower poverty last year.
The same philosophy applied to relief for businesses. The government kept the PPP application simple to encourage companies to participate, and banks were paid to move the loans along without asking many questions. While the program was built on the chassis of the SBA’s standard loan program, it dispensed with many of its rules, such as a requirement that applicants demonstrate they couldn’t obtain reasonably priced credit elsewhere.
In the first round of the bailout, which was quickly depleted, companies did not have to prove that they had actually been impacted by COVID-19.
Instead, the application required them to certify that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the applicant.” Facing confusion from corporate lawyers who said the language was vague, the SBA released further guidance in late April 2020.
The clarification specifically warned public companies that they probably wouldn’t meet the threshold. “Borrowers must make this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity,” the agency wrote. “It is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith.”
That admonition had some effect. According to a study forthcoming in the Review of Corporate Finance Studies, half of all public companies qualified for the loans, but only 42% of those eligible chose to take them. That compared to 87% of all eligible private companies. (The PPP generally excluded companies with more than 500 employees.) On average, the 812 public firms that took loans had less cash and more debt than those that didn’t borrow. The public companies collectively borrowed $2.2 billion, but 13.5% of them repaid their loans, mostly soon after the SBA’s April guidance.
But because Congress didn’t impose any actual requirements to return the money, many companies didn’t. Some even shrugged off congressional pressure to do so.
In May 2020, a House oversight subcommittee sent letters asking five large public companies to return their $10 million loans. One of them did. The other four refused, and they eventually all receivedforgiveness (with one asking for slightly less than the whole amount).
They included a contractor for the U.S. Postal Service called EVO Transportation and Energy Services, which hasn’t filed financial reports for all of 2020 after discovering problems with its 2019 disclosures.
The company didn’t respond to a request for comment.
The SBA began processing forgiveness applications after the first round of PPP loans was exhausted in August 2020. It decided that all borrowers of less than $2 million would automatically be “deemed” truthful in their pledges that their loans were necessary.
For those who borrowed more, it issued a nine-page “loan necessity questionnaire” that asked about the recipient’s ownership structure, cash on hand pre-pandemic, revenues during the time when the loan was supposed to be used and access to other capital.
That didn’t go over well.
Last December, a construction industry trade group sued, saying the SBA questionnaire violated the original guidance that implied forgiveness would be determined by what companies knew at the time they applied, without regard to what happened later. In July, the agency stopped using the questionnaire, saying that the form was burdensome for borrowers and a drain on auditing resources.
Without companies’ answers, the SBA has developed a machine-learning algorithm that flags loans for signs of potential fraud, such as payroll numbers that don’t add up. As of last month, agency data showed, investigators had reviewed 65,000 loans, 8,000 of which, totaling $2.7 billion, were referred for further analysis. Of those, only 300 loans were for more than $2 million.
The agency declined to say how many forgiveness applications have been rejected after going through this process, or how, without using the discontinued questionnaire, it has evaluated whether the loans were necessary.
The Securities and Exchange Commission also issued inquiries to some companies about their representations to investors, but a spokesperson declined to say whether any enforcement actions had been taken as a result.
A former finance manager at one company that received millions in PPP money and hasn’t paid it back said that he’d hoped the government would more closely examine his employer’s finances.
“I remember that questionnaire coming out, and we were thinking, ‘This might not get forgiven,’ because our cash position was a lot better at the end of the year,” the employee said. Since the questionnaire has been thrown out, he figures, companies that didn’t need the cash will end up keeping it. “The only reason to give it back is public sentiment. At that point, it’s free money.”
Waste is inevitable in any economic rescue mission. But some of it is avoidable. Experts say Congress could have created a threshold of financial health at which PPP loans would have to be repaid — without denying the lifeline many firms needed.
“We’re talking about a ridiculously low interest rate,” Hempowicz said. “There is a benefit either way, especially for bigger companies, to have received these loans, even if they aren’t then converted into grants.”
All PPP loans were forgivable if the cash was mostly spent on payroll. If a company was still seeing steady business, it could use that freed-up income for other priorities, like paying off debt and buying other companies.
That’s the happy outcome for many companies that performed well in 2020, often profiting from the very pandemic that they said put them in the position of needing a taxpayer bailout.
A chain of powersports dealers called RideNow collectively received $19 million, despite nearly tripling its net income from 2019 to 2020 as interest in motorbikes and all-terrain vehicles skyrocketed. In March 2021, the publicly traded online motorcycle sales platform RumbleOn announced it would acquire RideNow to create what it called the “only omnichannel customer experience in powersports and the largest publicly traded powersports dealership platform.” RideNow’s loans were fully forgiven in June, and RumbleOn’s forgiveness application for its original $5.1 million loan is pending.
Other examples abound. Acme United Corporation saw its sales increase 15% in 2020 because of strong demand for first-aid supplies. Its $3.5 million loan was fully forgiven. So was the $2.7 million borrowed by Conifer Holdings, an insurance company that attributed revenue growth to lower claims by businesses that were temporarily shuttered but maintained their policies — which explicitly did not cover business interruption due to infectious diseases. And the ammunition manufacturer Ammo Inc. kept $1 million after seeing its revenues triple to $62.5 million in 2020, fueled by increased consumer demand for bullets. None of those companies returned requests for comment.
Public companies aren’t the only borrowers that took more than they likely needed. Securities and Exchange Commission filings are also a window into privately held companies that have raised money in the public markets or later listed themselves on an exchange.
The venture-capital-backed person-to-person lending marketplace Prosper files earnings statements because it sells its loans to investors. The company had $64 million in unrestricted cash on hand at the end of 2019, but it still suspended its 401(k) match and cut salaries above $100,000 across the board in early 2020 — a collective reduction in compensation almost equal to the $8.4 million PPP loan it received. The pay cut also applied to the C-suite, but they had already received up to 10% base salary bumps in March 2020, so it hurt less.
In November, the company instituted a retroactive two-year bonus plan for executives — potentially totaling $3 million for five people.
Prosper did not respond to a request for comment, and its forgiveness request is still pending.
Some companies did pay the money back. At least 27 companies decided to do so while in the process of going public, since the sale of stock often generates large amounts of cash.
Luminar Technologies, an autonomous driving technology startup, gave back its $7.8 million before its Nasdaq debut.
“We decided to return the PPP loan as soon as we realized we didn’t need it anymore,” said Anthony Cooke, Luminar’s vice president for policy and regulation. “We decided to apply for a PPP loan because it gave us the flexibility to withstand uncertain times while protecting our employees. We were able to protect employees, grow our business and take it public in 2020, and we repaid our PPP loan as soon as it was feasible.”
Other companies kept the taxpayer money, even while paying off other debts.
That’s what another company in the autonomous driving business did. A Ford-backed designer of sensors called Velodyne Lidar got $10 million in government money, which a spokesperson said was “used to support our employees during a time of uncertainty.”
The company went public in September of last year, giving it $222 million in cash. The government forgave Velodyne’s loan this June.
Battery-powered bus maker Proterra got $10 million. Its revenues increased last year, and it went public this year. The company decided to keep the money, which spokesperson Shane Levy said “supported our ability to maintain a full workforce as we’ve navigated the uncertainty caused by the COVID-19 pandemic.” A Volkswagen- and UPS-backed self-driving truck company called TuSimple kept its $4.1 million after going public in a deal that generated about $1 billion; a spokesperson didn’t respond to a request for comment.
Several companies hadn’t yet had any income at all — they had been funded by investors through their entire existence, suggesting that they probably had access to other credit.
A pre-revenue electric vehicle maker called Faraday Future got $9.2 million. This past July, it launched a public offering that generated $1 billion; its loan forgiveness request is still pending. A spokesperson told ProPublica that the investor proceeds will be “budgeted to produce vehicles,” not to pay back taxpayers. Space launch services company Astra took $4.9 million in government money. As it applied for forgiveness in June, it told investors that COVID-19 “has not materially affected our future growth outlook” and that it had seen “some signs of positive effects for its long-term business prospects and partnerships as a result of the pandemic.” Astra’s Nasdaq debut in July generated $463 million, and its PPP loan was forgiven last month. A spokesperson didn’t respond to a request for comment.
Another category of large PPP recipients consisted of clinical and early commercial-stage medical device and pharmaceutical companies, which are heavily investor-backed and which sometimes profited from COVID-related activity. A biotech company called PolarityTE, which makes regenerative tissue products, cut staff by 47% in 2020 and raised revenues by 79% by serving as a COVID-19 testing lab. It received $3.6 million, which was forgiven; the company didn’t respond to a request for comment.
Anything having to do with residential real estate also did well.
Fast-growing homebuilder Dream Finders Homes saw 52% earnings growth in 2020, which it attributed in part to pandemic-induced migration to suburban developments. It went public in January 2021, generating $134 million, and was granted full forgiveness on its $7.2 million loan. The company didn’t respond to a request for comment.
The home improvement services platform Porch told investors that spiking home sales in late 2020 helped it rebound from a spring business dip. It applied for forgiveness for its $8.1 million PPP loan in December, the same month it debuted on Nasdaq. With $122 million of the proceeds from its IPO, it bought four other companies; it hasn’t paid back the PPP loan, which was forgiven in June. A spokesperson declined to comment.
Finally, the type of companies that arranged the capital for all these public offerings and funding rounds — investment advisory firms — also dipped into the PPP.
Cohen & Company, a financial services firm with $2.8 billion under management, got $2.2 million. The firm saw dramatically higher income last year. Nearly all of its loan was forgiven. Another asset manager and investment banking firm, JMP Group, had $3.8 million forgiven despite having $50 million in cash at the end of 2019 and 15% revenue growth in 2020. Neither firm responded to a request for comment.
Some investment advisory firms may have used inflated claims. One study found that at least 6% of the $590 million granted to those firms was more than they could have justified given their payroll, which has to be reported to the SEC.
Writing laws is often a balancing act. One approach draws bright lines that lay out exactly what’s required, which companies often figure out a way to game. The other leaves rules more vague, relying on the regulated party to abide by the program’s intent. That eases the process for beneficiaries who really need help, but runs the risk the others will also benefit.
The PPP leaned toward the latter approach. It told companies that they probably shouldn’t apply if they had other resources at their disposal, but gave them a window to do so if they wanted. In order to make that work, there would need to be a credible threat of enforcement, or at least public shaming if they took advantage of funds meant for the truly disadvantaged.
Erik Gordon, a professor at the University of Michigan’s Ross School of Business, said the SBA should have held public companies to a higher standard of need and then audited them to ensure they’d been truthful.
“If I ran the SBA, I would say, ‘You certified that this loan request was necessary — walk us through that. You had this much cash, or you had this much loan facility open or you had no trouble raising this money,’” Gordon said.
Of course, if you don’t want public companies to apply, you could just bar them from applying. That’s what Congress did when it created a second round of the PPP in December 2020. That time around, companies were also required to demonstrate that their revenues had declined substantially in at least one quarter in order to qualify.
Sam Rosen, a finance professor at Temple University who co-authored the study on public firm participation in the PPP, said it isn’t that complicated. “If we were in a similar situation in the future, do we want public firms to have access to this?” he said. “I think it’s just about being clear up front.”
Conviction of Steven Donziger, said one critic, “perfectly encapsulates how corporate power has twisted the U.S. justice system to protect corporate interests and punish their enemies.”
Environmental justice advocates and other progressives on Friday condemned a federal judge’s decision Friday to sentence human rights lawyer Steven Donziger to six months in prison—following more than two years of house arrest related to a lawsuit he filed decades ago against oil giant Chevron.
The sentence, delivered by U.S. District Judge Loretta Preska in New York City, represents “an international outrage,” tweeted journalist Emma Vigeland following its announcement.
Donziger’s sentence came a day after the United Nations Working Group on Arbitrary Detention said it was “appalled” by the U.S. legal system’s treatment of the former environmental lawyer and demanded the U.S. government “remedy the situation of Mr. Steven Donziger without delay and bring it in conformity with the relevant international norms” by immediately releasing him.
Donziger represented a group of farmers and Indigenous people in the Lago Agrio region of Ecuador in the 1990s in a lawsuit against Texaco—since acquired by Chevron—in which the company was accused of contaminating soil and water with its “deliberate dumping of billions of gallons of cancer-causing waste into the Amazon.”
An Ecuadorian court awarded the plaintiffs a $9.5 billion judgment in 2011—a decision upheld by multiple courts in Ecuador—only to have a U.S. judge reject the ruling, accusing Donziger of bribery and evidence tampering. Chevron also countersued Donziger in 2011.
In 2019, U.S. District Judge Lewis A. Kaplan of the Southern District of New York—a former corporate lawyer with investments in Chevron—held Donziger in contempt of court after he refused to disclose privileged information about his clients to the fossil fuel industry. Kaplan placed Donziger under house arrest, where he has remained under strict court monitoring for 787 days.
In addition to Kaplan’s own connections to Chevron, the judge appointed private attorneys to prosecute the case, including one who had worked for a firm that represented the oil giant.
Preska, who found Donziger guilty of the contempt charges in July, is a leader of the right-wing Federalist Society, which counts Chevron among its financial backers.
“As I face sentencing on Day 787 of house arrest, never forget what this case is really about,” tweeted Donziger on Friday morning, as he awaited the sentencing. “Chevron caused a mass industrial poisoning in the Amazon that crushed the lives of Indigenous peoples. Six courts and 28 appellate judges found the company guilty.”
Donziger indicated Friday afternoon that he plans to appeal the sentence.
“Stay strong,” he tweeted along with a photo from a rally attended by his supporters Friday.
BREAKING: Flouting the U.N. decision ordering my release, Judge Preska sentenced me to 6 months in prison. Still on house arrest until the appeals court rules on my motion for release pending appeal. Picture is from rally this morning.
350.org co-founder and author Bill McKibben said on social media that Donziger “deserves our thanks and support” for “daring to point out that Big Oil had poisoned the rainforest.”Rick Claypool, research director for Public Citizen, tweeted that Donziger’s case “perfectly encapsulates how corporate power has twisted the U.S. justice system to protect corporate interests and punish their enemies”—noting that as Donziger is ordered to prison for six months, members of the Sackler family recently won immunity from opioid lawsuits targeting their private company, Purdue Pharma.
“This ruling was done to deter ANYONE from crossing corporate special interests,” said progressive former congressional candidate Jen Perelman.
Originally published on Common Dreams by JULIA CONLEY and republished under a Creative Commons License (CC BY-NC-ND 3.0).
Stephanie Grisham’s new book exposes everything she knows about the Trumps after extensive time working in the White House. Reporters with galley proofs are exposing and releasing details that paint a sordid and alarming picture of the time, even beyond past, admittedly shocking revelations.
Grisham served multiple roles during Trump’s solo term, including as aide to former First Lady Melania Trump, as Chief of Staff, in addition to an aide to Trump as his White House Press Secretary and Communications Director.
Many of the most recent revelations focus on the former First Lady.
Reports from those who got a sneak peak at excerpts from the upcoming book, say during the 2020 election race, Melania did not stay up for results by her husband’s side, but instead spent most of the night…. asleep.
“I knew by now how much sleep meant to her,” Grisham writes, “but still, I couldn’t imagine being asleep at a time like that. Maybe she thought that someone would wake her up if Trump won.”
(Obviously he didn’t win). Although only a small little nugget of gossip, it solidifies what many have felt about the ex-FLOTUS, as her infamous green jacket implied, she really doesn’t care.
It seems like Melania Trump DOES care about her outward reputation as both unflattering images of author Grisham were leaked to press along with a statement issued by her camp about the upcoming book:
“The intent behind this book is obvious. It is an attempt to redeem herself after a poor performance as press secretary, failed personal relationships, and unprofessional behavior in the White House. Through mistruth and betrayal, she seeks to gain relevance and money at the expense of Mrs. Trump.”
More Than Half of America’s 100 Richest People Exploit Special Trusts to Avoid Estate Taxes
It’s well known, at least among tax lawyers and accountants for the ultrawealthy: The estate tax can be easily avoided by exploiting a loophole unwittingly created by Congress three decades ago. By using special trusts, a rarefied group of Americans has taken advantage of this loophole, reducing government revenues and fueling inequality.
There is no way for the public to know who uses these special trusts aside from when they’ve been disclosed in lawsuits or securities filings. There’s also been no way to quantify just how much in estate tax has been lost to them, though, in 2013, the lawyer who pioneered the use of the most common one — known as the grantor retained annuity trust, or GRAT — estimated they may have cost the U.S. Treasury about $100 billion over the prior 13 years.
As Congress considers cracking down on GRATs and other trusts to help fund President Joe Biden’s domestic agenda, a new analysis by ProPublica based on a trove of tax information about thousands of the wealthiest Americans sheds light on just how widespread the use of special trusts to dodge the estate tax has become.
More than half of the nation’s 100 richest individuals have used GRATs and other trusts to avoid estate tax, the analysis shows. Among them: former Democratic presidential candidate Michael Bloomberg; Leonard Lauder, the son of cosmetics magnate Estée Lauder; Stephen Schwarzman, a founder of the private equity firm Blackstone; Charles Koch and his late brother, David, the industrialists who have underwritten libertarian causes and funded lobbying efforts to roll back the estate tax; and Laurene Powell Jobs, the widow of Apple founder Steve Jobs. (Powell Jobs’ Emerson Collective is among ProPublica’s largest donors.)
More than a century ago amid soaring inequality and the rise of stratospherically wealthy families such as the Mellons and Rockefellers, Congress created the estate tax as a way to raise money and clip the fortunes of the rich at death. Lawmakers later added a gift tax as a means of stopping wealthy people from passing their fortunes on to their children and grandchildren before death. Nowadays, 99.9% of Americans never have to worry about these taxes. They only hit individuals passing more than $11.7 million, or couples giving more than $23.4 million, to their heirs. The federal government imposes a roughly 40% levy on amounts above those figures before that wealth is passed on to heirs.
For her part, Powell Jobs has decried as “dangerous for a society” the early 20th century fortunes of the Mellons, Rockefellers and others. “I’m not interested in legacy wealth buildings, and my children know that,” she told The New York Times last year. “Steve wasn’t interested in that. If I live long enough, it ends with me.”
Nonetheless, after the death of her husband in 2011, Powell Jobs used a series of GRATs to pass on around a half a billion dollars, estate-tax-free, to her children, friends and other family, according to the tax records and interviews with her longtime attorney. By using the GRATs, she avoided at least $200 million in estate and gift taxes.
Her attorney, Larry Sonsini, said Powell Jobs did this so that her children would have cash to pay estate taxes when she dies and they inherit “nostalgic and hard assets,” such as real estate, art and a yacht. (At 260 feet, Venus is among the larger pleasure ships in the world.) Without the $500 million or so passed through the trusts, he said, Powell Jobs’ heirs would have to sell stock that she intends to give to charity to pay her estate tax bill.
Sonsini said Powell Jobs, whose fortune is pegged at $21 billion by Forbes, has already given billions away to charity and paid $2.5 billion in state and federal taxes between 2012 and 2020. “When you look at an estate that may be worth multiple billions, and all the rest is going to charity, and you put it in perspective, what is the problem we’re worried about here?” Sonsini asked. “This is not about creating dynasty wealth for these kids.”
In a written statement, Powell Jobs said she supports “reforms that make the tax code more fair. Through my work at Emerson Collective and philanthropic commitments, I have dedicated my life and assets to the pursuit of a more just and equitable society.”
Others whose special trusts ProPublica identified, including Bloomberg and the Kochs, declined to comment on why they’d set up the trusts or their estate-tax implications. Representatives for Lauder didn’t respond to requests to accept questions on his behalf. Schwarzman’s spokesperson wrote that he is “one of the largest individual taxpayers in the country and fully complies with all tax rules.”
A typical GRAT entails putting assets, like stocks, in a trust that ultimately benefits a person’s heirs. The trust pays back an amount equal to what the trust’s creator put in plus a modest amount of interest. But any gains on the investments above that amount flow to the heirs free of gift or estate taxes. So if a person puts $100 million worth of stock in a GRAT and the stock rises in value to $130 million, their heirs would receive about $30 million tax-free.
In 1990, Congress accidentally created GRATs when it closed another estate tax loophole that was popular at the time. The IRS challenged the maneuver but lost in court.
“I don’t blame the taxpayers who are doing it,” said Daniel Hemel, a professor at the University of Chicago Law School. “Congress has virtually invited them to do it. I blame Congress for creating the monster and then failing to stop the monster once it became clear how much of the tax base the GRAT monster would eat up.”
Users of the trusts extend well beyond the top of the Forbes rankings, ProPublica’s analysis of the confidential IRS files show. Erik Prince, founder of the military contractor Blackwater and himself heir to an auto parts fortune, used the shelter. Fashion designer Calvin Klein has used them, as have “Saturday Night Live” creator Lorne Michaels and media mogul Oprah Winfrey.
“We have paid all taxes due,” a spokesperson for Winfrey said. A representative of Klein did not accept questions from ProPublica or respond to messages. A spokesman for Michaels declined to comment.
Prince also did not answer questions. “Hey if you publish private information about me I’ll be sure to return the favor,” he wrote. “Go ahead and fuck off.”
The GRAT has become so ubiquitous in recent decades that high-end tax lawyers consider it a plain vanilla strategy. “This is an off-the-shelf solution,” said Michael Kosnitzky, co-leader of the private wealth practice at law firm Pillsbury Winthrop Shaw Pittman. “Almost every wealthy person should have one.”
ProPublica’s tally almost certainly undercounts the number of Forbes 100 members who use shelters to avoid estate taxes. ProPublica counted only those people whose tax records or public filings explicitly mention GRATs or other trusts commonly used to dodge gift and estate taxes. But a wealthy person can call their trusts whatever they want, leaving plenty of trusts outside of ProPublica’s count.
This month, the House and Senate are hammering out proposals to raise revenue to help pay for the Biden administration’s plans to expand the social safety net. The legislative blueprint released by House Ways and Means Committee Chairman Richard Neal, D-Mass., would defang GRATs and other trusts, which would still be legal but no longer be as useful for estate tax avoidance. If the provision makes it into law, “it would put a major dent in GRATs,” said Bob Lord, an Arizona attorney who specializes in trusts and estates.
Senate Budget Committee Chairman Bernie Sanders, I-Vt., has proposed going further in undercutting estate tax avoidance tools. But the prospect of any reform is uncertain, as Democrats on Capitol Hill struggle to find the votes to pass the package of spending and tax changes.
GRATs are commonly described by tax lawyers as a “heads I win, tails we tie” proposition. If the investment placed in the GRAT soars in value, that increase passes to an heir without being subject to future estate tax. If the investment doesn’t go up, the wealthy person can simply try again and again until they succeed, leading many users to have multiple GRATs going at a time.
For example, Herb Simon, founder of the country’s biggest shopping mall empire and owner of the Indiana Pacers, was one of the most prolific GRAT creators in records reviewed by ProPublica. Since 2000, he has hatched dozens of the trusts, often more than one a year. In an interview with The Indianapolis Star in 2017, the octogenarian Simon said, “It’s always a big tax problem” for the next generation when someone dies, “but we’ve worked that tax problem. We won’t have a problem with that.”
A spokesperson for Simon didn’t respond to questions for this article.
Mentions of these trusts have periodically surfaced in the press after being disclosed in securities filings, as was the case with trusts held by Facebook co-founders Mark Zuckerberg and Dustin Moskovitz and Chief Operating Officer Sheryl Sandberg. In 2013, Bloomberg News published a groundbreaking series on GRATs, mining securities filings and other records to reveal how the mega-rich, including casino magnate Sheldon Adelson and such families as Walmart’s Waltons, had perfected the use of the device.
ProPublica’s data shows that Michael Bloomberg, the majority owner of the company that bears his name and No. 13 on Forbes’ list of the wealthiest Americans, is himself a heavy user of GRATs. Over the course of a dozen years, he repeatedly cycled pieces of his private company in and out of the trusts — often opening multiple GRATs in one year. During that time, hundreds of millions of dollars in income flowed through Bloomberg’s GRATs, giving him opportunities to shield parts of his fortune for his heirs.
ProPublica described the transactions (but not the name of the person engaging in them) to Lord, the trusts and estates attorney. The GRAT is “the perfect loophole to avoid estate and gift tax in this situation,” said Lord, who is also tax counsel for Americans for Tax Fairness and an advocate for estate tax reform.
When Bloomberg ran for president in 2020, he vowed to shore up the estate tax. “Owners of the biggest estates are expert at gaming the system to reduce what they owe,” a campaign fact sheet for his tax plan said. Bloomberg vowed to “lower the estate-tax threshold, so that more estates are taxed,” and to “shut down multiple estate-tax avoidance schemes.” His fact sheet offered few details as to how he would do that, and it didn’t mention GRATs.
The legislation Congress is now considering to curtail GRATs would leave open other options for estate tax avoidance, including a cousin to the GRAT known as a charitable lead annuity trust, or CLAT, which contributes to charity while passing gains from stocks and other assets on to heirs. And the legislation would grandfather in existing trusts, meaning that those who have already established trusts would be able to continue to use them to avoid paying estate taxes.
That has set off a predictable push by tax lawyers to get their clients to create tax-sheltering trusts before any new legislation takes effect.
Porter Wright, a law firm that offers estate planning services, told existing and potential clients it was “critical” to evaluate opportunities because “the window may close very soon. There are important and time sensitive issues which could substantially impact the amount of wealth you are able to transfer free of estate and gift tax to future generations.”
Originally published on ProPublica by Jeff Ernsthausen, James Bandler, Justin Elliott and Patricia Callahan and republished under Creative Commons.
“Ever notice how ‘deficit hawks’ vote for record-high defense spending, yet claim bills that help people and challenge lobbyists are ‘too much?'” asked Rep. Alexandria Ocasio-Cortez.
Sen. Joe Manchin on Thursday derided his own party’s plan to spend $3.5 trillion over the next decade to combat the climate crisis, invest in child care, and expand Medicare as “fiscal insanity.”
“All this operatic moaning about $3.5 trillion is ridiculous hypocrisy. Manchin has casually voted for nearly three times that for defense spending.”
But progressive lawmakers and commentators were quick to point out that Manchin (D-W.Va.)—along with other conservative Democrats who are currently standing in the way of Democrats’ reconciliation package—have had no problem greenlighting the Pentagon’s increasingly bloated budget year after year after year.
“Ever notice how ‘deficit hawks’ vote for record-high defense spending, yet claim bills that help people and challenge lobbyists are ‘too much?'” Rep. Alexandria Ocasio-Cortez (D-N.Y.) asked in a tweet Thursday evening.
“All this operatic moaning about $3.5 trillion is ridiculous hypocrisy. Manchin has casually voted for nearly three times that for defense spending”
Noting that the reconciliation package includes yearly spending of $350 billion while the proposed military budget for Fiscal Year 2022 is $770 billion, the New York Democrat wrote: “Guess which got rubber stamped and which gets deemed a ‘spending problem.'”
Last week, the House of Representatives passed the $770 billion military policy bill—which includes $740 billion for the Pentagon alone–by a vote of 316-113, with just 38 Democrats voting no. The Senate is expected to pass its version of the National Defense Authorization Act in the coming days.
In a column published late Thursday, The Week‘s Ryan Cooper observed that Manchin “voted for every single one of the military budgets over the last decade—in 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018, 2019, and 2020.”
“He voted for all $9.1 trillion,” Cooper wrote. “While he occasionally complained about wasteful military programs and asked for an audit of the Pentagon, these quibbles were never enough to get him to vote differently. He helped inflate the already-bloated war budget and regularly boasted about thus ‘supporting’ the troops. This year, he did it again.”
“So on one level, all this operatic moaning about $3.5 trillion is ridiculous hypocrisy,” Cooper continued. “Manchin has casually voted for nearly three times that for defense spending—money that killed hundreds of thousands of people and turned half the Middle East into a smoking crater. A modest fraction of that total to help parents pay their bills, give seniors dental coverage, fight climate change, and so forth is not some intolerable burden on the economy.”
West Virginia activists in kayaks presented that critique directly to Manchin on Thursday as the Democratic senator listened from his yacht:
In ongoing talks over the reconciliation package, Manchin is pushing for a top-line spending level of $1.5 trillion. That figure is at least $2 trillion less over 10 years than Democrats’ current plan, which would spend $3.5 trillion over the next decade.
As Win Without War executive director Stephen Miles noted Thursday, Manchin’s preferred $1.5 trillion number is “less than we’ll spend at the Pentagon over the next two years.”
“And Manchin’s talking about a DECADE of spending across the entire rest of the government,” Miles wrote on Twitter. “During that time we’ll spend somewhere north of $8 trillion, possibly closer to $10 trillion. Just. at. the. Pentagon.”
Originally published on Common Dreams by JAKE JOHNSON and republished under a Creative Commons license (CC BY-NC-ND 3.0).
Ahead of a national vote this month, Citizen Browser data shows that posts promoting the AfD party appeared more than three times as often as rivals’
Earlier this month, Germany’s far-right nationalist political party Alternative für Deutschland, or the AfD, posted on Facebook. Widespread support for Sharia law among Muslims in Afghanistan, the group claimed, illustrated the danger “wenn sich Massen von Afghanen auf den Weg nach Deutschland und Europa machen” (“when masses of Afghans make their way to Germany and Europe”).
The post was soon shared by thousands of users and commented on by thousands more. It was one of many posts by AfD-related pages over the past couple of months that railed against immigration or, another popular topic, disparaged COVID-19 restrictions as unnecessary.
Despite its modest size in Germany, the AfD has been remarkably successful on Facebook. Data obtained through The Markup’s Citizen Browser project, in partnership with Germany’s Süddeutsche Zeitung, shows how the AfD has gained tremendous traction on Facebook in the run-up to a historically contentious national election to replace Angela Merkel, the long-serving chancellor, later this month.
The Citizen Browser project, which collects data from a diverse panel of 473 German Facebook users, shows the party and its supporters have peppered Facebook with pages promoting its ideology, with posts on those pages appearing in our panelists’ news feeds at least three times as often as those from any rival party.
Fewer unique panelists had posts from AfD-related pages appear in their news feeds than posts from the sister parties of the Christian Democratic Union of Germany (CDU) and the Christian Social Union in Bavaria (CDU/CSU), which led in this count, and from Bündnis 90/Die Grünen (Alliance 90/The Greens). But the data shows AfD deeply engaged with its core audience: The users who did see content from the AfD tended to see it repeatedly, and the AfD was especially good at reaching its own supporters.
Citizen Browser captures up to 50 posts from a panelist’s Facebook news feed one to three times a day. The Markup catalogued every time a post from a page named for a German political party appeared in our panelists’ feeds over the past two months, from July 20 to Sept. 16, 2021. We included any pages that mentioned “AfD” or one of its political rivals (“SPD,” “CDU,” or “FDP,” for example) in its name. We did not determine whether the page was officially sanctioned by the party itself. We removed any pages meant to disparage a party.
Posts from more than 200 different pages promoting the AfD party—the most pages of any party we looked at—appeared in our panelists’ feeds. While the quantity of pages promoting the center-left Social Democratic Party, the SPD, followed closely behind with 175 pages, posts from AfD pages appeared four times as often in our panelists’ news feeds. Our panelists were shown posts from the AfD more than 3,200 times, while they were shown SPD posts only about 760 times.
The other major political party in Germany, the center-right Christian democratic political alliance, or the CDU/CSU, fared slightly better. Posts by pages related to those parties appeared in panelists’ news feeds around 850 times. But the AfD’s posts still appeared more than three times as often.
The AfD’s dominance of our panelists’ news feeds is especially stark considering the makeup of our Citizen Browser panel in Germany. Our panel consists of more people who identified themselves as SPD and CDU/CSU supporters—62 and 82, respectively—than the 44 who identified themselves as AfD supporters.
Those who did report aligning with the far-right party had an average of 55 posts from AfD-related pages appear in their news feeds in the eight weeks of data we examined. By comparison, supporters of the CDU/CSU had an average of just six CDU- or CSU-affiliated posts appear in their feeds.
“Given its very limited number of participants, data from The Markup’s ‘Citizen Browser’ is simply not an accurate reflection of the content people see on Facebook,” Facebook spokesperson Basak Tezcan said in an emailed statement. “We actively reduce the distribution of content that is sensational, misleading, or are found to be false by our independent fact-checking partners. Our approach goes beyond addressing the issue post-by-post, so when Pages or Groups repeatedly share this kind of content, we reduce the distribution of all the posts from those Pages and Groups.”
The AfD did not respond to a request for comment.
Our analysis has limitations. Citizen Browser tracks a small percentage of Facebook users in Germany compared to the tens of millions of Germans on the platform and is unlikely to perfectly mirror what Facebook shows all of its users in Germany. On Sept. 1, Facebook introduced a new interface that affected captures for 3 percent of the panel across all parties. Some captures for this small subgroup of panelists could not be included in this study.
But the panelists represent a diverse set of party affiliations across the political spectrum in the country, from AfD supporters to centrists to far more liberal users.
And AfD’s savvy on Facebook has been documented in past elections.
The AfD’s Rise on Social Media
The AfD launched in 2013, initially as a conservative party harnessing skepticism of the European Union. Though it failed to reach the vote threshold for representation in the German Bundestag in the federal election that year, the group’s facility with social media quickly became evident.
“Directly in their beginning, in 2013, they began to install a very strong network of interconnected Facebook accounts for nearly all local branches of the party,” said Isabelle Borucki, an interim professor at the University of Siegen who studies German political parties online. The AfD operates on many platforms, but Borucki said it was clear the party “understood especially how this network works.”
It isn’t just Facebook where the AfD has performed well, either. This year, a report from Süddeutsche Zeitung and AlgorithmWatch that relied on data from hundreds of users showed how Facebook-owned Instagram seemed to favor right-wing content, with posts from the AfD tending to appear higher up in users’ feeds.
While it’s difficult to say how social media popularity translates to votes, many observers have attributed the AfD’s growth, at least partially, to its social media strategy.
“They managed to use social media to explode and find people and citizens that weren’t interested in politics before,” said Juan Carlos Medina Serrano, a Ph.D. student at the Technical University of Munich who has studied the AfD’s use of social media and is now heading data operations for Germany’s Christian Social Union party.
In past elections, researchers and journalists have tried to measure how well the AfD has reached users on Facebook compared to other political parties. Like The Markup, they also found that the AfD has been able to use Facebook to find a large online audience.
After the 2017 national election, a Washington Post analysis noted that AfD posts had been shared more than 800,000 times that year, far outpacing all other major parties put together.
In 2019, one report found that AfD posts on Facebook accounted for about 85 percent of shared content from German political parties, according to Der Spiegel. A researcher told the outlet at the time that the AfD had become “the country’s first Facebook party.”
Facebook has highlighted its efforts to combat misinformation in past German elections. In 2017, after the last German federal election, the company said it had removed tens of thousands of suspicious accounts to clamp down on the spread of false information.
Facebook also announced earlier this month that it had removed a network of pages associated with Germany’s anti-lockdown Querdenken movement that promoted violent content and health misinformation. The movement is not directly aligned with a political party, although it shares its COVID-skeptical perspective with the AfD.
This month’s vote may present new challenges for the social network. In June, Politico reported that there had been a spike in election-related misinformation as far-right social media users appeared to be laying the groundwork to make claims of election fraud after the vote.
What’s Driving the AfD’s Success on Facebook?
Experts point to several factors that have contributed to the AfD’s Facebook presence.
As the Citizen Browser data shows, the AfD and its supporters tend to run more active pages in general than their rivals, setting up relatively small, localized pages that garner support across the country.
The AfD, researchers say, also relies more on sensational, aggravating content, which is a perspective Facebook rewards with greater reach. “They trigger anger, fear—I would say anarchic or basic emotions,” Borucki said. “Those trigger people and affect people more than bare facts.” One recent AfD post found in our dataset bemoaning “climate hysteria,” for example, led to more than 5,000 “angry” reactions on Facebook.
This strategy seems to be catching on with other political groups. The Wall Street Journal reported last week that some European parties had shifted policy positions to align with what performs well on Facebook, including more negative content.
The CDU didn’t respond to The Markup’s requests for comment, and the SPD declined to comment.
Like many conservative politicians in the United States, the AfD has been eager to court voters skeptical of COVID-19 restrictions and vaccines, leaning into a populist stance against preventative COVID-19 measures.
Facebook says it attempts to automatically tag any content related to COVID-19 with a flag sending users to reliable information. The Citizen Browser data shows that, of the posts shown to our panelists, posts from the AfD were by far the most likely to be tagged by Facebook as being related to COVID-19. Our panelists were shown AfD posts tagged by Facebook for being COVID-related more than 250 times. In contrast, our panelists were shown posts from the SPD with tags related to COVID-19 fewer than 15 times, and this was the second most tagged in our dataset.
Many of the AfD posts inveigh against lockdown measures and suggest that the vaccines may not be as effective as health officials claim. A post about infections spread in a club that required proof of vaccination, for example, called vaccine-related restrictions quatsch, or nonsense.
The group’s posts remain popular, but it’s also not clear whether those posts are leading to new votes. The party is projected to end up in fourth or fifth place in the upcoming election.
Since the 2017 election, Medina Serrano said, the AfD’s explosive growth on Facebook seems to have leveled off. Now, he said, the party has gone from a strategy of looking to pull in new voters to one of cementing its base in German politics through Facebook.
“It’s more about maintaining the base than growing—it’s already capped, in my opinion,” Medina Serrano said. “But we’ll see the results on election night.”
“The climate crisis has not disappeared,” said Swedish activist Greta Thunberg. “It’s the opposite—it’s even more urgent now than it was before.”
Young people by the hundreds of thousands took to the streets across the globe on Friday to deliver a resounding message to world leaders: The climate crisis is getting worse, and only radical action will be enough to avert catastrophe and secure a just, sustainable future for all.
“As emissions and inequalities increase, we rise up and demand climate justice.”
From Pakistan to Italy to Germany to the Philippines, the worldwide “Uproot the System” actions marked the largest climate demonstrations since the coronavirus pandemic forced campaigners to take their protests online last year. Climate activists in developing countries—where access to vaccines is limited due to artificial supply constraints and hoarding by rich nations—were still forced to limit the size of their demonstrations Friday as a public health precaution.
“Last time it was digital and nobody was paying attention to us,” Yusuf Baluch, a 17-year-old activist from the Pakistani province of Balochistan, toldReuters. “In the global north, people are getting vaccinated so they might be out in huge quantities. But in the global south, we are still limited.”
The Global Climate Strike continues! Balochistan is predominantly agriculture-based. They have been affected by drought due to climate change and the problems faced by people are increasing alarmingly.
Above: Photo Collage / Great Thunberg – via Instagram / Lynxotic
Swedish activist Greta Thunberg, whose solitary sit-down strike outside her home country’s parliament in 2018 helped spark the global Fridays for Future movement, said that “it has been a very strange year and a half with this pandemic.”
“But of course, the climate crisis has not disappeared. It’s the opposite—it’s even more urgent now than it was before,” said Thunberg, who on Friday joined a large demonstration in Berlin, which was hammered by massive, climate-linked floods in July.
Watch Thunberg’s full speech in front of the Reichstag building:
Organizers said that more than 1400 climate strikes are set to take place in at least 70 countries Friday, with hundreds of thousands expected to attend demonstrations in Germany alone.
“As emissions and inequalities increase, we rise up and demand climate justice,” saidBerlin-based climate activist Luisa Neubauer.
The latest youth-led global action kicked off just weeks ahead of the pivotal COP26 climate summit in Glasgow, which many civil society organizations want to be postponed over fears that inequities in coronavirus vaccine access could prevent delegates from developing nations—those most vulnerable to the climate crisis—from attending.
Equalizing global vaccine distribution is one of the six demands that climate campaigners are aiming to put before world leaders during Friday’s mass demonstrations. The full list is as follows:
The Global North needs to cut emissions drastically by divesting from fossil fuels and ending its extraction, burning, and use. We need concrete plans and detailed annual carbon budgets with roadmaps and milestones to ensure we get to net-zero with justice and equity in the time needed to address climate change.
The colonizers of the north have a climate debt to pay for their disproportionate amount of historic emissions and that starts with the increase of climate finance to implement anti-racist climate reparations, the cancellation of debts especially for damage caused by extreme weather events, and providing adaptation funds that serve the communities.
Work towards a genuinely global recovery from Covid-19 by ensuring equitable vaccine distribution worldwide and suspending intellectual property restrictions on Covid-19 technologies. This is an essential step towards a global, green, and just recovery.
Recognize the tangibility of the climate crisis as a risk to human safety and secure the rights of climate refugees in international law.
Recognize the invaluable impact of biodiversity on indigenous communities’ lives and culture, and commit to make ecocide an international punishable crime.
Stop the violence and criminalization against indigenous peoples, small farmers, small fisherfolk, and other environmental and land defenders. Support the work they do. Respect and listen to our defenders.
The worldwide demonstrations came a week after the United Nations warned that even if the 191 parties to the Paris Agreement meet their current climate targets, global greenhouse gas emissions will still rise 16% by 2030 compared to 2010 levels. The U.N. also estimated that the planet is on track for 2.7°C of warming by the end of the century, a level of heating that experts say would be cataclysmic—particularly for developing nations.
At the U.N. General Assembly in New York this week, the leaders of vulnerable countries pushed wealthy nations—the largest contributors to the climate emergency—to stop shirking their responsibilities to confront the planetary crisis.
“We simply have no higher ground to cede,” Marshall Islands President David Kabua said Wednesday. “The world simply cannot delay climate ambition any further.”
Participants in Friday’s global action pointedly amplified that message. Valentina Ruas, a Brazilian activist, toldThe Guardian that “the global north should be developing climate policies that have at their core climate justice and accountability to the most affected people and areas.”
“Instead,” she added, “they continue to exploit vulnerable communities and recklessly extract fossil fuel, while bragging about their insignificant emission reduction plans.”
Subpoenas have been issued for documents and testimony that held close ties to then-President Trump and were either working or had communications with the White House on in the the days leading to Jan 6th. An official press release revealed four individuals have been served and include: former WH Chief of Staff Mark Meadows, former WH Deputy Chief of Staff Daniel Scavino, Defense Dept Official Kashyap Patel, and lastly former advisor Stephen Bannon.
Chairman Bennie G. Thompson wrote:
“The Committee is investigating the facts, circumstances, and causes of the January 6th attack and issues relating to the peaceful transfer of power, to identify and evaluate lessons learned and to recommend corrective laws, policies, procedures rules, or regulations”
According to committee, Mark Meadows allegedly communicated with officials at the state level and Justice Dept in an effort to overturn 2020 election result ( or prevent its certification).
Kashyap Patel performed several national security jobs for Trump as well as served as Chief of Staff to then Defense Secretary Christopher Miller. Patel allegedly was in involved with discussions among senior Pentagon officials regarding Capitol security before and on Jan 6.
Daniel Scavino prior to Trump’s rally on the 6th took to his social media to encourage MAGA-ers to “be a part of history”. According to records obtain he also have text messages from the White House on Jan. 6.
Steve Bannon communicated with Trump around Dec 30 regarding focused efforts on or leading up to Jan. 6 and even told his War Room podcast listeners that “all hell was going to break loose”
The subpoenas instruct the witnesses to appear at depositions on the following dates and are required to produce all relevant documents by October 7th:
October 15, 2021: Mark Meadows and Daniel Scavino
October 14, 2021: Kashyap Patel and Stephen Bannon
The letters to the four witnesses can be found here:
A bill headed to the governor’s desk aims to curb injuries in warehouse distribution centers run by a broad spectrum of employers and outlaw punishment for bathroom breaks
Yesenia Barrera was just finishing up her 10-hour shift at an Amazon fulfillment center in Rialto, Calif., she recalled, when a manager approached her. She said he was concerned that throughout the day she’d racked up about 60 minutes of “time off task,” Amazon parlance for when someone is not directly working on the assignment at hand or taking too long to complete it. He told her he was writing her up and asked what happened, she said.
“I used the restroom today,” Barrera said she told him.
“How many times did you use it?” she remembered he asked.
“Three times,” she said she responded, thinking about how it took five minutes to walk each way across the warehouse floor to get to the bathroom.
When Barrera returned to Amazon for her next scheduled shift two days later, her badge wouldn’t let her into the building. She later learned she’d been terminated. Barrera has since become an organizer with the Warehouse Worker Resource Center, a nonprofit that advocates on behalf of warehouse workers.
The California Senate passed legislation last week that, if signed by the governor, would prohibit a spectrum of employers, including Amazon, from firing warehouse workers like Barrera for policies such as “time off task.” The bill, AB 701, would be the first law in the country to address productivity quotas and strict algometric metrics used to manage warehouse employees. (Governor Newsom’s office did not reply to a request for comment.)
Under AB 701, employers wouldn’t be able to punish workers for failing to meet quotas when health and safety issues come into play, such as a worker’s need to take bathroom and water breaks. And it would prohibit retaliation against workers who complain. The law would also require companies that run warehouses to report to the government—and their own employees—the quotas and speed metrics they mandate for workers.
“Right now, it’s very secretive,” said Christian Castro, communications director for the Los Angeles County Federation of Labor, AFL-CIO, which sponsored the bill. “E-commerce has been growing exponentially, it’s gotten even more popular during the pandemic…. Workers are telling us about an increase in quotas, not even knowing their quotas.”
Amazon spokesperson Rachael Lighty declined to comment on AB 701 and Barrera’s allegations but said in an email, “The health and safety of our employees is our number one priority—and has been since day one,” adding, “We’re committed to giving our employees the resources they need to be successful, creating time for regular breaks and a comfortable pace.”
In opposition to AB 701 is a coalition of about two dozen business groups, including the California Chamber of Commerce, California Farm Bureau, and California Retailers Association. They say the law could raise costs for companies that run warehouses and effectively drive employers from the state.
AB 701 is “burdensome and needlessly overbroad,” Steve McCarthy, vice president of public policy for the California Retailers Association, wrote in an Aug. 30 letter to all state senators. He said the bill could lead to increased litigation “by establishing potentially open-ended employee access to bathroom facilities which will make employers’ ability to enforce production standards even more complex.”
AB 701 would cover all warehouse distribution centers, such as those run by Walmart, Target, and UPS, but the bill’s supporters say Amazon is the main target. The company, they say, is leading the charge to automate workforces, increase the speed of work, and use surveillance technologies to monitor worker productivity.
Advocates who support the bill say they hope it will cause a ripple effect to other states. They say California’s labor laws have often served as a model for policymakers and worker organizations nationwide.
“Chart Topping” Injury Rates
Amazon is the largest private employer in California, with more than 150,000 employees in the state, and the second largest employer in the U.S. Over the years, several Californian cities have welcomed the influx of warehouses, which they say have brought in thousands of well-paying jobs to regions historically plagued by unemployment.
But it’s been well documented that warehouse work can be dangerous. Several studies point to injury rates that exceed those of other industries.
The U.S. Bureau of Labor Statistics cites data that shows warehouse workers are injured nearly twice as often as other workers in the private sector. And when employers, like Amazon, add in productivity quotas, those injuries tend to increase, other studies show. A December 2019 report by the Athena coalition looked at data and internal documents that Amazon provided to OSHA and found the injury rate at the company’s warehouses was nearly three times the combined rate of all other private employers that submitted data to OSHA.
“Primed for Pain,” a report by a coalition of four labor unions called the Strategic Organizing Center, found that not only are injury rates higher at Amazon warehouses, but the injuries also tend to be more severe—with a “serious injury rate” nearly 80 percent higher than that of all other employers in the warehousing industry.
“The rate of injuries at Amazon is astronomical…. It’s chart topping by all measures,” said Irene Tung, senior researcher at the workers’ rights group National Employment Law Project, who co-wrote a report about injury and churn rate at Amazon’s California warehouses. “I don’t think people understand just how different Amazon is as an employer and how they’re ushering in this new paradigm.”
When asked about injury rates at Amazon’s warehouses, spokesperson Lighty said the company has more than 6,200 “safety professionals” throughout its facilities. “We also invest billions of dollars in new operations safety measures, technologies and other innovative solutions that protect our employees, work closely with health and safety experts and scientists, conduct thousands of safety inspections each day in our buildings, and have made hundreds of changes as a result of employee feedback on how we can improve their well-being at work,” she said.
Lighty added that the data on musculoskeletal injuries, such as sprains, strained muscles, and torn ligaments, at Amazon’s warehouses “is skewed.” She said that’s because the company’s workforce has many people in the 18 to 24 age range, which she said is more likely than other age groups to claim work-related musculoskeletal injuries.
In April, Amazon’s executive chairman and former CEO Jeff Bezos called the company “Earth’s Best Employer and Earth’s Safest Place to Work.”
Along with injuries, Amazon has also been accused of not allowing workers enough time for bathroom breaks. In a 2020 letter to Bezos, a group of 15 U.S. senators wrote, “Pressure to meet their quotas is so great that workers report urinating in plastic bottles on the warehouse floor.” Amazon responded, saying workers are “allowed and encouraged to take breaks as needed.”
Last December, Amazon settled a class-action lawsuit in California brought by 27 warehouse workers who said the company violated the state’s labor codes by denying them adequate bathroom and rest breaks. Amazon’s “production clock does not stop when employees need to use the restroom facilities,” the lawsuit said, which meant workers “have been forced to forego bathroom breaks completely, simply out of fear of termination.”
Lighty declined to comment on the lawsuit or settlement.
While California law mandates that employers must allow breaks, warehouses with production quotas can make it difficult for workers to use the bathroom while still being able to meet their tasks. Assemblywoman Lorena Gonzalez, AB 701’s author, said the bill aims to strengthen state law by creating standards around these quota systems.
“To make next-day delivery possible, corporations like Amazon have forced warehouse employees to work faster, service more customers with more orders in record amounts of time, and risk their own bodies in the process,” Gonzalez said in a statement. “No worker should be forced to sacrifice their basic human needs, or accept such undignified conditions for a paycheck.”
When Barrera was working at Amazon’s Rialto warehouse, one of her jobs was scanning boxes on a conveyor belt.
“The conveyor doesn’t stop,” she said. “Time is against you.”
She remembers at one point, she fell behind and boxes started piling up. She set down her scan gun to move some boxes aside, and it got buried in the pile. She said when she tried to pry it free, she pulled too hard, and it bounced back and smacked her in the eye. She said she went to the onsite clinic, where she was given ibuprofen and told to hold a wet paper towel on her eye. Barrera said she asked to sit down, and after about five minutes, both her manager and the clinic medic said she should be good to go back to work.
“You’re being tracked the moment you clock in,” Barrera said. “Unrealistic quotas are why workers are getting injured.”
Amazon’s Lighty did not respond when asked about the incident.
Protecting Workers vs. Increasing Bureaucracy
AB 701 has two major components: creating more transparency around work quotas and banning policies that negatively affect worker health and safety, including “time off task” policies.
For the transparency piece, employers that run warehouse distribution centers would be compelled to tell government agencies the quotas and speed metrics they require of employees and also disclose that information to workers.
“This policy provides the tools that are needed to keep workers safe in a growing industry plagued with widespread injuries and labor violations,” said Ron Herrera, president of the Los Angeles County Federation of Labor and secretary treasurer of Teamsters Local 396, both of which are sponsors of AB 701.
“This kind of speed-up on workers is breaking their bodies and churning them out,” Shadix said. “It undermines the argument that these are good stable jobs.”
While AB 701 would require transparency from companies around quotas, it would not create specific rules on worker surveillance and metrics.
Several Republican lawmakers in California have opposed AB 701, saying it would lead to more lawsuits, higher prices for consumer goods, and that the bill is part of an organized labor strategy to unionize warehouses.
“This bill is sponsored by union leaders as part of a campaign to tip the scales to coerce employees to unionize,” Sen. Brian Jones said in an email, adding that he doesn’t have confidence in Democratic legislators to run the state efficiently. “So now we’re supposed to trust them to micro-manage private warehouses throughout the state? No thanks.”
Jones is one of 11 senators who voted no on AB 701 (26 voted yes, and three had no vote recorded).
At least four senators, including Jones, received campaign donations of $2,500 from Amazon, according to public records from the California secretary of state. Amazon also made payments of $2,500 and $4,900 to various state assembly members, including to nearly half of those who voted no on the bill in May. The company additionally made several donations to senators and assembly members who voted yes (though not to any authors or co-authors of the bill).
When asked about the donations, Jones’s chief of staff, Craig Wilson, said, “Campaign contributions are irrelevant when it comes to how Senator Jones votes on legislation.”
Amazon has hired at least four lobbying firms in California during this year’s legislative session, according to the public records. For comparison, in 2019 and 2020, it hired just two firms per year. And the company spent more than $425,000 on lobbying in the state from January to June. More recent lobbying expenditures aren’t yet publicly available. Amazon’s Lighty didn’t respond to questions about the company’s lobbying activity.
While Amazon hasn’t publicly commented on AB 701, the coalition of business organizations and its members, including the California Retailers Association and California Chamber of Commerce, have spoken out against the bill.
Initially, the California Chamber of Commerce listed AB 701 on its “job killer” list—a label that often leads to dead bills—but then removed it in July after certain provisions around litigation and regulations were amended. The chamber still opposes the bill, however. When asked for comment, spokesperson Denise Davis referred The Markup to the letter McCarthy sent to state senators on behalf of the business coalition.
This bill “establishes anti-retaliation provisions that will make it more costly and difficult to take job actions against underperforming employees,” McCarthy wrote in the letter. He added that AB 701 could “have a chilling effect on production at distribution centers that will ripple through the rest of the supply chain.”
Amazon is on the California Retailers Association’s board of directors. McCarthy didn’t respond to a request for comment.
If AB 701 is signed by California governor Gavin Newsom, it would be slated to go into effect on Jan. 1, 2022. Newsom faces a recall election on Tuesday, but regardless of the outcome, he will determine the bill’s fate. Should Newsom lose Tuesday’s recall election, he would have 38 days to sign or veto all pending legislation before leaving office, according to California law.
“It’s important to address the fact that billionaire heirs may never pay tax on billions in stock gains.”
Sen. Ron Wyden, chair of the Senate Finance Committee, warned Tuesday that House Democrats’ newly released tax plan would let U.S. billionaires off the hook by omitting key reforms that progressive lawmakers, advocacy organizations, and President Joe Biden have embraced.
“It would be a monumental mistake for Congress to pass a bill that really exempts billionaires,” Wyden (D-Ore.) told the New York Times in response to the House Ways and Means Committee’s proposal, which was spearheaded by Rep. Richard Neal (D-Mass.).
While the House plan (pdf) would hike taxes on large corporations and the top 1% of earners in the U.S., analysts and Democratic lawmakers have voiced concerns that it doesn’t go nearly as far as it should to raise revenue for policy priorities and tackle the nation’s runaway income inequality, which the coronavirus crisis has made even worse. According to one recent analysis, the collective wealth of U.S. billionaires has risen by $1.8 trillion—62%—during the pandemic.
Wyden’s committee is in the process of crafting a tax plan of its own as Democrats race to compile their sprawling budget reconciliation package, which is expected to include major investments in green energy, healthcare, housing, and other key areas.
Specifically, Wyden and progressive organizations criticized the House Ways and Means Committee for failing to tackle a loophole that allows the ultra-wealthy to pass on massive fortunes to their heirs tax-free. Earlier this year, Biden released a tax plan that would close the loophole.
“It’s important to address the fact that billionaire heirs may never pay tax on billions in stock gains,” Wyden toldHuffPost on Monday. “The nurses, firefighters, and teachers who pay their taxes with every paycheck know the system is broken when billionaire heirs never pay tax on billions in stock gains.”
Steve Wamhoff, director of federal tax policy at the Institute for Taxation and Economic Policy (ITEP), echoed Wyden’s concern, noting in an interview with the Washington Post that “if the Ways and Means plan was enacted as is, Jeff Bezos and Elon Musk would still pay an effective rate of $0 on most of their income if they pass their assets on to their heirs.”
“It’s obviously a big improvement over the tax code we have now,” Wamhoff said of the House plan, “but there are a lot of things Biden suggested that would go a lot further.”
I agree with Chairman @RonWyden: we need to pass a bill that ensures that billionaires and corporations are finally paying their fair share. A wealth tax and my Real Corporate Profits Tax are two ways to get that done. https://t.co/xTtTQ8PGx2
On Tuesday, the progressive advocacy group Patriotic Millionaires made the House plan’s shortcomings the focus of a new mobile billboard campaign that features an image of Bezos—the richest man in the world—accompanied by the caption, “Oops! Missed me! (Thanks, Richie Neal!)”
“Richard Neal and the House Ways and Means Committee failed the president, failed the country, and failed history. It’s that simple,” Morris Pearl, chair of the Patriotic Millionaires, said in a statement. “This is not what the American people voted for when they elected Joe Biden as president.”
To remedy the proposal, the Patriotic Millionaires urged the House Democratic leadership to make several changes, including:
End the preferential tax rate for capital gains income over $1 million as President Biden requested. There is no intellectual or economic justification for working people in America to pay a higher tax rate than investors.
Eliminate the “stepped up basis” that allows the heirs of billionaires to avoid capital gains taxes on inherited assets (provide a reasonable exemption for family farms and small businesses). The committee’s failure to address this problem at all is particularly troubling.
End the Carried Interest Loophole which allows fund managers to mischaracterize their “ordinary” income as capital gain income for tax purposes. The Ways and Means proposal extends the hold time for investments to five years. Given that most private equity firms hold investments for six years, this change will have essentially zero effect. The loophole should be eliminated entirely.
Rep. Alexandria Ocasio-Cortez (D-N.Y.), whose “Tax the Rich” dress at the lavish 2021 Met Gala made waves on social media, said Tuesday that “members of both parties have tried to halt taxing the wealthiest in our society” even after billionaires made enormous wealth gains during the pandemic.
“It’s unacceptable,” the New York Democrat added. “We must tax the rich.”
According to a June survey released by Americans for Tax Fairness, 72% of U.S. voters support closing “loopholes that let the wealthy avoid paying taxes on the profits from assets they transfer to heirs.” The poll also found that 62% of voters support raising the corporate tax rate from 21% to 28%.
The House Ways and Means Committee proposal would only raise the corporate rate to 26.5%.
As Chuck Collins and Sarah Anderson of the Institute for Policy Studies argued in a blog post on Monday, “The public has a tremendous appetite to do much more to address the grotesque concentrations of democracy-distorting wealth and power—and to shut down the ways that billionaires and a few hundred global corporations manipulate our tax system.”
“House Democratic tax writers do not go far enough to raise revenue or reduce extreme wealth inequality,” Collins and Anderson wrote. “The tax reforms would generate an estimated $2.2 trillion—just barely more than the revenue lost due to the 2017 Republican tax cuts.”
Ask almost any billionaire how they got so obscenely rich and , invariably, you will get the response: “I just did what the law allows” or some convoluted version of that idea. Tax laws, property and financial regulations and structures, corporate stock options, Roth IRA tricks, all the tried and true methods outlined in a slate of recent articles from ProPublica and others are rightfully given credit for the insanely massive windfalls.
Not that these arrogant, self-centered sociopaths don’t jump at the chance to take credit for their “miraculous” good fortune, or even write books and “let” others write books about all the “genius” ideas and methods they used to conquer the universe.
Jeff Bezos is the most ridiculous example of this, literally dozens of books exist only to extol the virtues and genius of this a-hole that basically used one simple trick: selling dollar bills for .75 cents and using the stock market to “monetize” a trillion in intentional losses and turn them into “wealth”, to amass his absurd mountain of “worth”, yet if you read these books the central concept of his fraud doesn’t even get a mention.
Of course, 25 years later, the FTC and Lina Khan are finally beginning to wake up to the simple fact that, not only is the entire scam something that “ought-a-be-illegal”, but literally is illegal and always was, yet this comes across, so far, as a somewhat pathetic attempt to put a band-aid on the world after a nuclear holocaust has already devastated the planet.
When we say “tax the rich,” we mean nesting-doll yacht rich. For-profit prison rich. Betsy DeVos, student-loan-shark rich.
AOC used her beauty and a cheeky dress to highlight the issue of income inequality
Above: Photo / Wikipedia
AOC at the Met Gala styled herself in a “Tax the Rich” gown. The look on her was beautiful. The subject matter being broached couldn’t be uglier. Tax the rich a not a bad idea, but the system is so screwed up, and so far from any semblance of “fair”, that a few little pin pricks on trillions in undeserved holdings is basically meaningless.
How can it be said that the system is that far gone? It’s in the numbers and the proportions of “wealth”. The extremes of unequal wealth distribution have risen to levels so incredible, that it’s as if they are turning into an economic ouroboros dragon that will expand and swallow itself until it has devoured all life.
The increases, during the pandemic, for example, in the “net-worth” (which is in itself an obscene concept for measuring humans) of the worlds richest animals was like the replication of the virus the rest of us were fighting to avoid, most with too few resources to have any hope of being rescued by medical intervention, if we got infected.
This idea and proof of a system vastly out of balance can be seen everywhere you look…
In a recent, excellent, NYT article on Afghanistan multiple examples were cited illustrating who really “won” that endless war, and points out that it wasn’t the just Taliban. It was locals entrepreneurs and politicians who, early on, saw the opportunity for what it really was, a way to build personal fortunes supplying the US military with support and comfort during the endless, directionless morass.
Several examples were of people who began the war as local american sympathizers and ended up with fortunes hundreds of millions of USD and more, virtually none of which trickled into the local populations which, ostensibly, the war was meant to give a chance for “democratic freedom”. And capitalism.
Here’s a couple of paragraphs from the NYT article in full :
”Consider the case of Hikmatullah Shadman, who was just a teenager when American Special Forces rolled into Kandahar on the heels of Sept. 11. They hired him as an interpreter, paying him up to $1,500 a month — 20 times the salary of a local police officer, according to a profile of him in The New Yorker. By his late 20s, he owned a trucking company that supplied U.S. military bases, earning him more than $160 million.”
“If a small fry like Shadman could get so rich off the war on terror, imagine how much Gul Agha Sherzai, a big-time warlord-turned-governor, has raked in since he helped the C.I.A. run the Taliban out of town. His large extended family supplied everything from gravel to furniture to the military base in Kandahar. His brother controlled the airport. Nobody knows how much he is worth, but it is clearly hundreds of millions — enough for him to talk about a $40,000 shopping spree in Germany as if he were spending pocket change”
New York Times
Redistribution will likely only happen after the entire system collapses of its own stupidity
Hubris and pride before the fall is the reason that, when you read this, you’ll think perhaps this writer has lost his marbles. But the system is unsustainable in its current unequal, and increasingly unjust, form.
Sources: March 18, 2020 data: Forbes, “Forbes Publishes 34th Annual List Of Global Billionaires,” accessed March 18, 2020. August 17, 2021 data: Forbes, “The World’s Real-Time Billionaires, Today’s Winners and Losers,” accessed August 17, 2021.
Just one more ballooning of the one tenth of one percent and the system will be so out of balance, that only a total and complete realignment of reality will allow any kind of improvement in the distribution of resources.
In fact, the opposite outcome is far more likely, where to increase in the imbalance will continue ‘till there are no options, but for the current system to be drowned in its own orgy of self-congratulations.
The solutions that are out there, many even championed ironically and paradoxically by the very billionaires that sit on top of this mountain of inequality, could work. But a “penny tax” or some kind of gratuitous show of “generosity” by those that have wealth that, if the system were designed with any form of equal distribution, they would not, and could not, have, is less than nothing.
Similar to the climate conundrum, things will have to get worse, it appears, to engage and enrage people, and wake enough people up, to set a fire under enough people, to build to a tipping point toward real change. Fortunately, if you accept that inverted and convoluted logic, that day is very near.
