America’s electric power system is undergoing radical change as it transitions from fossil fuels to renewable energy. While the first decade of the 2000s saw huge growth in natural gas generation, and the 2010s were the decade of wind and solar, early signs suggest the innovation of the 2020s may be a boom in “hybrid” power plants.
A typical hybrid power plant combines electricity generation with battery storage at the same location. That often means a solar or wind farm paired with large-scale batteries. Working together, solar panels and battery storage can generate renewable power when solar energy is at its peak during the day and then release it as needed after the sun goes down.
A look at the power and storage projects in the development pipeline offers a glimpse of hybrid power’s future.
Our team at Lawrence Berkeley National Laboratory found that a staggering 1,400 gigawatts of proposed generation and storage projects have applied to connect to the grid – more than all existing U.S. power plants combined. The largest group is now solar projects, and over a third of those projects involve hybrid solar plus battery storage.
While these power plants of the future offer many benefits, they also raise questions about how the electric grid should best be operated.
Why hybrids are hot
As wind and solar grow, they are starting to have big impacts on the grid.
Solar power already exceeds 25% of annual power generation in California and is spreading rapidly in other states such as Texas, Florida and Georgia. The “wind belt” states, from the Dakotas to Texas, have seen massive deployment of wind turbines, with Iowa now getting a majority of its power from the wind.
This high percentage of renewable power raises a question: How do we integrate renewable sources that produce large but varying amounts of power throughout the day?
Joshua Rhodes/University of Texas at Austin.
That’s where storage comes in. Lithium-ion battery prices have rapidly fallen as production has scaled up for the electric vehicle market in recent years. While there are concerns about future supply chain challenges, battery design is also likely to evolve.
The combination of solar and batteries allows hybrid plant operators to provide power through the most valuable hours when demand is strongest, such as summer afternoons and evenings when air conditioners are running on high. Batteries also help smooth out production from wind and solar power, store excess power that would otherwise be curtailed, and reduce congestion on the grid.
Hybrids dominate the project pipeline
At the end of 2020, there were 73 solar and 16 wind hybrid projects operating in the U.S., amounting to 2.5 gigawatts of generation and 0.45 gigawatts of storage.
Today, solar and hybrids dominate the development pipeline. By the end of 2021, more than 675 gigawatts of proposed solar plants had applied for grid connection approval, with over a third of them paired with storage. Another 247 gigawatts of wind farms were in line, with 19 gigawatts, or about 8% of those, as hybrids.
The amount of proposed solar, storage and wind power waiting to hook up to the grid has grown dramatically in recent years, while coal, gas and nuclear have faded. Lawrence Berkeley National Laboratory
Of course, applying for a connection is only one step in developing a power plant. A developer also needs land and community agreements, a sales contract, financing and permits. Only about one in four new plants proposed between 2010 and 2016 made it to commercial operation. But the depth of interest in hybrid plants portends strong growth.
In markets like California, batteries are essentially obligatory for new solar developers. Since solar often accounts for the majority of power in the daytime market, building more adds little value. Currently 95% of all proposed large-scale solar capacity in the California queue comes with batteries.
5 lessons on hybrids and questions for the future
The opportunity for growth in renewable hybrids is clearly large, but it raises some questions that our group at Berkeley Lab has been investigating.
The investment pays off in many regions. We found that while adding batteries to a solar power plant increases the price, it also increases the value of the power. Putting generation and storage in the same location can capture benefits from tax credits, construction cost savings and operational flexibility. Looking at the revenue potential over recent years, and with the help of federal tax credits, the added value appears to justify the higher price.
Co-location also means tradeoffs. Wind and solar perform best where the wind and solar resources are strongest, but batteries provide the most value where they can deliver the greatest grid benefits, like relieving congestion. That means there are trade-offs when determining the best location with the highest value. Federal tax credits that can be earned only when batteries are co-located with solar may be encouraging suboptimal decisions in some cases.
There is no one best combination. The value of a hybrid plant is determined in part by the configuration of the equipment. For example, the size of the battery relative to a solar generator can determine how late into the evening the plant can deliver power. But the value of nighttime power depends on local market conditions, which change throughout the year.
Power market rules need to evolve. Hybrids can participate in the power market as a single unit or as separate entities, with the solar and storage bidding independently. Hybrids can also be either sellers or buyers of power, or both. That can get complicated. Market participation rules for hybrids are still evolving, leaving plant operators to experiment with how they sell their services.
Small hybrids create new opportunities: Hybrid power plants can also be small, such as solar and batteries in a home or business. Such hybrids have become standard in Hawaii as solar power saturates the grid. In California, customers who are subject to power shutoffs to prevent wildfires are increasingly adding storage to their solar systems. These “behind-the-meter” hybrids raise questions about how they should be valued, and how they can contribute to grid operations.
Hybrids are just beginning, but a lot more are on the way. More research is needed on the technologies, market designs and regulations to ensure the grid and grid pricing evolve with them.
While questions remain, it’s clear that hybrids are redefining power plants. And they may remake the U.S. power system in the process.
net-zero by 2050 was a joke, but nobody’s laughing
Attitude matters. Imagine that in the run-up to the 20xx Olympics your country declared: we will strive to not-lose and achieve net-zero gold medals!
OK maybe not the best metaphor but still – why aim to not trigger armageddon by… 2050?
It is international scientific consensus that, in order to prevent the worst climate damages, global net human-caused emissions of carbon dioxide (CO2) need to fall by about 45 percent from 2010 levels by 2030, reaching net zero around 2050. –
Once that lofty non-goal was agreed upon by governments across the globe, it quickly became apparent that virtually none of them were doing anywhere near what it would take to get to said uninspired non-goal.
The idea was (and still is) to drag and under-achieve as long as politically possible and then suddenly, in the final stretch, accelerate efforts (with resources controlled by future politicians) and reach net-zero. And then declare victory.
People want more than net-zero. People need more than net-zero. At the very least there has to be a better name, and a serious plan to make it actually happen.
You are going to hear a lot about minus-zero carbon soon. The reason is a good one. When the stakes are as high as the extinction of all life on earth, just getting to a tie score is not a good plan. So those who are in the trenches, working on solutions for global warming and reducing the carbon footprint, are search also for better ways to communicate what the goal is and what it means.
This, hopefully, can lead to a focus on a goal, or at least the articulation of a desire, that can inspire people to become highly active, even agitated, perhaps even alarmed, and begin the hard work and striving that it will take to get to a net-positive outcome for all of us.
And, who exactly decided that it would be a good idea to prolong the carbon carnival as long as possible in the first place? Carbon emitters and oil profiteers perhaps?
60 years of feet dragging, obfuscation and deliberate blocking of any solutions threatening the status quo have already come and gone.
Also, if energy is clean and abundant, why not use more? Energy is good, more energy use, if clean and sustainable, could be better. It can give us amazing things. Efficient use is good too, of course, but this is a mind-set issue. This is thought error or a thought liberation.
Minus-zero carbon x 100% (with 200% energy availability) is a much better goal and represents a thought liberating idea.
Perfection can’t be the enemy of good in the energy arena
Do we need architects and inventors, innovators and scientists, and massive amount of ammunition in the form of trillions of dollars in funding, from both public and private sources? Hell yes.
And must these magicians and Mavericks do amazing things that were believed impossible just a short while ago? Absolutely. Is this a ‘moon-shot’ to, not just save, but catapult humanity into a better future? You bet-ur-a%$ it is.
That means that the challenges of finding better tech, examples such as for soil regeneration, or more efficient battery storage, or for alternatives to rare earth metals, if they are too, um, rare need to be figured out and set into motion, fast. It means inventing and discovering tech that does not exist, that has not been tried or even sought after, why never sought? Because oil was cheap and available, so don’t stress it, Bub.
And, there are those out there, already today, that are thinking beyond net-zero in 2050. There are those that want more, that know that we need more. Those that understand that political inertia and corrupt vested interests are not the excuses we want written on our tombstones.
And why not look for half-full glasses or beliefs manifested into action? Why not aim for something that makes us want to get up, stand up, and make something possible that looks like hope and feels like success and winning?
Decentralized solutions are coming, in every part of life
The reality is that it is not only the world’s energy infrastructure that needs a total makeover. Financial inequality, political and economic systems are fragile and failing, regardless where.
There is a whiff of collapse that could turn into a whirlwind and then could derail any progress made, as we plunge into dark ages, even before factoring in the catastrophic climate challenges.
We need new, innovative ways to learn, to communicate, interact and collaborate. And these are emerging – if you don’t believe in crypto, web3 or any other new directions that many are seeing as alternatives to broken systems of the past, you at least have to acknowledge that actively looking for a better way, one that does represent a solution, is what is needed even as the current systems are failing us.
So if you don’t agree with the ideas for change and proposed ways to improve methods for human interaction and coexistence, come up with new ideas and put them forth, ok?, maybe we have to try and strive and stumble until a truly better way presents itself.
Give yourself and all you have into actions that will finally change the direction from one that spells doom, in this case continuing to burn carbon in insanely massive amounts while we fight, disagree and kill one another (war, etc.), to something new, something that at least could have a chance to win the peace.
Losing is unacceptable for-real this time. Winning isn’t everything, no sir, it’s the only thing. And starting on 04-22-2022 this net-zero BS needs to be sent to Mars, or perhaps Uranus.
Meanwhile here on earth we gotta get busy building the only thing that will prevent oblivion: a tiny taste of utopia that will grow from a seed into a raging forest of real, not fossilized, success.
Perhaps in a moment of incoherence, this three-tweet set was launched. It is just plain goofy (unless he is buttering up “the right” for after mid-terms…?)
In what looks like some kind of twisted attempt at being diplomatic, Elon Musk’s latest tweet manages to clarify his stance regarding “free-speech“ about as much as a mud bath clarifies a cupcake.
Leading off with a bizarre attack on what he Calls “the far left “, he explains that it is his contention that they “hate everyone including themselves”.
Standing alone this is already a bizarre statement, which seems like a far right talking point, typical of the Joe Rogan school of anti-cancel culture and anti-so-called “woke-mob”.
He follows this up with a disclaimer of sorts, as bland as it can be stating that he is “no fan” of the far right, either.
One would have to be forgiven if they thought that this implied, in its very wording, an actual bias toward the far right which is what many already believe.
Ending his three-tweet soufflé on the flat “Let’s have less hate and more love” the responses, not surprisingly, were a very loving mix of WTF and ????
To be fair, there were also lots like this:
If you ever run for President of United States 🇺🇸 you definitely have my vote 🗳 You are awesome my friend 🙏
But, the way his tweets were so oddly posted, there was definitely a sense among “lefties” that he was biased. And it didn’t take a genius, but merely @cjwalker21, to retort:
It actually seems odd, that Elon Musk would wade (or dive head first) into a “left vs. right” argument that has no hope of any kind of resolution. And pretending that the disagreements are equal on some level and love can just be ratcheted up as if it was cheap rocket fuel, seems odd…
In the US, far left is free healthcare and education, far right is no abortions allowed.
Honestly, if you just look at the numbers, maybe you don’t see taxes as the answer, but considering the company Elon is in (Zuckerberg and Bezos?) there’s clearly something wrong with this picture?
Off the Massachusetts and New York coasts, developers are preparing to build the United States’ first federally approvedutility-scale offshore wind farms – 74 turbines in all that could power 470,000 homes. More than a dozen other offshore wind projects are awaiting approval along the Eastern Seaboard.
Offshore wind farms are uniquely positioned to do both – and save money.
Most renewable energy lease areas off the Atlantic Coast are near the Mid-Atlantic states and Massachusetts. About 480,000 acres of the New York Bight is scheduled to be auctioned for wind farms in February 2022. BOEM
The systems use filters or liquid solutions that capture CO2 from air blown across them. Once the filters are full, electricity and heat are needed to release the carbon dioxide and restart the capture cycle.
For the process to achieve net negative emissions, the energy source must be carbon-free.
The world’s largest active direct air capture plant operating today does this by using waste heat and renewable energy. The plant, in Iceland, then pumps its captured carbon dioxide into the underlying basalt rock, where the CO2 reacts with the basalt and calcifies, turning to solid mineral.
A similar process could be created with offshore wind turbines.
If direct air capture systems were built alongside offshore wind turbines, they would have an immediate source of clean energy from excess wind power and could pipe captured carbon dioxide directly to storage beneath the sea floor below, reducing the need for extensive pipeline systems.
Researchers are currently studying how these systems function under marine conditions. Direct air capture is only beginning to be deployed on land, and the technology likely would have to be modified for the harsh ocean environment. But planning should start now so wind power projects are positioned to take advantage of carbon storage sites and designed so the platforms, sub-sea infrastructure and cabled networks can be shared.
Using excess wind power when it isn’t needed
By nature, wind energy is intermittent. Demand for energy also varies. When the wind can produce more power than is needed, production is curtailed and electricity that could be used is lost.
For example, New York State’s goal is to have 9 gigawatts of offshore wind power by 2035. Those 9 gigawatts would be expected to deliver 27.5 terawatt-hours of electricity per year.
Based on historical wind curtailment rates in the U.S., a surplus of 825 megawatt-hours of electrical energy per year may be expected as offshore wind farms expand to meet this goal. Assuming direct air capture’s efficiency continues to improve and reaches commercial targets, this surplus energy could be used to capture and store upwards of 0.5 million tons of CO2 per year.
That’s if the system only used surplus energy that would have gone to waste. If it used more wind power, its carbon capture and storage potential would increase.
Several Mid-Atlantic areas being leased for offshore wind farms also have potential for carbon storage beneath the seafloor. The capacity is measured in millions of metric tons of CO2 per square kilometer. The U.S. produces about 4.5 billion metric tons of CO2 from energy per year. U.S. Department of Energy and Battelle
The Intergovernmental Panel on Climate Change has projected that 100 to 1,000 gigatons of carbon dioxide will have to be removed from the atmosphere over the century to keep global warming under 1.5 degrees Celsius (2.7 Fahrenheit) compared to pre-industrial levels.
Researchers have estimated that sub-seafloor geological formations adjacent to the offshore wind developments planned on the U.S. East Coast have the capacity to store more than 500 gigatons of CO2. Basalt rocks are likely to exist in a string of buried basins across this area too, adding even more storage capacity and enabling CO2 to react with the basalt and solidify over time, though geotechnical surveys have not yet tested these deposits.
Planning both at once saves time and cost
New wind farms built with direct air capture could deliver renewable power to the grid and provide surplus power for carbon capture and storage, optimizing this massive investment for a direct climate benefit.
But it will require planning that starts well in advance of construction. Launching the marine geophysical surveys, environmental monitoring requirements and approval processes for both wind power and storage together can save time, avoid conflicts and improve environmental stewardship.
“Despite half of U.S. and U.K. adults getting their news from social media, social media companies have not taken the steps necessary to fight industry-backed deception,” reads the report.
Weeks after the Intergovernmental Panel on Climate Change identified disinformation as a key driver of the planetary crisis, three advocacy groups published a report Wednesday ranking social media companies on their efforts to ensure users can get accurate data about the climate on their platforms—and found that major companies like Twitter and Facebook are failing to combat misinformation.
The report, titled In the Dark: How Social Media Companies’ Climate Disinformation Problem is Hidden from the Public and released by Friends of the Earth (FOE), Greenpeace, and online activist network Avaaz, detailed whether the companies have met 27 different benchmarks to stop the spread of anti-science misinformation and ensure transparency about how inaccurate data is analyzed.
“Despite half of U.S. and U.K. adults getting their news from social media, social media companies have not taken the steps necessary to fight industry-backed deception,” reads the report. “In fact, they continue to allow these climate lies to pollute users’ feeds.
⚠️NEW RESEARCH: Fossil fuel industry-backed climate disinformation pollutes our social media feeds and fans the flames of the #ClimateCrisis. This is why tech companies must take responsibility and stop leaving the public in the dark! https://t.co/7h0rI2jAKWpic.twitter.com/rYEtNETJrY
The groups assessed five major social media platforms—Facebook, Twitter, YouTube, Pinterest, and TikTok—and found that the two best-performing companies, Pinterest and YouTube, scored 14 out of the 27 possible points.
As Common Dreams reported earlier this month, Pinterest has won praise from groups including FOE for establishing “clearly defined guidelines against false or misleading climate change information, including conspiracy theories, across content and ads.”
“One of the key objectives of this report is to allow for fact-based deliberation, discussion, and debate to flourish in an information ecosystem that is healthy and fair, and that allows both citizens and policymakers to make decisions based on the best available data.”
The company also garnered points in Wednesday’s report for being the only major social media platform to make clear the average time or views it allows for a piece of scientifically inaccurate content before it will take action to combat the misinformation and including “omission or cherry-picking” of data in its definition of mis- or disinformation.
Pinterest and YouTube were the only companies that won points for consulting with climate scientists to develop a climate mis- and disinformation policy.
The top-performing companies, however, joined the other firms in failing to articulate exactly how their misinformation policy is enforced and to detail how climate misinformation is prioritized for fact-checking.
“Social media companies are largely leaving the public in the dark about their efforts to combat the problem,” the report reads. “There is a gross lack of transparency, as these companies conceal much of the data about the prevalence of digital climate dis/misinformation and any internal measures taken to address its spread.”
Twitter was the worst-performing company, meeting only five of the 27 criteria.
“Twitter is not clear about how content is verified as dis/misinformation, nor explicit about engaging with climate experts to review dis/misinformation policies or flagged content,” reads the report. “Twitter’s total lack of reference to climate dis/misinformation, both in their policies and throughout their enforcement reports, earned them no points in either category.”
TikTok scored seven points, while Facebook garnered nine.
The report, using criteria developed by the Climate Disinformation Coalition, was released three weeks after NPRreported that inaccurate information about renewable energy sources has been disseminated widely in Facebook groups, and the spread has been linked to slowing progress on or shutting down local projects.
In rural Ohio, posts in two anti-wind power Facebook groups spread misinformation about wind turbines causing birth defects in horses, failing to reduce carbon emissions, and causing so-called “wind turbine syndrome” from low-frequency sounds—a supposed ailment that is not backed by scientific evidence. The posts increased “perceptions of human health and public safety risks related to wind” power, according to a study published last October in the journal Energy Research & Social Science.
As those false perceptions spread through the local community, NPRreported, the Ohio Power Siting Board rejected a wind farm proposal “citing geological concerns and the local opposition.”
Misinformation on social media “can really slow down the clean energy transition, and that has just as dire life and death consequences, not just in terms of climate change, but also in terms of air pollution, which overwhelmingly hits communities of color,” University of California, Santa Barbara professor Leah Stokes told NPR.
As the IPCC reported in its February report, “rhetoric and misinformation on climate change and the deliberate undermining of science have contributed to misperceptions of the scientific consensus, uncertainty, disregarded risk and urgency, and dissent.”
Wednesday’s report called on all social media companies to:
Establish, disclose, and enforce policies to reduce climate change dis- and misinformation;
Release in full the company’s current labeling, fact-checking, policy review, and algorithmic ranking systems related to climate change disinformation policies;
Disclose weekly reports on the scale and prevalence of climate change dis- and misinformation on the platform and mitigation efforts taken internally; and
Adopt privacy and data protection policies to protect individuals and communities who may be climate dis/misinformation targets.
“One of the key objectives of this report is to allow for fact-based deliberation, discussion, and debate to flourish in an information ecosystem that is healthy and fair, and that allows both citizens and policymakers to make decisions based on the best available data,” reads the report.
“We see a clear boundary between freedom of speech and freedom of reach,” it continues, “and believe that transparency on climate dis/misinformation and accountability for the actors who spread it is a precondition for a robust and constructive debate on climate change and the response to the climate crisis.”
The former Trump chief of Staff has been “administratively removed” from the voter rolls in the state of North Carolina.
Officials are currently investigating whether or not he was fraudulently registered to vote and cast a ballot for the 2020 presidential election. This comes as county election officials discovered he was registered in both North Carolina and Virginia.
Meadows represented NC in Congress up until March 2020 when he went to work for Trump at the White House.
Director for the Macon County Board of Elections, Melanie Thibault told CNN Meadows lived in Virginia and last voted in the 2021 election there.
Records showed that Meadows last voted in Macon County, North Carolina for the 2020 general election via absentee by mail. The investigation shows that he registered to vote weeks before the 2020 election at a mobile home where Meadows and his wife never allegedly lived or visited as reported by CNN.
Periodically, we get a glimpse into the financial lives of the ultrarich. A pro athlete signs a huge contract, a tech CEO sells a boatload of shares in their company, or a billionaire heir unloads a Manhattan penthouse. Based on these nuggets of information, the media speculates as to how much income the rich might bring in every year. But nobody actually knows.
The analysis also shows how much they paid in federal income taxes — and it demonstrates how the American tax system, which theoretically makes the highest earners pay the highest income tax rates, fails to do so for the people at the very top of the income pyramid.
The top 400 earners pay noticeably lower tax rates than the merely rich; and, if you include payroll taxes, a married couple making $200,000 a year could end up paying higher tax rates than a person making $200 million a year. (The full analysis is here; it includes selected names beyond the top 15.)
Names That Won’t Surprise You
Scan the names on the list of the top 15 income earners and you’re certain to recognize several names — or at least the names of the companies they founded. Bill Gates hasn’t been involved in the day-to-day operations of Microsoft for over a decade, yet he still earned the most during the years we studied, reporting an average yearly income of $2.85 billion — and an effective federal income tax rate of 18.4%. Steve Ballmer, his former colleague, is also a well-known public figure, both for his time as Microsoft CEO and his current ownership of the Los Angeles Clippers NBA team.
Ballmer’s average annual reported income of $1.05 billion landed him in the 10th spot on the list, and his effective federal income tax rate was 14.1%. The other side of the PC/Mac wars is represented here by Laurene Powell Jobs, widow of Apple founder Steve Jobs.
Her average reported income of $1.57 billion ranked fifth-highest; she paid an effective tax rate of 14.8%. (ProPublica sought comment from everyone mentioned in this article. Nobody disputed the numbers cited here. Unless otherwise noted, representatives for people named in this article either declined to comment, declined to comment on the record or did not respond to requests for comment.)
Another well-known billionaire sits just below Gates on the list: Media and tech mogul and former New York City mayor Michael Bloomberg, with an average reported income of just over $2 billion, paid an effective income tax rate of 4.1%, by far the lowest rate among the top 15. (A spokesperson told ProPublica for an earlier article that Bloomberg “pays the maximum tax rate on all federal, state, local and international taxable income as prescribed by law,” and cited Bloomberg’s philanthropic giving.)
The presence of Amazon founder Jeff Bezos — either the first- or second-wealthiest person in America, depending on the day — won’t shock most people, but Bezos’s annual reported income during these years of $832 million put him only at number 15. He paid an effective tax rate of 23.2%; as we’ve previously reported, Bezos had so little income in a couple of recent years that he was able to pay $0 in federal income taxes in those periods.
Who Are These Others and Why Are They Paying Higher Tax Rates?
Tech billionaires dominate the top 15, but hedge fund managers account for a full third of the names on this list, and some of their incomes were just as huge. Most of them paid relatively high effective tax rates, especially compared to most of the tech sector representatives. Hedge fund managers often make their money through short-term trades, which are taxed at a much higher rate than when tech titans cash in on long-term investments.
The highest-earning hedge funder is Ken Griffin, founder of the Chicago-based firm Citadel. From 2013 to 2018, he reported an average income of nearly $1.7 billion, putting him fourth on the list. Griffin paid a tax rate of 29.2% during these years. (A spokesperson for Griffin said the tax rates in the IRS data “significantly understate” what Griffin pays, because they were lowered by charitable contributions and do not reflect local and state taxes. He also said Griffin pays foreign taxes, which aren’t included in IRS calculations of effective tax rate.)
Israel Englander, co-founder of Millennium Management, paid at a 30.8% rate, while the co-founders of Two Sigma Investments, David Siegel and John Overdeck, paid tax rates of 31.6% and 34.2%, respectively.
Some of this variation in rates reflects how people structure their businesses under tax law. Income earned by publicly traded corporations is taxed at the company level. When it’s passed on to big shareholders, such as tech billionaires, it can come in the form of dividends, which are taxed at lower rates than ordinary income. By contrast, the income from some manufacturing companies and hedge funds flows directly to company owners, who pay taxes on it, resulting in higher effective tax rates on average.
Where Are the Heirs?
Lists of the world’s wealthiest individuals are always heavily populated by heirs, ranging from descendents of old money to scions of more recently minted fortunes. Dozens of heirs made ProPublica’s list of 400 biggest income earners. Descendents and relatives of Sam Walton, founder of Walmart, claim 11 spots.
The DeVos family, heirs to the Amway fortune, also have multiple members in the top 400. Perhaps the best known is Betsy DeVos, who served as U.S. secretary of education during the Donald Trump administration. With a reported annual income of $112 million, she was the 389th-highest earner in this period.
Much like the tech titans who top the list, most of these heirs get their income from dividends or long-term investments, which are taxed at a lower rate. Their effective tax rates ranged from as low as 10.6% for Betsy DeVos to a high of 23% paid by Walmart heirTom Walton.
Don’t Forget the Deductions
Another key way that some top earners reduced their tax liability was to claim significant deductions, often in the form of large charitable contributions. This is particularly true for wealthy investors who are able to make their donations with shares of stock. Thanks to a generous provision of the tax code, they can then deduct the full value of the stock at its current price — without having to first sell it and pay capital gains tax.
Michael Bloomberg achieved a tax rate of 4.1% from 2013 to 2018 by taking annual deductions of more than $1 billion, mostly through charitable contributions. From 2013 to 2017, he also wrote off an average of $400 million each year from what he’d paid in state and local taxes. The 2018 tax overhaul limited that deduction to $10,000 — but also introduced a huge new deduction for pass-through companies that Bloomberg benefited from.
Wait — What About the Celebrities?
The earnings of actors, musicians and sports stars are a subject of nonstop scrutiny in the media, yet few celebrities cracked the list of the top 400 earners, which would have required them to report annual incomes of at least $110 million.
ProPublica’s trove has data on many celebrities. One who came close to the top 400 is basketball superstar LeBron James, who averaged $96 million a year in reported income. Grammy-winning singer Taylor Swift also came within reach of the top 400, averaging $82 million in reported income during these years. Actor George Clooney would have had to double his average income of $55 million to crack the top 400.
As desirable vacation destinations go, war-torn Ukraine must surely rate low. But in the first month of Russia’s invasion, Airbnb bookings in Ukraine boomed, as people around the world used the accommodation platform to channel more than US$15 million in donations to the country.
As with other forms of direct donation, using Airbnb to channel aid to Ukraine has been problematic. The company was relatively quick to waive the 20% commission it usually charges on transactions. But stopping scammers from setting up fake accounts to collect money from well-meaning donors has proven more difficult.
It’s a story that illustrates both the potential and limitations of the so-called sharing economy.
Idealistic visionaries once imagined the internet would connect individual buyers and sellers, peer to peer (or P2P), without the need for intermediaries and their commissions. But this promise of market democratisation and inclusivity has largely failed to materialise.
Instead, the platforms that have arisen – eBay, Uber, Airbnb and so forth – are very much like traditional capitalist enterprises, putting the squeeze on rivals, exploiting labour, and making their founders and executives among the wealthiest people on the planet.
Platform capitalism
The founders of these companies didn’t necessarily begin with such ambitions. Airbnb’s founders, for example, started their website in 2007 to provide an alternative to mainstream hotels and motels, enabling anyone to offer a spare room or residence for short-term stays in the expensive San Francisco market.
Now Airbnb’s market capitalisation rivals that of the world’s biggest hotel chain, Marriott. In 2021, Airbnb reported US$1.6 billion in earnings before interest, tax, depreciation and amortisation, compared with Marriott’s US$2 billion.
Co-founder and chief executive Brian Chesky’s personal fortune is an estimated US$14 billion, placing him 157th on Forbes’ world billionaires list.
The fortunes made by the dominant sharing platform have not all come from technological innovation.
There’s little that is democratic about these platforms. The owners have the last say in the equation, dictating which actions and exchanges are allowed or cancelled.
Creating a true sharing economy
Our research on the sharing economy shows that digital platforms can be a powerful tool for individuals to collaborate in developing solutions to their needs. But for the promise of the sharing economy to be realised, platforms must be far more open, democratic and publicly accountable than they are now.
As the non-profit P2P foundation argues, peer-to-peer networks create the potential to transition to a commons-oriented economy, focused on creating value for the world, not enriching shareholders.
For that to happen, all users must have input into decisions about why a platform exists and how it is used.
Examples of what is possible already exist. Perhaps the best known is Wikipedia – a hugely valuable service that runs on volunteer labour and donations. It’s not perfect but it’s hard to imagine it working as a for-profit enterprise.
There are many attempts to create collectively owned, more democratic sharing platforms. In New York, for example, drivers have organised to create ride-sharing alternatives to Uber and Lyft based on cooperative principles. Such endeavours are known as platform cooperativism.
But these ventures routinely struggle to raise the money needed to develop their platforms. Members also vary largely in their knowledge of business practices, particularly the skills needed to manage democratic decision making.
To help these platforms thrive, we need public policies that assist them to raise funds. We also need programs that deliver financial and business education to platform members.
Beyond these practical difficulties, users also need to have a stake in how these platforms run for them be a fully transformative version of the sharing economy.
We’ve drifted a long way from the early hopes for the sharing economy. But it’s not too late to change course and work to co-create more equitable, human-focused models of exchange.
Members of the Senate Judiciary Committee are scheduled to vote April 4, 2022, on Ketanji Brown Jackson’s nomination for the Supreme Court. It kicks off a potentially historic week in which a full Senate vote could set course for the nation’s highest court seating it’s first Black female judge.
The elevation of Jackson to the Supreme Court would not change the ideological setup of the bench – which would continue to be split 6-3 in favor of conservative justices.
Nonetheless, it would be an important landmark in the history of the Court – of the 115 justices on the Supreme Court since it was established in 1789, 108 have been white men.
Race featured in Jackson’s confirmation process; so too attempts to define her “judicial philosophy.” The Conversation has turned to legal scholars to explain the meaning of Jackson’s potential ascension to the court.
On the shoulders of pioneers
Jackson, if she wins confirmation at the next stage, a vote by the full Senate, will have broken through the ultimate glass ceiling in terms of legal careers. She would have done so on the shoulders of pioneering Black female judges.
University of Florida’s Sharon D. Wright Austin notes, even now, “relatively few Black women are judges at the state or federal level” – which makes the achievement of those who have made it to this level all the more remarkable.
Of the judges highlighted by Austin, there is Judge Jane Bolin, who became the country’s first Black female judge in 1939, serving as a domestic relations court judge in New York for almost four decades. Later, in 1961, Constance Baker Motley became the first Black woman to argue a case before the Supreme Court. In all she argued 10 cases before the Court, winning nine of them. Meanwhile, Judge Julia Cooper Mack is noted as the first Black woman to sit on a federal appellate court, being appointed in 1975 and serving 14 years on the bench.
These women are to be celebrated and remembered. As Wright Austin writes: “Representation matters: It is easier for young girls of color to aspire to reach their highest goals when they see others who have done so before them, in the same way that women like Jane Bolin, Constance Baker Motley and Julia Cooper Mack encouraged Ketanji Brown Jackson to reach hers.
Echoes of the past
The fact that a Black female Supreme Court justice is long overdue is testament to the slow progress the U.S. has made toward racial – and gender – equality.
Questions directed at the would-be Supreme Court justice were, according to Russell, tantamount to race-baiting. They also sounded eerily similar to criticisms that then-Supreme Court nominee Thurgood Marshall, the first Black American nominee to the court, faced in his own confirmation hearings in 1967.
Both Jackson now, and Marshall then, stood accused by senators of being soft on crime and were asked about how they intended to bring race into their legal decisions. “Are you prejudiced against white people in the South?” Marshall was asked by a known white supremacist senator. Similarly, Jackson was asked during her confirmation hearings if she had a “hidden agenda” to incorporate critical race theory, which holds that racism is structural in nature rather than expressed solely through personal bias, into the legal system.
“I find it striking,” Russell writes, “that race has surfaced in such a major way in these hearings, more than five decades after Marshall’s nomination. In some respects, there has been progress on racial equity in the U.S., but aspects of these hearings demonstrate that too much remains the same.”
What Jackson would bring to the Supreme Court
Jackson’s potentially historic achievement of becoming the first Black female Supreme Court justice may distract from the fact she is also eminently qualified to sit on the highest court in her own rights.
Alexis Karteron of Rutgers University-Newark notes that the Harvard law-trained Jackson went on to clerk for Stephen Breyer, the retiring justice she is set to replace. She has served on the U.S. Sentencing Commission as well as acting as both a trial court and appellate judge.
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Jackson is also the first former criminal defense attorney to be nominated to the Supreme Court since Marshall. This puts Jackson in a unique position on the bench. Karteron writes that having served as a public defender “will help [Jackson] understand the very real human toll of our criminal justice system. … The criminal justice system takes an enormous toll on both the people in the system and their loved ones. I believe having a Supreme Court justice who is familiar with that is incredibly valuable.”
Several sites, such as one near Freeport, Texas, store the hundreds of million of barrels in the United States’ Strategic Petroleum Reserve. Department of Energy via AP
The Biden administration on March 31, 2022, said it plans to release an unprecedented 180 million barrels of oil from the U.S. Strategic Petroleum Reserve to combat the recent spike in gas and diesel prices. About a million barrels of oil will be released every day for up to six months.
As an energy researcher, I believe considering the reserve’s history can help answer these questions.
Origins of the reserve
Congress created the Strategic Petroleum Reserve as part of the Energy Policy and Conservation Act of 1975 in response to a global oil crisis.
Arab oil-exporting states led by Saudi Arabia had cut supply to the world market because of Western support for Israel in the 1973 Yom Kippur War. Oil prices quadrupled, resulting in major economic damage to the U.S. and other countries. This also shook the average American, who had grown used to cheap oil.
The oil crisis caused the U.S., Japan and 15 other advanced countries to form the International Energy Agency in 1974 to recommend policies that would forestall such events in the future. One of the agency’s key ideas was to create emergency petroleum reserves that could be drawn on in case of a severe supply disruption.
The map shows the locations of the oil held in the Strategic Petroleum Reserve. Department of Energy
The Energy Policy and Conservation Act originally stipulated the reserve should hold up to 1 billion barrels of crude and refined petroleum products. Though it has never reached that size, the U.S. reserve is the largest in the world, with a maximum volume of 714 million barrels. The cap was previously set at 727 million barrels.
Oil in the reserve is stored underground in a series of large underground salt domes in four locations along the Gulf Coast of Texas and Louisiana, and is linked to major supply pipelines in the region.
Salt domes, formed when a mass of salt is forced upward, are a good choice for storage since salt is impermeable and has low solubility in crude oil. Most of the storage sites were acquired by the federal government in 1977 and became fully operational in the 1980s.
History of drawdowns
In the 1975 act, Congress specified that the reserve was intended to prevent “severe supply interruptions” – that is, actual oil shortages.
Over time, as the oil market has changed, Congress expanded the list of reasons for which the Strategic Petroleum Reserve could be tapped, such as domestic supply interruptions due to extreme weather.
The third was a coordinated release by the International Energy Agency in 2011 as a result of supply disruptions from several oil-producing countries, including Libya, then facing civil unrest during the Arab Spring. In all, the agency coordinated a release of 60 million barrels of crude, half of which came from the U.S.
President Joe Biden’s November decision to tap the reserve was also seen as political by Republicans because there was no emergency shortage of supply at that time.
Similarly, the latest historic release of 180 million barrels could also be seen as serving a political purpose – in an election year, no less. But I believe it also seems perfectly legitimate in terms of fulfilling the Strategic Petroleum Reserve’s original purpose: reducing the negative impacts of a major oil price shock.
“We want to thank Jeff Bezos for going to space, because while he was up there, we were organizing a union,” said Christian Smalls, president of the Amazon Labor Union.
Amazon warehouse workers in Staten Island, New York won their election Friday to form the retail giant’s first-ever union in the United States, a landmark victory for the labor movement in the face of aggressive union-busting efforts from one of the world’s most powerful companies.
According to an initial tally released by the National Labor Relations Board (NLRB),there were 2,654 votes in favor of recognizing a union and 2,131 against. The number of disputed ballots, 67, is not nearly enough to change the outcome.
The historic unionization drive was spearheaded by the Amazon Labor Union (ALU), a worker-led group not affiliated with any established union. Christian Smalls, the president of ALU, was fired by Amazon in 2020 after he led a protest against the company’s poor workplace safety standards in the early stages of the coronavirus pandemic.
“When Covid-19 came into play, Amazon failed us,” Smalls said during a press conference after the union victory was announced. “We want to thank Jeff Bezos for going to space, because while he was up there, we were organizing a union.”
BREAKING: David beats Goliath! In a historic victory, Amazon workers in Staten Island win the first U.S. Amazon union.@AmazonLabor and workers at the JFK8 warehouse overcame extreme union-busting to make history.
Long-time labor journalist Steven Greenhouse wrote Friday that “the unionization victory at the Amazon warehouse in Staten Island is by far the biggest, beating-the-odds, David-versus-Goliath unionization win I’ve seen.”
“America’s wealthiest, most powerful, most seemingly indispensable company has lost to a pop-up coalition of workers,” Greenhouse added. “A generation, the younger generation, is stirring.”
Amazon, which spent $4.3 million on anti-union consultants in 2021 alone, worked hard to crush the unionization effort, forcing employees to attend hundreds of captive-audience meetings and threatening workers with pay cuts and other potential consequences.
But the company’s union-busting campaign wasn’t enough to overcome the upstart revolt led by ALU, which was founded just months ago.
Derrick Palmer, a co-founder of ALU and an employee at the Staten Island warehouse, said he expects Friday’s victory to be one of many.
“This will be the first union,” said Palmer, “but moving forward, that will motivate other workers to get on board with us.”
Widespread celebration followed the official announcement of the union’s election win, with progressive lawmakers and activists hailing the victory as a potential watershed moment for the U.S. labor movement, which has struggled for decades in the face of corporate America’s relentless assault. Union membership in the U.S. declined by 241,000 workers in 2021, according to Labor Department figures.
“The organizing victory at Amazon on Staten Island is a signal that American workers will no longer accept exploitation,” Sen. Bernie Sanders (I-Vt.) tweeted Friday. “They’re tired of working longer hours for lower wages. They want an economy that works for all, not just Jeff Bezos.”
The union has much work ahead of it. As HuffPost labor reporter Dave Jamieson noted, the union must now negotiate “a first collective bargaining agreement with one of the most powerful companies in the world.”
“It can take years for a union to secure a first contract, and some never manage to,” Jamieson wrote. “Amazon would have a strong incentive not to offer the union a decent deal, for fear it would only encourage more unionization elsewhere.”
Originally published on Common Dreams by JAKE JOHNSON and republished under Creative Commons (CC BY-NC-ND 3.0)
“While Americans struggle with high gas prices, these companies are doing victory laps, showering their already wealthy executives and shareholders with billions in stock buybacks and bonus compensation,” said one watchdog group. “They should be ashamed.”
As people across the United States face record-high gas prices—compounded by rising grocery bills and prices for other essentials—executives at three major oil companies are refusing to testify before Congress about what their firms could do to lessen the burden on U.S. households, leaving Democratic lawmakers and consumer advocates to condemn the companies for profiting amid lower and middle-class people’s financial pain.
Rep. Raúl M. Grijalva (D-Ariz.), who chairs the House Natural Resources Committee, had invited the CEOs of EOG Resources Inc., Devon Energy Corp. and Occidental Petroleum Corp. to testify next week, only to be rebuffedTuesday by the executives, who have personally profited off gas prices which averaged $4.24 per gallon on Monday.
“I invited these companies to come before the committee and make their case, but apparently they don’t think it’s worth defending,” Grijalva said in a statement Tuesday. “Their silence tells us all we need to know—that cries for more drilling and looser regulations are nothing more than another age-old attempt to line their own pockets.
I invited oil and gas companies to come before @NRDems to defend raising gas prices, raking in record profits, hurting Americans, and pushing for a drilling free-for-all. Apparently, they don't think their actions are worth defending. https://t.co/CuZdHWlHak
Since oil and gas prices began rising earlier this year as traveling and commuting increased, and went up further following Russia’s invasion of Ukraine in February, the fossil fuel industry has claimed the Biden administration should release more permits for drilling on public lands and accelerate approval of permits for building energy infrastructure, with the American Petroleum Institute pushing for what Grijalva called “a domestic drilling free-for-all” earlier this month.
Lawmakers including Grijalva have argued that the companies could easily stabilize gas prices immediately, considering the billions of dollars in profits EOG Resources, Devon Energy, and Occidental Petroleum raked in last year.
Instead, watchdog group Accountable.US said Tuesday, Occidental Petroleum planned to use $3 billion for stock buybacks in 2022, while Devon Energy gave nearly $2 billion in share buybacks and dividends to shareholders last year. EOG Resources gave CEO William R. Thomas a $150,000 raise in 2021, making his total compensation $9.8 million.
“We want to work with them to reduce gas prices, but it seems as though they’re too busy taking in record profits while refusing to pass savings on to consumers,” said Rep. Mike Levin (D-Calif.), a member of the Natural Resources Committee.
Rep. Mark Pocan (D-Wis.) sarcastically expressed empathy for the “spineless” executives who refused to testify before Grijalva’s committee.
If I were a spineless, unethical oil corporation raking in record profits at the expense of consumers I probably wouldn’t want to answer questions either. https://t.co/XqSLR4agUJ
“It is hardly surprising that EOG Resources, Devon Energy, and Occidental Petroleum are dodging accountability by refusing to testify in Congress,” said Kyle Herrig, president of watchdog group Accountable.US. “While Americans struggle with high gas prices, these companies are doing victory laps, showering their already wealthy executives and shareholders with billions in stock buybacks and bonus compensation. They should be ashamed.”
Grijalva noted that while the industry has used the Russian invasion of Ukraine to call for even more freedom to drill for oil and gas, fossil fuel companies hold leases on 26 million acres of land.
“These same companies already have over 9,000 approved permits they can use whenever they want,” Grijalva toldPublic News Service on Tuesday. “And the very companies with thousands of acres of existing leases and hundreds of unused permits are the same ones shouting that they need more land for drilling.”
According to Accountable.US, the three companies refusing to speak to Grijalva’s committee “are among the top leaseholders of public lands oil and gas leases with 4,114 leases covering nearly 1.5 million acres.”
Companies including BP, Chevron, Exxon Mobil, and Shell have also been invited to testify at upcoming hearings on their business practices and impacts on consumers. In February, board members from the four companies refused to testify about the firms’ climate pledges.
Senate Majority Leader Chuck Schumer (D-N.Y.) noted last week that oil prices dropped in recent days, but no savings were passed onto consumers.
“The bewildering incongruity between falling oil prices and rising gas prices smacks of price gouging and is deeply damaging to working Americans,” Schumer said last week. “The Senate is going to get answers.”
Originally published on Common Dreams by JULIA CONLEY and republished under Creative Commons (CC BY-NC-ND 3.0).
The new law “will put an end to some of the most harmful practices of Big Tech and narrow the power imbalance between people and online platforms.”
Digital and consumer rights advocates on Friday hailed a landmark European Union law aimed at curbing Big Tech’s monopolistic behavior.
“This is a big moment for consumers and businesses who have suffered from Big Tech’s harmful practices.”
Negotiators from the European Parliament and European Council agreed late Thursday on the language of the Digital Markets Act (DMA), which aims to prevent major tech companies from anti-competitive practices by threatening large fines or possible breakup.
Ursula Pachl, deputy director-general at the European Consumer Organization (BEUC), an umbrella advocacy group, said in a statement that “this is a big moment for consumers and businesses who have suffered from Big Tech’s harmful practices.”
“This legislation will rebalance digital markets, increase consumer choice, and put an end to many of the worst practices that Big Tech has engaged in over the years,” she added. “It is a landmark law for the E.U.’s digital transformation.”
The European Union just struck an important deal on the Digital Markets Act, recognizing that only a just and interoperable market can ensure fair competition and more choice for users. #DMAhttps://t.co/lGcTDstagj
Cédric O, the French minister of state with responsibility for digital, said in a statement that “the European Union has had to impose record fines over the past 10 years for certain harmful business practices by very large digital players. The DMA will directly ban these practices and create a fairer and more competitive economic space for new players and European businesses.”
“These rules are key to stimulating and unlocking digital markets, enhancing consumer choice, enabling better value sharing in the digital economy, and boosting innovation,” he added.
Andreas Schwab, a member of the European Parliament from Germany, said that “the Digital Markets Act puts an end to the ever-increasing dominance of Big Tech companies. From now on, Big Tech companies must show that they also allow for fair competition on the internet. The new rules will help enforce that basic principle.”
BEUC’s Pachl offered examples of the new law’s benefits:
Google must stop promoting its own local, travel, or job services over those of competitors in Google Search results, while Apple will be unable to force users to use its payment service for app purchases. Consumers will also be able to collectively enforce their rights if a company breaks the rules in the Digital Markets Act.
Companies are also barred from pre-installing certain software and reusing certain private data collected “during a service for the purposes of another service.”
Today’s historical agreement on the #DMA taught us two things, first, that the EU is up to the challenge to reign big tech and, secondly, that Europe’s civil society can make a difference in making the regulatory framework more user-focused.
The DMA applies to companies deemed both “platforms” and “gatekeepers”—those with market capitalization greater than €75 billion ($82.4 billion), 45 million or more monthly end-users, and at least 10,000 E.U. business users. Companies that violate the law can be fined up to 10% of their total annual worldwide turnover, with repeat offenders subject to a doubling of the penalty.
“The DMA is a major step towards limiting the tremendous market power that today’s gatekeeper tech firms have.”
Diego Naranjo, head of policy at the advocacy group European Digital Rights (EDRi), said in a statement that “the DMA will put an end to some of the most harmful practices of Big Tech and narrow the power imbalance between people and online platforms. If correctly implemented, the new agreement will empower individuals to choose more freely the type of online experience and society we want to build in the digital era.”
To ensure effective implementation, BEUC’s Pachl called on E.U. member states to “now also provide the [European] Commission with the necessary enforcement resources to step in the moment there is foul play.”
EDRi senior policy adviser Jan Penfrat said that while “the DMA is a major step towards limiting the tremendous market power that today’s gatekeeper tech firms have,” policymakers “must now make sure that the new obligations not to reuse personal data and the prohibition of using sensitive data for surveillance advertising are respected and properly enforced by the European Commission.”
“Only then will the change be felt by people who depend on digital services every day,” he added.
Originally published on Common Dreams by BRETT WILKINS and republished under Creative Commons (CC BY-NC-ND 3.0).
“This money belongs to the people of Afghanistan, not to the United States,” said an Afghan protest organizer in Kabul over the weekend.
With the people of Afghanistan facing one of the most severe humanitarian crises in the world, U.S.-based peace activists—who largely blame the policies of their own government for inflicting pain on millions of innocent Afghans—are using Valentine’s Day on Monday to demand the Biden administration return billions of dollars of seized assets to the war-torn country before more lasting harm and “cruelty” is done.
Under the banner of “Love to Afghanistan,” nationwide actions were scheduled for the weekend and localized vigils organized set for Monday (Feb. 14) by Peace Action, World Beyond War, and other humanitarian groups who argue that $7 billion frozen by the U.S. government and subsequently seized by an executive order issued Friday by President Joe Biden rightfully belongs to the Afghan people, who without it face an economy on the brink of collapse and a healthcare system and federal infrastructure without adequate support amid the Covid-19 pandemic and a worsening food crisis.
The Biden plan to confiscate $7 Billion of the Afghan people’s assets is unjust. Afghans need food & a functioning economy. Urge #Congress to reverse this policy.#LoveToAfghanistan#UnFreezeAfghanistan Call Congress from Congress Square Park . Noon. Portland, ME. Valentine's Day! pic.twitter.com/9tXwxrmKOe
After 20 years of war in Afghanistan, Peace Action welcomed the withdrawal of troops from the country and an end to the war.
Yet when the United States military pulled out of Afghanistan, the Biden administration also responded by choking off assets to Afghan banks and the economy by freezing the reserves of the Afghan Central Bank held in the U.S. They also imposed sanctions on those doing business with Afghanistan and cut aid. Jobs and income disappeared, people cannot afford to buy food and mass starvation is now occurring.
The Afghan people are suffering now more than ever. Hunger could kill more now than in two decades of war. This humanitarian crisis in Afghanistan is in the words of the International Red Cross a “human-made catastrophe.” “Human-made” largely by coercive U.S. economic policies.
In Decemebr, 46 members of Congress wrote a letter demanding the U.S. unfreeze assets that had been locked following the U.S. military withdrawal earlier in 2021. But instead of heeding that call, Biden on Friday took the step of more permanently seizing the funds that otherwise would be under control of Afghanistan’s central bank, the Da Afghanistan Bank (DAB), which now operates under the authority of the Taliban government.
Biden’s executive order includes setting aside half of the funds, $3.5 billion, for possible settlement claims by families who lost loved ones in the 9/11 attacks of 2001, but critics have said the Afghan people—who had nothing to do with the crimes of that day twenty years ago—should not be punished for the acts of Al Qaeda jihadists, most them Saudis and Egyptians.
Millions of Afghans are starving, due to US crimes, and now instead of getting back what is their’s, their money is being used as reparations for a crime they never committed & have been punished for for 20 years.
Promoting the “Love to Afghanistan” events in an op-ed for Common Dreamslast week, peace activist Jean Athey, coordinator of the Montgomery County Peace Action group in Maryland, said the economic war against the Afghan has the potential to be just as deadly as the 20 years of war and occupation they have just endured. Explaining the current situation and the “liquidity crisis” gripping the country, she wrote:
The government has almost no money and cannot pay workers, who cannot buy food for their families. Most have received no payment for months. In addition, Afghans have limited access to their own funds in banks. International commerce has halted.
Given U.S. sanctions and the liquidity crisis, even international humanitarian relief organizations have great difficulty operating in Afghanistan, despite U.S. government assurances. Relief efforts designed to stave off starvation—although critically important right now—cannot endure for long since no one is willing to provide assistance indefinitely to a country of almost 40 million people. The country needs a functioning government and economy, and needs access to the international financial system.
“Political backbone” is now required of the Biden administration, argued Athey, who said the president should not be scared of predictable GOP attacks or media hit pieces about somehow appeasing the Taliban by giving the everyday people back money the money that rightfully belongs to them. “The lives of one million children are more important than a negative headline in a tabloid. The U.S. should unfreeze Afghan government assets and lift sanctions hindering the recovery of the Afghan economy and humanitarian relief efforts. We must end the U.S. economic war on Afghanistan.”
On Saturday, the DAB demanded the funds ostensibly stolen by the U.S. government be returned and called the move by Biden an “injustice against the people of Afghanistan.”
Also in Saturday, protests in Kabul decried the theft of the money.
“This money belongs to the people of Afghanistan, not to the United States. This is the right of Afghans,” Abdul Rahman, a civil society activist and the demonstration’s organizer, told the Dawn newsaper.
A spokesperson for the Taliban government, Mohammad Naeem, also decriedthe move in a post on social media Saturday.
“The theft and seizure of money held by the United States of the Afghan people represent the lowest level of human and moral decay of a country and a nation,” Naeem tweeted, added that while victory and defeat are evident throughout history, “the greatest and most shameful defeat is when moral defeat combines with military defeat.”
Originally published on Common Dreams by JON QUEALLY and republished under a Creative Commons (CC BY-NC-ND 3.0) license.
“A large across-the-board increase in interest rates is a cure worse than the disease,” says economist Joseph Stiglitz. “That might dampen inflation if it is taken far enough, but it will also ruin people’s lives.”
As the U.S. Federal Reserve mulls hiking interest rates in the coming weeks in an effort to curb inflation, progressive economists are warning against such a move—arguing that it will hurt workers and fail to address the real source of rising prices: unmitigated corporate power.
“The last thing average working people need is for the Fed to raise interest rates and slow the economy further.”
“A large across-the-board increase in interest rates is a cure worse than the disease,” Joseph Stiglitz, a Nobel laureate in economics and Columbia University professor, wrote Monday in Project Syndicate. “We should not attack a supply-side problem by lowering demand and increasing unemployment. That might dampen inflation if it is taken far enough, but it will also ruin people’s lives.”
Josh Bivens, director of research at the Economic Policy Institute, echoed Stiglitz’s message, writing Monday: “The inflation spike of 2021 has been bad for typical families and is a real policy challenge. But it remains the case that an overreaction to it could end up causing the most damage of all.”
Stiglitz and Bivens’ essays came three days after Robert Reich, professor of public policy at the University of California, Berkeley, made a similar warning.
Fed policymakers are poised to raise interest rates at their March meeting and then continue raising them, in order to slow the economy. They fear that a labor shortage is pushing up wages, which in turn are pushing up prices—and that this wage-price spiral could get out of control.
It’s a huge mistake. Higher interest rates will harm millions of workers who will be involuntarily drafted into the inflation fight by losing jobs or long-overdue pay raises. There’s no “labor shortage” pushing up wages. There’s a shortage of good jobs paying adequate wages to support working families. Raising interest rates will worsen this shortage.
Although Federal Reserve Chair Jerome Powell “has expressed concern about wage hikes pushing up prices,” Reich wrote, “there’s no ‘wage-price spiral.'”
“To the contrary, workers’ real wages have dropped because of inflation,” he added. “Even though overall wages have climbed, they’ve failed to keep up with price increases—making most workers worse off in terms of the purchasing power of their dollars.”
Reich conceded that “wage-price spirals used to be a problem” but argued that’s no longer the case “because the typical worker today has little or no bargaining power.”
Declining union membership and corporations’ increased mobility—both key pillars in the ruling class’ highly effective assault on workers that has been carried out on a bipartisan basis for more than four decades—”have shifted power from labor to capital,” wrote Reich. “Increasing the share of the economic pie going to profits and shrinking the share going to wages… ended wage-price spirals.”
It is “totally wrong” to contend that inflation is being fueled by rising wages stemming from a so-called “tight” labor market, Reich argued. He continued:
The January jobs report shows that the U.S. economy is still 2.9 million jobs below what it had in February 2020. Given the growth of the U.S. population, it’s 4.5 million short of what it would have by now had there been no pandemic.
Consumers are almost tapped out. Not only are real (inflation-adjusted) incomes down, but pandemic assistance has ended. Extra jobless benefits are gone. Child tax credits have expired. Rent moratoriums are over. Small wonder consumer spending fell 0.6% in December, the first decrease since last February.
“Given all this, the last thing average working people need is for the Fed to raise interest rates and slow the economy further,” Reich added. “The problem most people face isn’t inflation. It’s a lack of good jobs.”
When it comes to what is causing inflation, Reich blamed “continuing worldwide bottlenecks in the supply of goods, and the ease with which big corporations (with record profits) are passing these costs to customers in higher prices.”
Corporate greed has played a large role in why people are paying higher prices for food and gas, as Common Dreams has reported and a majority of the public appears to understand, based on recent polling. Amid a public health crisis that has claimed the lives of more than 900,000 people in the U.S. and 5.7 million people globally, price-gouging corporations are enjoying mega-profits not seen since 1950.
While pandemic profiteering is evident, the question remains as to what made global supply chains so fragile to disruption in the first place—leading to prolonged shortages of key inputs and increased shipping costs that have been accompanied by price hikes.
According to Rakken Mabud, chief economist and managing director of policy and research at the Groundwork Collaborative, the answer lies in offshoring, financialization, deregulation, just-in-time logistics, and other profit-maximizing policies associated with neoliberalization and globalization.
Mabud made that case last week when testifying at a House Energy and Commerce Committee hearing. She and David Dayen, executive editor of The American Prospect, expanded on that argument in a recent essay introducing a new series on the supply chain crisis.
As a number of economists have warned recently, policymakers on the verge of making life-altering decisions with respect to interest rates may be doing so based on faulty data or misconceptions.
“Among the biggest job gains in January were workers who are normally temporary and paid low wages (leisure and hospitality, retail, transport and warehousing),” Reich cautioned. “This January employers cut fewer of these low-wage temp workers than in most years, because of rising customer demand and the difficulties of hiring during Omicron. Due to the Bureau of Labor Statistics’ ‘seasonal adjustment,’ cutting fewer workers than usual for this time of year appears as ‘adding lots of jobs.'”
Stiglitz, meanwhile, noted that “the inflation rate has been volatile. Last month, the media made a big deal out of the 7% annual inflation rate in the United States, while failing to note that the December rate was little more than half that of the October rate.”
“Moreover, given that a large proportion of today’s inflation stems from global issues—like chip shortages and the behavior of oil cartels—it is a gross exaggeration to blame inflation on excessive fiscal support in the U.S.,” Stiglitz continued.
While “the U.S. has slightly higher inflation than Europe,” he added, “it also has enjoyed stronger growth. U.S. policies prevented a massive increase in poverty that might have occurred otherwise. Recognizing that the cost of doing too little would be huge, U.S. policymakers did the right thing.”
Stiglitz wrote that his “biggest concern is that central banks will overreact, raising interest rates excessively and hampering the nascent recovery. As always, those at the bottom of the income scale would suffer the most in this scenario.”
“What we need instead,” he argued, “are targeted structural and fiscal policies aimed at unblocking supply bottlenecks and helping people confront today’s realities.”
For instance, wrote Stiglitz, “food stamps for the needy should be indexed to the price of food, and energy (fuel) subsidies to the price of energy.”
“Beyond that, a one-time ‘inflation adjustment’ tax cut for lower- and middle-income households would help them through the post-pandemic transition,” he added. “It could be financed by taxing the monopoly rents of the oil, technology, pharmaceutical, and other corporate giants that made a killing from the crisis.”
Originally published on Common Dreams by KENNY STANCIL and republished under a Creative Commons license (CC BY-NC-ND 3.0)
Bloomberg’s Lorcan Roche Kelly called Bitcoin “the first true religion of the 21st century.” Bitcoin promoter Hass McCook has taken to calling himself “The Friar” and wrote a series of Medium pieces comparing Bitcoin to a religion. There is a Church of Bitcoin, founded in 2017, that explicitly calls legendary Bitcoin creator Satoshi Nakamoto its “prophet.”
The dirty secret of religious studies is that there is no universal definition of what religion is. Traditions such as Christianity, Islam and Buddhism certainly exist and have similarities, but the idea that these are all examples of religion is relatively new.
The word “religion” as it’s used today – a vague category that includes certain cultural ideas and practices related to God, the afterlife or morality – arose in Europe around the 16th century. Before this, many Europeans understood that there were only three types of people in the world: Christians, Jews and heathens.
Above: Photo / Collage / Lynxotic
This model shifted after the Protestant Reformation when a long series of wars began between Catholics and Protestants. These became known as “wars of religion,” and religion became a way of talking about differences between Christians. At the same time, Europeans were encountering other cultures through exploration and colonialism. Some of the traditions they encountered shared certain similarities to Christianity and were also deemed religions.
Non-European languages have historically not had a direct equivalent to the word “religion.” What has counted as religion has changed over the centuries, and there are always political interests at stake in determining whether or not something is a religion.
As religion scholar Russell McCutcheon argues, “The interesting thing to study, then, is not what religion is or is not, but ‘the making of it’ process itself – whether that manufacturing activity takes place in a courtroom or is a claim made by a group about their own behaviors and institutions.”
Critics highlight irrationality
With this in mind, why would anyone claim that Bitcoin is a religion?
Some commentators seem to be making this claim to steer investors away from Bitcoin. Emerging market fund manager Mark Mobius, in an attempt to tamp down enthusiasm about cryptocurrency, said that “crypto is a religion, not an investment.”
His statement, however, is an example of a false dichotomy fallacy, or the assumption that if something is one thing, it cannot be another. There is no reason that a religion cannot also be an investment, a political system or nearly anything else.
Mobius’ point, though, is that “religion,” like cryptocurrency, is irrational. This criticism of religion has been around since the Enlightenment, when Voltaire wrote, “Nothing can be more contrary to religion and the clergy than reason and common sense.”
In this case, labeling Bitcoin a “religion” suggests that bitcoin investors are fanatics and not making rational choices.
Bitcoin as good and wholesome
On the other hand, some Bitcoin proponents have leaned into the religion label. McCook’s articles use the language of religion to highlight certain aspects of Bitcoin culture and to normalize them.
For example, “stacking sats” – the practice of regularly buying small fractions of bitcoins – sounds weird. But McCook refers to this practice as a religious ritual, and more specifically as “tithing.” Many churches practice tithing, in which members make regular donations to support their church. So this comparison makes sat stacking seem more familiar.
While for some people religion may be associated with the irrational, it is also associated with what religion scholar Doug Cowan calls “the good, moral and decent fallacy.” That is, some people often assume if something is really a religion, it must represent something good. People who “stack sats” might sound weird. But people who “tithe” could sound principled and wholesome.
Using religion as a framework
For religion scholars, categorizing something as a religion can pave the way for new insights.
As religion scholar J.Z. Smith writes, “‘Religion’ is not a native term; it is created by scholars for their intellectual purposes and therefore is theirs to define.” For Smith, categorizing certain traditions or cultural institutions as religions creates a comparative framework that will hopefully result in some new understanding. With this in mind, comparing Bitcoin to a tradition like Christianity may cause people to notice things that they didn’t before.
For example, many religions were founded by charismatic leaders. Charismatic authority does not come from any government office or tradition but solely from the relationship between a leader and their followers. Charismatic leaders are seen by their followers as superhuman or at least extraordinary. Because this relationship is precarious, leaders often remain aloof to keep followers from seeing them as ordinary human beings.
Several commentators have noted that Bitcoin inventor Satoshi Nakamoto resembles a sort of prophet. Nakamoto’s true identity – or whether Nakamoto is actually a team of people – remains a mystery. But the intrigue surrounding this figure is a source of charisma with consequences for bitcoin’s economic value. Many who invest in bitcoin do so in part because they regard Nakamoto as a genius and an economic rebel. In Budapest, artists even erected a bronze statue as a tribute to Nakamoto.
There’s also a connection between Bitcoin and millennialism, or the belief in a coming collective salvation for a select group of people.
In Christianity, millennial expectations involve the return of Jesus and the final judgment of the living and the dead. Some Bitcoiners believe in an inevitable coming “hyperbitcoinization” in which bitcoin will be the only valid currency. When this happens, the “Bitcoin believers” who invested will be justified, while the “no coiners” who shunned cryptocurrency will lose everything.
A path to salvation
Finally, some Bitcoiners view bitcoin as not just a way to make money, but as the answer to all of humanity’s problems.
“Because the root cause of all of our problems is basically money printing and capital misallocation as a result of that,” McCook argues, “the only way the whales are going to be saved, or the trees are going to be saved, or the kids are going to be saved, is if we just stop the degeneracy.”
This attitude may be the most significant point of comparison with religious traditions. In his book “God Is Not One,” religion professor Stephen Prothero highlights the distinctiveness of world religions using a four-point model, in which each tradition identifies a unique problem with the human condition, posits a solution, offers specific practices to achieve the solution and puts forth exemplars to model that path.
This model can be applied to Bitcoin: The problem is fiat currency, the solution is Bitcoin, and the practices include encouraging others to invest, “stacking sats” and “hodling” – refusing to sell bitcoin to keep its value up. The exemplars include Satoshi and other figures involved in the creation of blockchain technology.
So does this comparison prove that Bitcoin is a religion?
Not necessarily, because theologians, sociologists and legal theorists have many different definitions of religion, all of which are more or less useful depending on what the definition is being used for.
However, this comparison may help people understand why Bitcoin has become so attractive to so many people, in ways that would not be possible if Bitcoin were approached as a purely economic phenomenon.
The wealth-hoarding by ultrarich families would be equivalent to over four Build Back Better plans
Over the next few decades, the richest American families could avoid paying about $8.4 trillion in taxes, or more than four times the cost of the stalled Build Back Better package, according to a report released Wednesday.
“We can fix our broken estate and gift tax system… or we can trust our democracy to a handful of trillionaire trust fund babies.”
The new analysis details how loopholes have made the payment of estate, gift, and generation-skipping taxes—collectively called wealth-transfer taxes—effectively optional for the “ultrawealthy” and thereby accelerate the “accumulation of dynastic wealth.”
“Ultrarich families use dynasty trusts—the term for a variety of wealth-accumulating structures that remain in place for multiple generations—to ensure their fortunes cascade down to children, grandchildren, and beyond undiminished by wealth-transfer taxes,” the report explains.
Some U.S. states, such as South Dakota, have even changed their laws on dynasty trusts to attract wealthy residents, as Chuck Collins of the Institute for Policy highlighted last year.
The new report notes that U.S. lawmakers aren’t planning to address the issue, even if the Senate passes a version of a House-approved package:
The Build Back Better (BBB) legislation now before Congress—otherwise a vehicle for significant progressive tax reform—does nothing to directly reverse this toxic accumulation of dynastic wealth. Moreover, some dynasty trust reforms that were included in the bill passed by the House Ways and Means Committee in September 2021 were stripped out before the House voted on the measure in November.
The BBB bill needs full support from Senate Democrats to pass. Sen. Joe Manchin (D-W.Va.)—one of the primary reasons the legislation hasn’t reached President Joe Biden’s desk—said Tuesday that it is “dead.”
However, Americans for Tax Fairness still uses the whittled-down BBB package to illustrate just how much money wealthy Americans can hoard for their families in the years ahead thanks to the U.S. tax system.
“The tax savings for the richest families could be about $8.4 trillion over the next 24 years or so if the current 40% estate tax rate remains in place,” the report states. “That’s the equivalent of more than four Build Back Better plans costing $1.75 trillion each over 10 years.”
The report adds that “about half of the $8.4 trillion is equivalent to the cost of the expanded child tax credit, which was included in the House-passed BBB bill and is estimated to reduce childhood poverty by 40%, for 24 years at $160 billion a year.”
There's no denying our economy and democracy are rigged in favor of the ultra-wealthy.
When the richest 100 Americans have 60,000 times more political power than the bottom 90% of people— it's time to get dynastic wealth under control. https://t.co/U1s6HmY1XC
“This hoarding of wealth is inexcusable,” declared the report’s principal author, Bob Lord, who practiced estate law for 30 years before joining Americans for Tax Fairness as tax counsel.
“The BBB legislation now before the U.S. Senate should be amended to close loopholes in the three components of America’s wealth transfer tax system: the estate, gift, and generation-skipping tax,” he asserted. “Effective reforms have already been developed—all that’s needed is for Congress to recognize the urgency to act now.”
The group’s new analysis and call for action come after Americans for Tax Fairness estimated last month that the 10 wealthiest billionaires in the United States have become approximately $1 billion richer collectively every day of the Covid-19 pandemic.
Wednesday’s report contains a warning about that group of ultra-billionaires, mentioning by name Amazon’s Jeff Bezos, Facebook’s Mark Zuckerberg, and Elon Musk of Telsa and SpaceX.
“As much as familiar fortunes have blossomed in the low-regulation, low-tax, wealth-worshiping environment of the previous 40 years,” the report says, “the next 40 and beyond could see the rise of economic dynasties that will make the old money look small.”
Along with closing dynasty-trust tax loopholes, Americans for Tax Fairness urges reforms that would “curb the year-to-year accumulation of wealth in existing trusts.” Specifically, it calls for a new income-tax bracket “on undistributed trust income in excess of $250,000 that is five percentage points higher than the maximum income-tax bracket for individuals.”
Noting a proposal from Sen. Elizabeth Warren (D-Mass.), the group also encourages U.S. lawmakers to “impose an annual 2% wealth tax on the portion of a dynasty trust’s holdings that exceed $50 million, and an additional 1% on dynasty trust accumulations in excess of $1 billion.”
“The choice is clear,” according to the report. “We can fix our broken estate and gift tax system and stop the concentration of an ever-larger share of America’s wealth inside enormous dynasty trusts, or we can trust our democracy to a handful of trillionaire trust fund babies.”
“Fortunately, we know what needs to be done,” the report concludes. “The sole remaining challenge is to summon the courage to stand up to the holders of dynastic wealth and their enablers.”
Originally published on Common Dreams by JESSICA CORBETT and republished under a Creative Commons license (CC BY-NC-ND 3.0)
A new legal filing by New York’s attorney general this week accused former President Donald Trump’s company of misleading lenders about the financial health of its landmark downtown Manhattan skyscraper, 40 Wall Street, while seeking to renew the building’s mortgage.
Though the Trump Organization called 40 Wall Street “one of the great success stories post 2008,” lender Capital One found the company’s estimates of the building’s worth so unbelievable that the bank declined to refinance the tower’s loan in 2015, the filing alleges.
“Capital One harbored great skepticism regarding the Trump Organization’s valuations,” says the filing, which was submitted by Attorney General Letitia James in response to Trump’s efforts to block her from questioning him and his children as part of an ongoing investigation by her office.
The new accusations offer startling details about possible financial fraud involving 40 Wall Street — one of the subjects of a 2019 ProPublica story that highlighted conflicting financial documents the Trump Organization had filed for the building.
ProPublica’s story documented how income, expense and occupancy numbers cited in the eventual refinance for 40 Wall Street and another Manhattan building sometimes didn’t match those the company had filed with city tax authorities. A lower valuation for the city would produce a lower tax bill, while a higher valuation for lenders would make it easier to get a new mortgage.
One expert said it appeared like the Trump Organization was keeping “two sets of books.”
“It feels like a set of books for the tax guy and a set for the lender,” said Kevin Riordan, a financing expert and real estate professor at Montclair State University, at the time.
In her filing, James asserts that Trump Organization employees, including Trump’s children, took part in a pattern of deception in which they misled lenders, insurers and the Internal Revenue Service by vastly overstating values for 40 Wall Street and a host of other Trump properties, including golf courses in Scotland, Los Angeles and Westchester and his buildings on Fifth and Park avenues.
The Trump Organization on Thursday lashed out at James, a Democrat, via a statement emailed by a spokesperson, saying, “The only one misleading the public is Letitia James.
“She defrauded New Yorkers by basing her entire candidacy on a promise to get Trump at all costs without having seen a shred of evidence and in violation of every conceivable ethical rule,” the organization’s statement said. It asserted that James “has no case” and that the “allegations are baseless and will be vigorously defended.”
Alan Futerfas, a lawyer for Trump’s children Donald Jr. and Ivanka Trump, also criticized James, accusing her of making “repeated threats to target the Trump family” and ignoring legal protections for “the very people she is investigating.”
James is seeking to compel testimony and obtain documents from Trump, Donald Jr. and Ivanka, who she said have not cooperated with her investigation.
The filing says that property valuations formed the heart of statements of financial condition that the Trump Organization used to demonstrate its net worth. The statements, which James said contained inaccuracies, were compiled by an outside accounting agency from a data spreadsheet and backup material provided by the Trump Organization.
Trump’s personal guarantees to some banks and insurers required him to certify that his financial statements were correct, according to James’ filing. The documents say her office has evidence Trump was “personally involved in reviewing and approving” the statements.
If the company or its employees are found to have deliberately provided misleading valuations, they could face civil or criminal penalties. The company is under investigation by both James and Manhattan District Attorney Alvin Bragg.
With its classic Gothic Revival style and signature green spire, 40 Wall Street gave Trump a presence in the most famous financial district in the world. His company doesn’t own it, but rather purchased in 1995 the right to act as the landlord for its office and retail space. Finding tenants for that space, however, particularly in the building’s narrow tower, proved a challenge, especially after 9/11, when occupancy sagged and the entire financial district struggled, the ProPublica investigation found.
James’ filing says that as early as 2009, Capital One, which held the mortgage on the property, “raised substantial concerns about cash flow” at 40 Wall Street, prompting in-person meetings with Trump, longtime Trump Organization Chief Financial Officer Allen Weisselberg and others. Donald Trump Jr. was also involved in the discussions, the filing says.
The conversations led to a loan modification in 2010, with bank personnel harboring doubts about the Trump Organization’s representations of the building’s financial standing. During those discussions, the Trump Organization provided the bank with profit numbers for 2010 of $12.3 million, which bank personnel described as “very optimistic.”
More startling were the differences between valuations that appeared on Trump’s statements of financial condition and those prepared by appraisers for Capital One. The Trump Organization set the value of the building at $601.8 million in 2010, while the appraisals for Capital One done by Cushman & Wakefield set it at just less than one-third of that, $200 million.
Weisselberg shared one of the company’s higher valuations for the building with the bank in early 2015, boasting of “considerable capital investment” and “a much improved cash flow.” He wanted Capital One to restructure its loan and waive a principal payment of $5 million due in November.
But Capital One declined to refinance the mortgage, referencing its own internal estimate that the building was only worth $257 million a few months before.
That year, 40 Wall Street’s $160 million mortgage was a thorn in Trump’s side, representing his then-largest single debt as he launched his campaign for the presidency.
After Capital One’s rejection, the Trump Organization turned to Ladder Capital Finance, where Weisselberg’s son Jack was a director. Ladder commissioned its own appraisal. Though Ladder used the same Cushman & Wakefield team that had estimated the building was worth $220 million in 2012, the team this time more than doubled the value to $540 million, legal filings said. Ladder approved the refinance.
James’ filing said that evidence her office obtained suggests the 2015 Cushman valuation “appears to have used demonstrably incorrect facts and aggressive assumptions” to arrive at the higher estimate, which the document said “did not reflect a good faith assessment of value.”
On Thursday, Cushman & Wakefield defended its practices, saying it took “great issue with mischaracterizations concerning the work performed and believe they are not supported by the evidence.
“The referenced Cushman & Wakefield appraisals were undertaken and completed in good faith based upon the material information made available,” the company said in a statement emailed by a spokesperson. “We stand behind the appraisers and the referenced appraisals which reflect fair valuations based upon the underlying facts and market dynamics.”
In 2015, the Trump Organization’s statement of financial condition listed the value of the building as $735.4 million.
Ladder Capital and Capital One did not immediately respond to requests for comment Thursday. Allen Weisselberg and Jack Weisselberg could not immediately be reached.
ProPublica’s 2019 story found several instances of the Trump Organization reporting much lower expenses to its lender, Ladder Capital, than to city tax authorities — including 40 Wall Street’s insurance costs and ground lease. Jack Weisselberg declined to comment at the time on Ladder’s loans or his relationship with the Trump Organization. Executives with Ladder also declined to be quoted for the story then.
In 2019, former Trump lawyer Michael Cohen testified before Congress that the Trump Organization inflated valuations at times to appear more profitable and deflated them to achieve a lower real estate tax bill.
Above: Collage by Lynxotic, Original Photo by Unsplash
“Wall Street’s toxic fossil fuel investments threaten the future of our planet and the stability of our financial system and put all of us, especially our most vulnerable communities, at risk.”
Fueling fresh calls for swift, sweeping action by President Joe Biden and financial regulators, a report published Tuesday reveals that if the planet-heating pollution of the 18 largest U.S. asset managers and banks is compared to that of high-emissions countries, Wall Street is a top-five emitter.
“Financial regulators have the authority to rein in this risky behavior, and this report makes it clear that there is no time to waste.”
The new report—entitled Wall Street’s Carbon Bubble: The global emissions of the U.S. financial sector—was released by the Center for American Progress (CAP) and Sierra Club. The analysis was done by South Pole, which replicated an approach it used earlier this year for a U.K.-focused effort commissioned by Greenpeace and the World Wide Fund for Nature (WWF).
Though likely a “gross underestimate,” as Sierra Club put it, because the analysis relies on public disclosures that exclude key data, the researchers found that “just the portions of the portfolios of the eight banks and 10 asset managers studied in this report financed an estimated total of 1.968 billion tons CO2e based on year-end disclosures from 2020.”
Putting that CO2e—or carbon dioxide equivalent, which is used to compare emissions from various greenhouse gases—figure into context, the report notes:
If the financial institutions (FIs) in this study were a country, they would have the fifth largest emissions in the world, falling just short of Russia;
Financed emissions from the 18 institutions covered in this report are equivalent to 432 million passenger vehicles driven for one year;
Financed emissions from the eight banks studied in this report are equivalent to 80 million homes’ energy use for one year; and
Financed emissions from the 10 asset managers studied in this report are equivalent to three billion barrels of oil consumed.
The banks analyzed are Bank of America, Bank of New York (BNY) Mellon, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, State Street, and Wells Fargo.
The asset managers included are BNY Mellon Investment Management, BlackRock, Capital Group, Fidelity Investments, Goldman Sachs Asset Management, JPMorgan Asset Management, Morgan Stanley Investment Management, PIMCO, State Street Global Advisors, and the Vanguard Group.
When Wall Street is factored into the list of the world’s top 10 countries responsible for the most annual greenhouse gas emissions, it falls after China, the United States, India, and Russia but ranks ahead of Indonesia, Brazil, Japan, Iran, and Germany, according to Climate Watch data.
As the new publication warns:
The findings of this report make clear that the U.S. financial sector is a major contributor to climate change. Given that the indirect emissions of the U.S. financial sector are just below the total emissions of Russia, it should be considered a high-carbon sector and treated as such. Therefore, if President Biden and his administration do not put in place measures to mitigate U.S.-financed emissions, the United States will almost certainly fall far short of its targets to achieve a 50% to 52% reduction from 2005 levels in 2030 and net-zero emissions economy-wide by no later than 2050.
The implications of falling short would be dire. Continued unfettered emissions supported by the financial industry would mean that the deadly wildfires, droughts, heatwaves, hurricanes, floods, and other extreme weather events that Americans and communities around the world are already experiencing will only become worse, and efforts to mitigate emissions will only become more challenging and costly.
Representatives from the groups behind the report echoed its call to action in a statement Tuesday.
“Climate change poses a large systemic risk to the world economy. If left unaddressed, climate change could lead to a financial crisis larger than any in living memory,” said Andres Vinelli, vice president of economic policy at CAP. “The U.S. banking sector is endangering itself and the planet by continuing to finance the fossil fuel sector.”
Vinelli added that “because the industry has proven itself to be unwilling to govern itself,” regulators including the U.S. Securities and Exchange Commission and Office of the Comptroller of the Currency “must urgently develop a framework to reduce banks’ contributions to climate change.”
Ben Cushing, Sierra Club’s Fossil-Free Finance campaign manager, agreed that “regulators can no longer ignore Wall Street’s staggering contribution to the climate crisis.”
“The U.S. banking sector is endangering itself and the planet by continuing to finance the fossil fuel sector.”
“Wall Street’s toxic fossil fuel investments threaten the future of our planet and the stability of our financial system and put all of us, especially our most vulnerable communities, at risk,” he said. “Financial regulators have the authority to rein in this risky behavior, and this report makes it clear that there is no time to waste.”
The report comes as financial institutions worldwide face mounting criticism for their contributions to the climate emergency—including at the COP26 climate summit in Scotland last month—and as the Koch-funded American Legislative Exchange Council (ALEC) is pushing model legislation that opposes fossil fuel divestment.
More than three dozen climate advocacy groups argued Monday that “what ALEC claims to be discriminatory action”—referring to divestment from major polluters—”is instead prudent action to ensure the stability of our financial system and economy.”
“We know from the Great Recession that the financial sector won’t take responsibility,” the organizations noted. “It’s up to regulators to protect people from the impact on climate and financial risk of fossil fuel investment.”
Originally published on Common Dreams by JESSICA CORBETT and republished under a Creative Commons (CC BY-NC-ND 3.0)
Real life Stephen Ross, who founded Related Companies, a global firm best known for developing the Time Warner Center and Hudson Yards in Manhattan, was a massive winner between 2008 and 2017. He became the second-wealthiest real estate titan in America, almost doubling his net worth over those years, according to Forbes Magazine’s annual list, by adding $3 billion to his fortune. His assets included a penthouse apartment overlooking Central Park and the Miami Dolphins football team.
Then there’s the other Stephen Ross, the big loser. That’s the one depicted on his tax returns. Though the developer brought in some $1.5 billion in income from 2008 to 2017, he reported even more — nearly $2 billion — in losses. And because he reported negative income, he didn’t pay a nickel in federal income taxes over those 10 years.
What enables this dual identity? The upside-down tax world of the ultrawealthy.
ProPublica’s analysis of more than 15 years of secret tax data for thousands of the wealthiest Americans shows that Ross is one of a special breed.
He is among a subset of the ultrarich who take advantage of owning businesses that generate enormous tax deductions that then flow through to their personal tax returns. Many of them are in commercial real estate or oil and gas, industries that have been granted unusual advantages in the American tax code, which allow the ultrawealthy to take tax losses even on profitable enterprises. Manhattan apartment towers that are soaring in value can be turned into sinkholes for tax purposes. A massively profitable natural gas pipeline company can churn out Texas-sized write-offs for its billionaire owner.
By being able to generate losses — effectively, by being the biggest losers — these Americans are the most effective income-tax avoiders among the ultrawealthy, ProPublica’s analysis of tax data found. While ProPublica has shown that some of the country’s absolute wealthiest people, including Jeff Bezos, Elon Musk and Michael Bloomberg, occasionally sidestep federal income tax entirely, this group does it year in and year out.
Take Silicon Valley real estate mogul Jay Paul, who hauled in $354 million between 2007 and 2018. According to Forbes, he vaulted into the ranks of the multibillionaires in those years. Yet Paul paid taxes in only one of those years, thanks to losses of over $700 million.
Then there’s Texas wildcatter Trevor Rees-Jones, who built Chief Oil & Gas into a major natural gas producer over the past two decades. The multibillionaire reported a total of $1.4 billion in income from 2013 to 2018, but offset that with even greater losses. He paid no federal income taxes in four of those six years.
None of the people mentioned in this article would discuss their taxes or tax-avoidance techniques with ProPublica.
A spokesperson for Ross declined to accept questions. In a statement, he said, “Stephen Ross has always followed the tax law. His returns — which were illegally obtained and descriptions of which were released by ProPublica — are reflective of and in accordance with federal tax policy. It should terrify every American that their information is not safe with the government and that media will act illegally in disseminating it. We will have no further correspondence with you as we believe this is an illegal act.” (As ProPublica has explained, the organization believes its actions are legal and protected by the Constitution.)
A spokesman for Rees-Jones declined to comment. Paul did not respond to repeated requests for comment.
The techniques used by these billionaires to generate losses are generally legal. Loopholes for fossil-fuel businesses date back practically to the income tax’s birth in the early 20th century. Carve-outs for real estate and oil and gas have withstood sporadic efforts at reform by Congress in part because there has been widespread support for investment in housing and energy.
The commercial real estate and fossil fuel breaks have enabled some of the wealthiest Americans to escape federal income taxes for long stretches of time. Sometimes they amass such large losses that they cannot use all of them in a given year. When that happens, they fill up reservoirs of deductions that they then draw down bit by bit to wipe away taxes in future years. Before ProPublica’s analysis of its trove of tax data, the extent of this type of avoidance among the nation’s wealthiest was not known.
Typical working Americans do not generate these kinds of business losses and thus can’t use them to offset income or reduce income tax.
As long as there have been income taxes, there have been schemes to manufacture illusory losses that reduce taxes, and there have likewise been counterefforts by Congress and the IRS to rein them in. But ProPublica’s findings show these measures to prevent deduction abuses “aren’t doing what they are supposed to do,” said Daniel Shaviro, the Wayne Perry Professor of Taxation at New York University Law School. “The system isn’t working right.”
For decades, One Columbus Place, a 51-story apartment complex in midtown Manhattan, has looked like an excellent investment. Located a block off the southwest corner of Central Park, it’s adjacent to the Columbus Circle mall for shopping at Coach or Swarovski or for dining at the Michelin three-star restaurant Per Se.
Its 729 rental units have churned out millions of dollars in rental income every year for its owners, among them Stephen Ross. Mortgage records show its value has skyrocketed, jumping from $250 million in the early 2000s to almost $550 million in 2016.
Yet, for more than a decade, this prime piece of New York real estate was a surefire money-loser for tax purposes. Since Ross acquired a share in the property in 2007, he has recorded $32 million in tax losses from his stake in a partnership that owns it, his tax records show.
Tax losses from properties owned through a host of such partnerships are central to Ross’ ability, and that of other real estate moguls, to continue to grow their wealth while reporting negative income year after year to the IRS.
Their down-is-up, up-is-down tax life comes in large part from provisions in the code that amplify developers’ ability to exploit write-offs from what’s known as depreciation, or the presumed decline in the value of assets over time. Some of these rules apply only to the real estate business, letting developers take outsize deductions today to reduce their taxable income while delaying their tax bill for decades — and potentially forever.
Depreciation itself is a widely accepted concept. In most businesses, the depreciation write-offs come from assets, like machinery, that reliably lose their value over time; eventually, a machine becomes outmoded or breaks down.
When it comes to real estate, a common justification for depreciation relies on the idea that space in older buildings will tend to command lower rents than space in newer ones, eventually making it worthwhile for an owner to knock down a building and construct a new one. So, if a building initially cost investors $100 million, the tax code allows them, over a period of years, to deduct that $100 million.
But rather than losing value, real estate properties often rise in value over time, much like One Columbus Place has done for Ross and his business partners. (That value includes the cost of the land, which doesn’t generate depreciation write-offs.)
These depreciation write-offs, along with deductions for interest and other expenses, have helped many of the nation’s wealthiest real estate developers largely avoid income taxes in recent years, even as their empires have grown more valuable.
Former President Donald Trump, for whom Ross hosted a $100,000-a-plate fundraiser in 2019, is perhaps the best-known example of commercial real estate’s tax beneficiaries. As The New York Times reported last year, Trump paid $750 in federal income taxes in 2016 and 2017, and nothing at all in 10 of the years between 2001 and 2015. According to ProPublica’s data, Trump took in $2.3 billion from 2008 to 2017, but his massive losses were more than enough to wipe that out and keep his overall income below zero every year. In 2008, Trump reported a negative income of over $650 million, one of the largest single-year losses in the tax trove obtained by ProPublica.
New York-area real estate developer Charles Kushner, the father of Trump’s son-in-law, Jared Kushner, also avoided federal income taxes for long stretches of time. Though he reported making some $330 million between 2008 and 2018, Charles Kushner paid income taxes only twice in that decade ($1.8 million in total) thanks to deductions. (Kushner went to prison in 2005 after being convicted of tax fraud and other charges. Trump pardoned him last year.)
A spokesperson for Trump did not respond to questions about his taxes. (The Trump Organization’s chief legal officer told The New York Times last year that Trump “has paid tens of millions of dollars in personal taxes to the federal government” over the past decade, an apparent reference to taxes other than income tax.) Representatives for Kushner did not respond to repeated requests for comment.
Even relative to fellow real estate developers, though, Stephen Ross is exceptional. He didn’t start out in commercial real estate. He began his career as a tax attorney.
Ross, 81, grew up on the outskirts of Detroit, the son of an inventor with little business savvy. After getting a business degree from the University of Michigan, Ross decided to go to law school to avoid the Vietnam war draft. He then extended his education, earning a master’s degree in tax law at New York University.
He saw the tax code as a puzzle to solve. “Most people, when you say you’re a tax lawyer, they think you’re filling out forms for the IRS,” Ross once told a group of NYU students. “But I look at it as probably the most creative aspect of law because you’re given a set of facts and you’re saying, ‘How do you really reduce or eliminate the tax consequences from those facts?’”
After graduating, Ross went to work, first at the accounting firm Coopers & Lybrand, and later at a Wall Street investment bank, which fired him. Then, with a $10,000 loan from his mother, Ross went into business for himself, selling tax shelters.
In its early years, Ross’ Related Companies solicited investments in affordable-housing projects from affluent professionals like doctors and dentists with the promise that the deals would generate deductions they could use on their taxes to offset the income from their day jobs.
By the mid-1970s, such shelters had become big business on Wall Street. The losses frequently subsidized economically dubious investments in a range of industries. It wasn’t uncommon for firms to offer investors the chance to get $2 or $3 worth of tax savings for every $1 they put in.
As the decade wore on, regulators increasingly took notice. The IRS started programs to scrutinize loss-making businesses. Ross and some of his real estate partnerships were audited, according to a company prospectus, and in some cases, the IRS determined that the firm had been too aggressive in taking write-offs from the projects.
Lawmakers began to crack down, too. In 1976, Congress limited the tax losses investors could take if they borrowed money to invest in industries like oil and gas or motion pictures. But the change didn’t apply to the real estate industry, which successfully argued that without such tax shelters, investors wouldn’t back new low-income housing.
In 1986, Congress sought to rein in tax shelters once more as part of a major tax overhaul. This time the changes included rules to prevent affluent people from using the kind of investments Ross had been offering. The rules shrank who could offset their other income using business losses to only those who had important roles in the business, such as those who spent a certain number of hours on it; so-called passive investors were out of luck.
Several tough years followed for Ross and others in the industry, but the real estate lobby mounted a pressure campaign that yielded results in 1993, when Congress allowed real estate professionals once again to use losses generated from their rental properties to wipe out taxable income from things like wages.
After being pounded by the real estate crash of the early 1990s, the Related Companies reorganized itself with an infusion of cash from new investors. Related made use of new federal housing tax credits, as well as local tax breaks and tax-exempt public financing offered by New York City to propel development of affordable housing units. The firm also continued to branch out into more traditional office and luxury apartment deals.
In 2003, the $1.7 billion development of Time Warner Center catapulted Ross indisputably into the upper echelon of New York developers. Then the most expensive real estate project in the history of the city, the two shining glass towers beside Columbus Circle also helped elevate Ross into the the Forbes 400 for the first time in 2006.
Despite his growing fortune, Ross often owed no federal income tax. In the 22 years from 1996 to 2017, he paid no federal income taxes 12 times. His largest tax bill came in 2006, when he owed $12.6 million after reporting just over $100 million in income.
In the years since, Ross has used a combination of business losses, tax credits and other deductions to sidestep such bills. In 2016, for example, Ross reported $306 million in income, including $219 million in capital gains, $51 million in interest income and $5 million in wages from his role at Related Companies. But he was able to offset that income entirely with losses, including by claiming $271 million in losses through his business activities that year and by tapping his reserve of losses from prior years.
ProPublica’s records don’t offer a complete picture of the sources of each taxpayer’s losses, but they do provide some insight. That year, for example, in addition to losses from One Columbus Place, Ross recorded a loss of $31 million from a partnership associated with the Miami Dolphins. As ProPublica previously reported, professional sports teams provide a stream of tax losses for their wealthy owners. Ross also had a loss of $16.9 million from RSE Ventures, his investment company, which has owned stakes in restaurants, a chickpea pasta maker and a drone racing league.
After taking all of his losses, his records show that he would have owed a small amount of alternative minimum tax, which is designed to ensure that taxpayers with high income and huge deductions pay at least some taxes. But Ross was able to eliminate that bill, too, by using tax credits, which he’d also built up a store of over the years. That left him with a federal income tax bill of zero dollars for the year.
Since the early 2000s, when he had significant taxable income, Ross has turned to a conventional technique for creating tax deductions: charitable donations. He has made a series of multimillion-dollar contributions to his alma mater, the University of Michigan, which have earned him naming rights to its business school and some of its sports facilities. In 2003, a partnership owned by Ross and his business partners donated part of a stake in a southern California property to the school, taking a $33 million tax deduction in exchange. But when the university sold the stake two years later, it got only $1.9 million for it.
In 2008, the IRS rejected the claimed tax deduction. In court, the agency argued that the transaction was “a sham for tax purposes” and that Ross and his partners had grossly overvalued the gift. After almost a decade of legal wrangling, a federal judge sided with the IRS, disallowing the deduction, including Ross’ personal share of $5.4 million. The judge also upheld millions of dollars in penalties that the IRS imposed on the partnership for engaging in the maneuver. Both the tax attorney and the accountant who advised Ross on the deal pleaded guilty to tax evasion in an unrelated case. (In a 2017 article on the case, a spokesperson said Ross “was surprised and extremely disappointed by the actions of the two individuals, who have pled guilty, and has severed all dealings with them.”)
Ross’ core business, real estate, remains almost unmatched as a way to avoid taxes.
For most investors, losses are limited by how much money they stand to lose if the enterprise goes belly up, or how much money they have “at risk.” But not real estate investors. They can deduct the depreciation of a property from their taxable income even if the money they used to buy the place was borrowed from a bank and the property is the only asset on the line for the loan. If they buy a building worth $50 million, putting $10 million down and borrowing the rest, they can still deduct $50 million from their personal taxes over time, even though they’ve put much less of their own money into the project.
Savings related to depreciation and similar write-offs are supposed to be temporary; when you sell the assets, you owe taxes not only on your profits from the sale, but on whatever depreciation you’ve taken on the property as well. In tax lingo, this is known as “depreciation recapture.”
But two big gifts in the tax code, working together, can allow real estate moguls to push off those taxes forever.
First, commercial real estate investors can avoid paying taxes on their gains by rolling sale proceeds into similar investments within six months. This provision of the tax code, called the “like-kind exchange,” goes back to the years following the end of World War I and used to apply to other kinds of property owners. Now it’s available only to real estate investors, a provision that’s expected to cost the U.S. Treasury $40 billion in revenue over the next 10 years. Real estate moguls can “swap till they drop,” as the industry saying has it.
Then, there are even more tax benefits that can be used when they do meet their demise — at least to benefit their heirs. For starters, all the gains in the value of the moguls’ properties are wiped out for tax purposes (a process known by the wonky phrase “step-up in basis”). The tax slate is similarly wiped clean when it comes to the depreciation write-offs that were taken on the properties. The heirs don’t have to pay depreciation recapture taxes.
Real estate heirs then get another quirky benefit: They can depreciate the same buildings all over again as if they’d just bought them, using the piggy bank of write-offs to shield their own income from taxes.
As for Ross, after filing his taxes for 2017, he still had a storehouse of tax losses that ProPublica estimates exceeded $440 million. It was entirely possible that he’d never pay federal income taxes again.
If you’re looking to get richer while telling the tax man you’re getting poorer, it’s hard to beat real estate development. But the oil and gas industry provides stiff competition.
Privileged as the lifeblood of the economy, the energy sector has long been lavished with tax breaks. Provisions dating to the 1910s allow drillers to immediately write off a large portion of their investments, essentially subsidizing oil and gas exploration.
One special gift from U.S. taxpayers to oil drillers is called depletion. The idea is grounded in common sense: As oil (or gas or coal) is taken out of the ground, there’s less left to collect later. That bit-by-bit depletion — analogous to depreciation — becomes a tax write-off. Each year, oil investors get to deduct a set percentage of the revenue from the property.
But investors can keep on deducting that set amount indefinitely, even after they’ve recouped their investment, a benefit that had its critics almost from the beginning. The idea was “based on no sound economic principle,” groused the Joint Committee on Taxation in 1926. Yet only in the 1970s was the depletion provision meaningfully curtailed, and then mainly for the largest oil producers. Congress left it in place for independent operators like wildcatters, long venerated as a cross between plucky entrepreneurs and cowboys.
Today the ranks of billionaires are filled with these independent operators. They get the best of both worlds: legacy tax breaks from the days when oil exploration was a crapshoot and current technology that makes the business much less speculative.
These tax breaks have long outlived their initial purpose of encouraging drilling, said Joseph Aldy, a professor of the practice of public policy at the John F. Kennedy School of Government at Harvard University. Now “we’re just giving money to rich people.”
Billionaires in the industry collect enough deductions to dwarf even vast incomes. Of the 18 billionaires ProPublica previously identified as having received COVID-19 stimulus checks last year — they were eligible because their huge tax write-offs resulted in reported incomes that fell below the middle-class cutoffs for receiving payments — six made their fortunes in the oil and gas industry.
One was Trevor Rees-Jones, who rode the shale fracking boom to build a fortune of over $4 billion while shrinking his federal income taxes to nothing.
His tax returns show huge income, over a billion dollars in total from 2013 to 2018, but even more enormous deductions. In 2013, for instance, Rees-Jones’ company, Chief Oil & Gas, made a major move, acquiring 40 natural gas wells in Pennsylvania’s Marcellus Shale for $500 million. Hundreds of millions in write-offs for that acquisition flowed to Rees-Jones’ taxes.
A spokesman for Rees-Jones declined to comment.
Another Texan, Kelcy Warren of the pipeline giant Energy Transfer, shows how the industry’s tax breaks, when blended with others that are more broadly available, can turn a wildly profitable company into a tax write-off for its owner, even as he reaps billions of dollars in income.
Warren, who co-founded Energy Transfer in the 1990s, is worth about $3.5 billion, according to Forbes. He built the company on a plan of aggressive expansion, through both acquisitions and building pipelines. “You must grow until you die,” he has said.
Warren’s aggressive strategy has allowed him to amass billions of dollars in income, only a small portion of which is taxed. (Representatives for Warren did not respond to requests for comment.)
Energy Transfer is publicly traded, but it’s structured as a special kind of partnership, called a master limited partnership. Only public companies in oil and gas, as well as a few other industries, can take this form.
Partnerships work differently than corporations. A corporation is a separate entity from its investors: The corporation pays taxes on its profits, and the investors pay taxes on the dividends they receive. By contrast, partnerships, including master limited partnerships, don’t generally pay taxes. Only the investors (the partners) pay taxes on their share of the partnership’s profits.
But when Energy Transfer sends regular cash distributions to its partners, these payments are, in most cases, considered a “return of capital” rather than a profit. They come tax free.
Warren’s stake in Energy Transfer — he is the primary general partner and holds hundreds of millions of units of the publicly traded limited partnership — has long entitled him to receive hundreds of millions of dollars in distributions every year, which have helped fund an outsize lifestyle. In addition to a 23,000-square-foot home in Dallas, which boasts a 200-seat theater, a bowling alley and a baseball field, he also has a fleet of private planes, an entire Honduran island, and an 11,000-acre ranch near Austin that has giraffes, javelinas and Asian oxen.
From 2010 to 2018, Warren was entitled to receive more than $1.5 billion in cash distributions, according to ProPublica’s analysis of company filings. During that time, Warren also disclosed an additional $500 million in income from other sources on his tax returns.
But in six of the nine years, he told the IRS he’d lost more money than he’d made. In four of them, he paid nothing.
Warren was able to wipe out his income tax liabilities because Energy Transfer provided him with huge deductions, not only from depletion and other tax breaks specific to oil and gas, but also from the way his company is allowed to account for depreciation.
After Energy Transfer builds a new pipeline, its value becomes an asset, one that will degrade over time, and thus produces depreciation deductions. All of that is standard. What’s unusual is that the tax code has long allowed Energy Transfer and its peers to treat the pipeline as if it lost more than half its value immediately. This “bonus depreciation” can wipe out billions in profits; indeed, in 2018, Energy Transfer reported $3.4 billion in profits in its annual public filing while simultaneously delivering big tax losses to its partners.
Lawmakers from both parties have supported bonus depreciation on the theory that the tax break, which is available across many industries, boosts spending on new equipment and juices the economy. But Trump and Republicans took the idea to its extreme in 2017 with two key changes that benefited aggressive companies like Energy Transfer in particular.
Under the new tax law, the “bonus” rose from 50% to 100%. In other words, for tax purposes, a shiny new pipeline becomes worthless upon completion. Second, the new law contained an even greater perk: It extended to the purchase of used equipment. This means that when a big company like Energy Transfer buys the assets of a smaller one, the value of all the smaller company’s equipment can be written off immediately.
Warren’s tax data reflects the benefits of this to individual owners. He entered 2018 already having built up an $82 million store of losses, and by the end of the year, he had increased it to over $130 million, ProPublica estimates.
Warren is a major Republican donor, having given $18 million to federal and state Republicans since 2015. Most of that went to supporting Trump, who was once an Energy Transfer investor.
Warren’s closeness to the Trump administration seemed to pay off. Days after taking office in 2017, Trump ordered the Army to reconsider a decision to block Energy Transfer’s Dakota Access Pipeline, whose planned path under a reservoir and near the Standing Rock Sioux Reservation had sparked strong opposition. Two weeks later, the pipeline was approved. Energy Transfer boasted record profits in the years that followed.
The company’s biggest quarter ever came last year. The reason? A $2.4 billion windfall from the worst winter storm to hit Texas in decades. Hundreds of Texans died. Utilities scrambled and prices for natural gas soared. San Antonio’s largest utility later accused Energy Transfer of “egregious” price gouging and sued to recoup some payments. The city’s mayor called Energy Transfer’s actions “the most massive wealth transfer in Texas history.” No company profited more, reported Bloomberg. (A spokesperson for Energy Transfer responded that the company had merely sold gas “at prevailing market prices.”)
It was a characteristic victory for Warren, who once said, “The most wealth I’ve ever made is during the dark times.”
Nobody knows just how many of the ultrawealthy are able to completely wipe out their income tax bills using business losses. The IRS publishes all sorts of reports analyzing the traits of taxpayers at different income levels, but its analysis typically starts with people who report $0 or more in income, thus excluding anyone who reported negative income.
But while the scope of the problem isn’t known, policymakers are well aware of techniques taxpayers use to game the system. Congress periodically seeks to tighten tax loopholes (often when it has ambitious spending initiatives it needs to pay for). For his part, President Joe Biden put forward plans this spring that would have axed a variety of oil and gas tax breaks, including percentage depletion. Master limited partnerships, the corporate form that Energy Transfer uses, were on the chopping block. In real estate, the special like-kind exchange carve-out was slated for elimination. The plans would have killed even the step-up in basis, the crucial provision that enables titans in both industries to reap huge deductions without worrying about a future income tax bill.
But as in the past, lobbyists for these industries rallied to preserve their privileged status, and these proposals were dropped.
A novel reform proposal still survives. Recent versions of Biden’s Build Back Better plan have contained a provision that would prevent wealthy taxpayers from using outsize losses from their businesses to wipe out other income in the future.
However, even if this proposal makes it into law, older losses that predate the legislation would still have a privileged status, immune to the new limitations. The biggest losers, it appears, will once again emerge unscathed.
ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for The Big Story newsletter to receive stories like this one in your inbox.
Almost a year ago, Google took a major step to ensure that its ubiquitous online ad network didn’t put money in the pocket of Steve Bannon, the indicted former adviser to Donald Trump. The company kicked Bannon off YouTube, which Google owns, after he called for the beheading of Anthony Fauci and urged Trump supporters to come to Washington on Jan. 6 to try to overturn the presidential election results.
Google also confirmed to ProPublica that it has at times blocked ads from appearing on Bannon’s War Room website alongside individual articles that violate Google’s rules.
But Bannon found a loophole in Google’s policies that let him keep earning ad money on his site’s homepage.
Until Monday, the home page automatically played innocuous stock content, such as tips on how to protect your phone in winter weather or how to improve the effectiveness of your LinkedIn profile.
The content likely had no interest for War Room visitors, especially since it was interrupted every few seconds by ads. But the ads, supplied through Google’s network, came from such prominent brands as Land Rover, Volvo, DoorDash, Staples and even Harvard University.
Right below that video player was another that featured clips from Bannon’s “War Room” podcast, which routinely portrays participants in the Jan. 6 Capitol riot as patriots and airs false claims about the 2020 election and the COVID-19 pandemic.
The video player running Google ads amid innocuous clips disappeared from Bannon’s website on Monday, after ProPublica inquired with Google, Bannon and advertisers. The change was not Google’s doing: Google spokesperson Michael Aciman said the player did not break the company’s rules. He said Google’s policies were effective in preventing ads from ending up on sites with “harmful content.”
“We have strict policies that explicitly prohibit publishers from both promoting harmful content and providing inaccurate information about their properties, misrepresenting their identity, or sending unauthorized ad requests,” Aciman said. “These policies exist to protect both users and advertisers from abuse, fraud or disruptive ad experiences, and we enforce them through a mix of automated tools and human review. When we find publishers that violate these policies we stop ads from serving on their site.”
A spokesperson for Bannon, who was indicted this month for stonewalling Congress’ bipartisan investigation into the Jan. 6 insurrection, declined to answer questions for this article.
Zach Edwards, the founder of Victory Medium, a consulting firm that advises companies on online advertising, said the digital ad industry, including Google, is rife with loopholes and bad behavior, and its complexity prevents advertisers from understanding what they’re funding. “A lot of times ad buyers just shrug their shoulders and are like, ‘It’s video ads, what can you do?’” he said.
Of Bannon’s dodge and Google’s acquiescence to it, Edwards added, “Nothing about this is aboveboard.”
The vast majority of online ads aren’t purchased through direct relationships with the sites on which they appear. Instead, brands use automated ad exchanges like Google’s that rely on real-time auctions to automatically place ads in front of people who fit a brand’s target audience. As long as Google keeps the War Room website in its network, and as long as brands don’t specifically block it from their ad buys, Bannon’s site can keep collecting money. Warroom.org draws between 450,000 and 1 million visits a month, according to traffic tracker SimilarWeb.
And Google takes a cut of each dollar from ads it places on the War Room site.
“For most advertisers, having an ad placed on a Steve Bannon-affiliated outlet is the stuff of nightmares,” said Nandini Jammi, the co-founder of Check My Ads, an ad industry watchdog. “The fact that ad exchanges are still serving ads should tell brands that their vendors are not vetting their inventory, and I wouldn’t be surprised if advertisers who have found themselves on War Room request refunds.”
Companies contacted by ProPublica said they didn’t intend to advertise on War Room’s site and would take steps to stop their ads from appearing there. Land Rover called the ad “an error.” Harry Pierre, a spokesperson for Harvard’s Division of Continuing Education, said the school is working with its ad buyer to update its list of unwanted websites. Adobe said its ad was a violation of its brand safety guidelines. “We worked with the ad partner to remove the ads from the site,” a spokesperson said.
DoorDash also blamed a third-party vendor. “DoorDash’s mission is to empower local communities and provide access to opportunity for all, and we stand against the spread of disinformation that undermines those principles,” the company said in a statement.
Spokespeople for Volvo did not respond to requests for comment.
Meanwhile, Google may have banned a different site affiliated with Bannon. Until recently, the site Populist Press earned money via Google’s ad network. The site, styled to imitate the Drudge Report, was prominently linked on the War Room homepage and draws roughly 5 million visits a month, according to SimilarWeb.
According to an online disclosure from a former advertising partner, Populist Press is affiliated with August Partners, a Colorado company registered to Amanda Shea, whose husband, Tim Shea, was a partner of Bannon’s in We Build the Wall initiative. Bannon and allies used We Build the Wall to solicit money to fulfill Trump’s campaign promise of a wall on the U.S.-Mexico border. Federal prosecutors accused Bannon, Tim Shea and other associates of misusing the money, and Trump pardoned Bannon before leaving office. An attorney for Tim Shea, who is awaiting trial, declined to comment, and Amanda Shea did not respond to a request for comment.
At some point during the week of Nov. 15, Populist Press stopped showing Google ads — and it stopped being promoted on the War Room homepage. Aciman, the Google spokesperson, declined to comment on whether Google had banned Populist Press, but said that the site “is not monetizing using our services.”
Bannon’s “War Room” podcast draws a massive audience, with more than 100 million total downloads across more than 1,000 episodes, available on platforms including Apple’s. A sort of far-right “Meet the Press,” it’s the go-to talk show for pro-Trump influencers and Republican hopefuls. Frequently using violent imagery, Bannon and his guests promote new ways of trying to overturn the election, such as demanding “audits” of the 2020 ballots. Since February, Bannon has inspired thousands to take over local-level Republican Party committees, unlocking influence over how elections are run from the ground up.
On his podcast in 2020, Bannon called for the beheading of Fauci and FBI director Chris Wray. On the eve of Jan. 6, Bannon said, “We’re on the point of attack” and “all hell will break loose tomorrow.” Bannon was also reportedly involved in the Trump team’s command center on the day of the riot, which is part of congressional investigators’ interest in his testimony and records. Since the insurrection, Bannon has taken up the cause of people held on charges related to the Capitol riot.
In addition to his podcast, Bannon has spun a complex web of political and business ventures. He co-founded a training academy for right-wing nationalists that got mired in a legal dispute with the Italian government over control of a medieval monastery near Rome. A media company he launched with Guo Wengui, a fugitive Chinese billionaire on whose yacht Bannon was arrested in 2020, was part of a $539 million settlement with the Securities and Exchange Commission in September for illegally marketing digital currency. Before advising Trump, Bannon had a wide-ranging career in finance and movies, and his pardon from Trump lifted a $1.75 million lien against his house in Laguna Beach, California.
Bannon’s megaphone is not just influential. It’s also lucrative. His show and website have promoted fellow election fraud evangelist Mike Lindell’s MyPillow business, as well as a cryptocurrency investing newsletter called TheCryptoCapitalist. (The marketers of an unproven COVID-19 treatment that Bannon promoted were sued by the Justice Department and the Federal Trade Commission in April. The chiropractor behind the treatment denies the government’s accusations.) The War Room site also contains ads from MGID, a network that places content ads that look like links to related articles and sometimes promote dubious health or financial products.
It’s not clear how much money Bannon makes from online ads. But industry data shows that the links placed by MGID are much less profitable than the video ads facilitated by Google. (MGID did not respond to a request for comment.)
The issue is that major brands likely have no idea that they’re advertising on the site of one of the biggest perpetrators of bogus election fraud claims. That disconnect between brands and where their ads and money end up is a failure of digital advertising and a concern for consumers, according to industry experts.
“Over the past few years, consumers have become really vocal about buying from brands that are aligned with their values,” said Jammi of Check My Ads. “When they find out a brand is funding toxic content, that matters to them.”
A similar scenario has played out with ads that aired during Bannon’s podcast airing on a right-wing website called Real America’s Voice. In March, for instance, an ad for prescription coupon company GoodRx appeared on Bannon’s show.
“We take the trust and reputation of our brand very seriously and have strict advertising standards in place, which include not participating in heavily editorialized news programming,” the company said in an emailed statement to ProPublica. “This placement was an error in the media buying policies.”
Bannon’s show also airs on Pluto TV, a streaming service owned by ViacomCBS that is available on Roku and other devices. This month, the show on Pluto featured ads for such major companies as Men’s Wearhouse, Lexus and Procter & Gamble, according to monitoring by the liberal watchdog Media Matters. As with the Google video ads on the War Room website, these ads are not placed directly, and companies were at a loss to explain why they had appeared on Bannon’s show. (Bannon’s podcast is available in the Google Podcasts app, but the company does not place ads in it.) A Lexus spokesperson said the company’s ad was briefly on Bannon’s site and taken down. A spokesperson for Procter & Gamble did not respond to a request for comment.
“Our marketing spend follows targeted customers, rather than choosing specific programs we want to appear alongside,” said Mike Stefanov, a spokesperson for Tailored Brands, which owns Men’s Wearhouse. “The team continually refines the criteria used, but the appearance of advertising on a specific program does not necessarily mean the company agrees with or endorses the views espoused.”
“There is no longer any question: These companies knew and lied about their product’s role in the climate crisis, they continue to deceive, and they must be held accountable.”
Fossil fuel executives who testified Thursday at a U.S. House of Representatives hearing focused on decades of coordinated industry misinformation refused to pledge that their companies will stop lobbying against efforts to combat the climate emergency driven largely by their businesses.
That joint refusal came in response to a challenge from Rep. Carolyn Maloney (D-N.Y.), chair of the House Committee on Oversight and Reform—who at the end of the hearing announced subpoenas for documents the fossil fuel companies have failed to provide.
Earlier in the hearing, Maloney had asked if the Big Oil CEOs would affirm that their organizations “will no longer spend any money, either directly or indirectly, to oppose efforts to reduce emissions and address climate change.”
Big Oil CEOs unanimously refuse to pledge to Congress to "no longer spend any money directly or indirectly to oppose efforts to reduce emissions and address climate change".
Advocates for climate action pointed to the moment as yet another example of major polluters impeding planet-saving policy.
“The silence, non-answers, and repeated deflections from Big Oil’s Slippery Six exposed once and for all that the fossil fuel industry won’t back off its commitment to spreading climate disinformation and lobbying against climate action in order to protect their bottom line,” Richard Wiles, executive director of the Center for Climate Integrity, said in a statement.
“For the first time ever, fossil fuel executives were confronted under oath with the evidence of their industry’s decadeslong efforts to deceive the American people about climate change,” Wiles continued. “They not only refused to accept responsibility for lying about the catastrophic effects of their fossil fuels—they refused to stop funding efforts to spread disinformation and oppose climate action.”
“There is no longer any question: These companies knew and lied about their product’s role in the climate crisis, they continue to deceive, and they must be held accountable,” he added. “Today’s hearing and the committee’s ongoing investigation are important steps in those efforts.”
The only real backdrop to today's hearing with Big Oil CEOS is: These companies knew all about climate change in the 1980s and chose to lie about it systematically for decades, which is why we're in our current hideous political fix.
Maloney and Rep. Ro Khanna (D-Calif.), who chairs the panel’s Subcommittee on the Environment, had threatened to subpoena the industry leaders—collectively dubbed the #SlipperySix—if they declined to join the hearing, entitled, “Fueling the Climate Crisis: Exposing Big Oil’s Disinformation Campaign to Prevent Climate Action.”
The historic event included testimony from four industry executives—ExxonMobil CEO Darren Woods, BP America CEO David Lawler, Chevron CEO Michael Wirth, Shell Oil president Gretchen Watkins—and leaders from industry trade groups: American Petroleum Institute (API) president Mike Sommers and U.S. Chamber of Commerce president and CEO Suzanne Clark.
Kyle Herrig, president of the watchdog group Accountable.US, warned that “lawmakers should be wary of testimony from executives who have consistently put their industry’s bottom line over the health of the climate and the American people, no matter their rhetoric.”
Yep. We are seeing the fossil fuel savior framework all over the place. We need them, we have always needed them, and we will always need them. https://t.co/SltC52FPoy
Geoffrey Supran and Naomi Oreskes, a pair of climate misinformation scholars at Harvard University, have warned of a “fossil fuel savior frame” that “downplays the reality and seriousness of climate change, normalizes fossil fuel lock-in, and individualizes responsibility.”
Both Oreskes and Fossil Free Media director Jamie Henn observed the presence of such framing during the hearing. Henn said that “it’s striking how much all these Big Oil execs come across as hostage-takers: ‘You need us. You can’t live without us. You’ll never escape.”
It’s striking how much all these Big Oil execs come across as hostage takers: “You need us. You can’t live without us. You’ll never escape.” #SlipperySixpic.twitter.com/mT8bPZJu8j
The fossil fuel witnesses’ initial remarks and responses to lawmakers’ questions were full of industry talking points. They advocated for “market-based solutions” like carbon taxes while failing to offer specifics. They also highlighted carbon capture, utilization, and storage (CCUS) technology and hydrogen—both of which progressive green groups have denounced as “false solutions”—as key to reaching a “lower-carbon future.”
FACT CHECK: Exxon's CEO just said the International Energy Agency says the world will continue relying on fossil fuels.
That is false.
Earlier this year, the IEA said: "There is no need for investment in new fossil fuel supply in our net zero pathway."
While suggesting a long-term need for oil and gas, the executives claimed to believe in anthropogenic climate change and said fossil fuel emissions “contribute” to global heating. Some critics called them out for using that term, rather than “cause” or “drive.”
First misleading ExxonMobil statement: GHG "can contribute to climate change." No, not "can contribute." They DRIVE climate change, and they come primarily from @exxonmobil 's primary product: oil and gas.https://t.co/BO6oAofbeA
Using the the word “contribute” rather than cause, saidHuffPost environment reporter Chris D’Angelo, “downplays/dismisses the science, which shows they are the primary driver… Frankly, it’s climate denial—the very topic of this hearing.”
After inquiring about how long all four executives had been in their current roles, the panel’s ranking member, Rep. James Comer (R-Ky.), asked whether they had ever signed off on a climate disinformation campaign. They all said no—which experts and activists promptly disputed.
While progressives on the panel grilled the executives, Republicans repeatedly apologized to the CEOs for Democrats’ supposed “intimidation” efforts. Blasting the GOP lawmakers’ actions as “pathetic,” Henn said that “they really do see themselves as servants to Big Oil.”
.@RepGarretGraves (R-$759,995 oil and gas) literally explains that his state of Louisiana is completely screwed by fossil-fueled global warming but he can't and won't do anything about it because oil & gas is so profitable. "Why would we stop?"#SlipperySixpic.twitter.com/uXzf23E3a9
— Brad Johnson SUBSCRIBE TO HILLHEAT.NEWS (@climatebrad) October 28, 2021
The panel’s GOP members also tried to redirect attention to planet-heating activities of other countries, particularly China, and complained about President Joe Biden’s move to block the controversial Keystone XL pipeline, even inviting Neal Crabtree, a welder who lost his job when the project was canceled, to testify.
Republicans trotting out as a political prop a witness who supposedly lost his job due to climate policy, as if they or Big Oil ever cared about workers. Meanwhile real labor voices are speaking the truth, thank you @steelworkers: https://t.co/Fz0pk6q3wr
“The GOP’s strategy at this hearing is clear: It will not attempt to claim Big Oil *didn’t* mislead on climate,” tweeted climate reporter Emily Atkin of the HEATED newsletter. “Instead, the GOP is claiming Democrats are wasting time by focusing on climate change, and that it isn’t important to ‘everyday Americans.'”
Thanking Atkin for spotlighting the Republicans’ strategy, ClimateVoice noted that new polling shows the U.S. public does care about the issue. According to survey results released this week, a majority of Americans see climate as a problem of high importance to them and support Congress passing legislation to increase reliance on clean electricity sources.
Maloney, in her closing remarks Thursday, lamented that the hearing featured “much of the denial and deflection” seen in recent decades. She also called out the companies for not turning over requested documents, refusing to “take responsibility” for their contributions to the climate crisis, and continuing to fund groups like API. The chair vowed that her committee will continue its investigation.
Originally published on Common Dreams by JESSICA CORBETT and republished under Creative Commons License (CC BY-NC-ND 3.0
