Recent White House Study on Taxes Shows the Wealthy Pay a Lower Rate Than Everybody Else
A decade ago, in an essay for The New York Times, Warren Buffett disclosed that he had paid nearly $7 million in federal taxes in 2010. “That sounds like a lot of money,” he wrote. “But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.”
The words “taxable income” are doing a lot of work in that sentence.
Buffett owns a substantial number of shares in Berkshire Hathaway, the fabulously successful holding company he founded decades ago. As the company’s shares have soared nearly every year, his wealth has grown by billions. Under the U.S. tax code, none of that is taxed until he sells shares at a profit.
A little math shows that Buffett’s 17.4% rate meant he reported roughly $40.2 million in income in a year where Forbes said his wealth grew by $3 billion. His revelation made it possible to compare how much he was paying the government to the increase in the size of his fortune.
No one did so, and Buffett became something of a folk hero for calling for any increase in taxes.
When we obtained access to a trove of tax data on the richest Americans, it quickly became clear to our reporters that Buffett’s comparison of his own tax rate to his employees’ vastly understates the inequity of our tax system. Buffett is far from unique; the documents showed that the amount of money people like Michael Bloomberg, Jeff Bezos or Elon Musk reported to the IRS as income was infinitesimal when measured against their annual gains in wealth.
And so the first story in our “Secret IRS Files” series set out a new concept that makes more sense in our 21st century Gilded Age; we called it “the true tax rate.” We compared the annual taxes paid by the ultrarich to their wealth gains to give readers a sense of how the system really works.
From 2014 to 2018, we pointed out, Buffett paid $125 million in federal taxes. As he said, that sounds like a lot. But according to Forbes, his riches rose $24.3 billion during that period, making his true tax rate 0.1%. In a detailed written response, Buffett defended his practices but did not directly address ProPublica’s true tax rate calculation.
When we published this story, howls of rage rang out from the freewheeling corners of Twitter to the ornate offices on Wall Street. Some of the most irate critics wrote to me directly and demanded to know whether I was so @#$!@ stupid that I didn’t understand the meaning of the word “income tax.”
“This story, sadly, reeks with ‘class envy,’” one angry reader wrote. “If this was intended to get clicks, you made your money.” We’re a nonprofit and our revenue from advertising adds almost nothing to our annual budget, but I understand this reader’s larger point, which we noted in the story: The ultrarich are doing only what the current tax code invites them to do.
The debate intensified, and the White House-backed proposals on taxes advanced by congressional Democrats largely followed the traditional approach of raising rates on income. A separate bill introduced by Sens. Elizabeth Warren and Bernie Sanders to impose a 3% tax on all wealth above $1 billion is seen as having little chance of passing.
The reluctance to embrace a wealth tax is deeply rooted. The biggest donors to both parties would be hit hard by such a law. And as we pointed out in our initial story, the complexities of taxing wealth are not trivial. Several countries have tried and struggled to figure out a fair way to tax stock gains. Does an entrepreneur whose stock skyrockets in one year, and pays a big tax, deserve a rebate if his company’s shares plummet the next year?
All of that said, we took note when White House economists issued a study that used publicly available data to estimate “the average Federal individual income tax rate paid by the 400 wealthiest American families’ in recent years, determined using a more comprehensive measure of income.” Their methodology was similar to ours, and their findings — that those families gained $1.8 trillion from 2010 to 2018 and paid 8.2% in taxes — are in line with what we found in the tax data.
The authors say their findings are evidence in support of President Joe Biden’s plan for tweaking the existing system; the words “wealth tax” are not mentioned. They point to the administration’s proposal to impose higher tax rates on stock dividends and on capital gains, the profit an investor reaps when selling a stock whose value has risen.
(The Biden administration has proposed getting rid of a provision in the tax code that shields heirs who inherit stock from paying capital gains tax on the growth in value that occurred before the shares were transferred.)
None of the proposed changes come close to addressing the biggest hole in the system, which is that an ultrarich person can live comfortably off gains in wealth while never selling a single share. As our initial story pointed out, the Buffetts and Bezos of the world can borrow against the value of their considerable holdings and live comfortably without selling stock or receiving any income from dividends, which new companies like Tesla and Amazon don’t pay.
The strategy, known as “buy, borrow and die,” allows the wealthy to amass fast fortunes, pay no taxes on those gains and pass on much of the wealth to their descendants.
Herb and Marion Sandler, the founders of ProPublica, made it clear from the outset that they hoped our journalism would spur real-world change. They were not particularly interested in stories whose biggest effect was that they had “started a conversation.”
We still measure our success by tangible effects. But over the years, we have seen that the road to impact on very complex issues can begin by changing the conversation.
Lawmakers have said that some of the most egregious tax loopholes we’ve exposed, notably multibillion-dollar Roth IRA accounts, will be scrutinized as Congress takes up tax legislation in coming months.
There’s no telling where the larger conversation about taxing wealth will lead. As the White House paper suggests, a new way of thinking about equality and taxation has taken center stage. Whether that ultimately results in change remains very much an open question.
As Congress launched a historic bailout to keep businesses afloat at the outset of the pandemic, government officials stressed that the loans were for mom-and-pop operations that didn’t have another easily available lifeline.
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“This was a program designed for small businesses,” then-Treasury Secretary Steven Mnuchin said, as companies like Shake Shack and Potbelly made headlines for grabbing millions from the newly created Paycheck Protection Program. “It was not a program that was designed for public companies that had liquidity.”
House Minority Leader Kevin McCarthy was even clearer. “We will go after those big companies that cheat the system,” he told Fox News that spring.
But the tough talk hasn’t translated into action. Instead, a ProPublica review has found, the government gave out generous loans to companies that may not have needed them. And it has often forgiven the loans, despite having said that publicly traded companies would be unlikely to merit such generous treatment.
Take Lazydays Holdings, a publicly traded collection of RV dealerships that got a nearly $9 million loan. The company had $31 million in cash on hand at the end of 2019, and then prospered as Americans turned to RVs for socially distanced vacations. Lazydays’ stock price has shot up more than 500% during the pandemic. (Lazydays did not respond to requests for comment.) The government has forgiven nearly all of it, allowing Lazydays to keep the money.
The ProPublica analysis of Securities and Exchange Commission filings found at least 120 publicly traded companies that received loans of more than $500,000, grew their revenues last year and have been allowed to keep the money.
In addition, at least 30 companies announced plans to go public after receiving their loans, bringing in truckloads of investor cash that they often used to pay off other debts — but not the ones they owed to the federal government, all of which were forgiven.
Overall, ProPublica found at least $250 million that went to publicly traded companies with growing revenues and that has already been forgiven by the government. That’s just a sliver of the $800 billion PPP program. But it’s also almost certainly a significant undercount of the amount of taxpayer dollars that went to well-heeled companies. The count, for instance, doesn’t include any of the billions of dollars that went to firms backed by giant private equity funds. Their finances are not publicly disclosed.
The government had no rules requiring companies to pay back loans if it turned out they didn’t need the money.
Instead, the government had one modest requirement particularly relevant to publicly traded companies: It made all applicants for loans attest that pandemic-related uncertainty made the loan “necessary.” And it warned in a follow-up advisory that having access to cash elsewhere — as public companies usually do via investors — would make it difficult to take that pledge in good faith.
But the government has rarely followed up. The Small Business Administration, which oversees the PPP, discarded a questionnaire it had begun sending companies to quiz them on their financial situations.
In response to questions from ProPublica, the SBA said that it is examining all forgiveness applications to make sure they comply with the rules. “We are continuously aware of our role in the stewardship of federal funds to ensure the integrity of our programs, and we have rigorous processes in place to ensure appropriate oversight of loans of all sizes,” spokesperson Christalyn Solomon said.
But the SBA declined to provide evidence of how it is evaluating whether public applicants were honest when they said their loans were “necessary.” Experts say that’s because lawmakers offered no specifics on what they meant by “necessary” from the outset, leaving the program’s administrators with no objective basis on which to demand repayment.
“Congress needed to say to the SBA, ‘This is what constitutes need,’” said Liz Hempowicz, director of public policy at the nonprofit Project on Government Oversight. “If you have access to excess capital in any form, that absolutely should’ve been baked into the program from the beginning.”
By many metrics, the federal government’s response to the pandemic succeeded in alleviating the worst effects of the most abrupt pause in economic activity America has ever experienced. Unlike most safety net programs, it did so by erring on the side of generosity. The government’s supplemental unemployment insurance and stimulus checks were enough to actually lower poverty last year.
The same philosophy applied to relief for businesses. The government kept the PPP application simple to encourage companies to participate, and banks were paid to move the loans along without asking many questions. While the program was built on the chassis of the SBA’s standard loan program, it dispensed with many of its rules, such as a requirement that applicants demonstrate they couldn’t obtain reasonably priced credit elsewhere.
In the first round of the bailout, which was quickly depleted, companies did not have to prove that they had actually been impacted by COVID-19.
Instead, the application required them to certify that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the applicant.” Facing confusion from corporate lawyers who said the language was vague, the SBA released further guidance in late April 2020.
The clarification specifically warned public companies that they probably wouldn’t meet the threshold. “Borrowers must make this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity,” the agency wrote. “It is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith.”
That admonition had some effect. According to a study forthcoming in the Review of Corporate Finance Studies, half of all public companies qualified for the loans, but only 42% of those eligible chose to take them. That compared to 87% of all eligible private companies. (The PPP generally excluded companies with more than 500 employees.) On average, the 812 public firms that took loans had less cash and more debt than those that didn’t borrow. The public companies collectively borrowed $2.2 billion, but 13.5% of them repaid their loans, mostly soon after the SBA’s April guidance.
But because Congress didn’t impose any actual requirements to return the money, many companies didn’t. Some even shrugged off congressional pressure to do so.
In May 2020, a House oversight subcommittee sent letters asking five large public companies to return their $10 million loans. One of them did. The other four refused, and they eventually all receivedforgiveness (with one asking for slightly less than the whole amount).
They included a contractor for the U.S. Postal Service called EVO Transportation and Energy Services, which hasn’t filed financial reports for all of 2020 after discovering problems with its 2019 disclosures.
The company didn’t respond to a request for comment.
The SBA began processing forgiveness applications after the first round of PPP loans was exhausted in August 2020. It decided that all borrowers of less than $2 million would automatically be “deemed” truthful in their pledges that their loans were necessary.
For those who borrowed more, it issued a nine-page “loan necessity questionnaire” that asked about the recipient’s ownership structure, cash on hand pre-pandemic, revenues during the time when the loan was supposed to be used and access to other capital.
That didn’t go over well.
Last December, a construction industry trade group sued, saying the SBA questionnaire violated the original guidance that implied forgiveness would be determined by what companies knew at the time they applied, without regard to what happened later. In July, the agency stopped using the questionnaire, saying that the form was burdensome for borrowers and a drain on auditing resources.
Without companies’ answers, the SBA has developed a machine-learning algorithm that flags loans for signs of potential fraud, such as payroll numbers that don’t add up. As of last month, agency data showed, investigators had reviewed 65,000 loans, 8,000 of which, totaling $2.7 billion, were referred for further analysis. Of those, only 300 loans were for more than $2 million.
The agency declined to say how many forgiveness applications have been rejected after going through this process, or how, without using the discontinued questionnaire, it has evaluated whether the loans were necessary.
The Securities and Exchange Commission also issued inquiries to some companies about their representations to investors, but a spokesperson declined to say whether any enforcement actions had been taken as a result.
A former finance manager at one company that received millions in PPP money and hasn’t paid it back said that he’d hoped the government would more closely examine his employer’s finances.
“I remember that questionnaire coming out, and we were thinking, ‘This might not get forgiven,’ because our cash position was a lot better at the end of the year,” the employee said. Since the questionnaire has been thrown out, he figures, companies that didn’t need the cash will end up keeping it. “The only reason to give it back is public sentiment. At that point, it’s free money.”
Waste is inevitable in any economic rescue mission. But some of it is avoidable. Experts say Congress could have created a threshold of financial health at which PPP loans would have to be repaid — without denying the lifeline many firms needed.
“We’re talking about a ridiculously low interest rate,” Hempowicz said. “There is a benefit either way, especially for bigger companies, to have received these loans, even if they aren’t then converted into grants.”
All PPP loans were forgivable if the cash was mostly spent on payroll. If a company was still seeing steady business, it could use that freed-up income for other priorities, like paying off debt and buying other companies.
That’s the happy outcome for many companies that performed well in 2020, often profiting from the very pandemic that they said put them in the position of needing a taxpayer bailout.
A chain of powersports dealers called RideNow collectively received $19 million, despite nearly tripling its net income from 2019 to 2020 as interest in motorbikes and all-terrain vehicles skyrocketed. In March 2021, the publicly traded online motorcycle sales platform RumbleOn announced it would acquire RideNow to create what it called the “only omnichannel customer experience in powersports and the largest publicly traded powersports dealership platform.” RideNow’s loans were fully forgiven in June, and RumbleOn’s forgiveness application for its original $5.1 million loan is pending.
Other examples abound. Acme United Corporation saw its sales increase 15% in 2020 because of strong demand for first-aid supplies. Its $3.5 million loan was fully forgiven. So was the $2.7 million borrowed by Conifer Holdings, an insurance company that attributed revenue growth to lower claims by businesses that were temporarily shuttered but maintained their policies — which explicitly did not cover business interruption due to infectious diseases. And the ammunition manufacturer Ammo Inc. kept $1 million after seeing its revenues triple to $62.5 million in 2020, fueled by increased consumer demand for bullets. None of those companies returned requests for comment.
Public companies aren’t the only borrowers that took more than they likely needed. Securities and Exchange Commission filings are also a window into privately held companies that have raised money in the public markets or later listed themselves on an exchange.
The venture-capital-backed person-to-person lending marketplace Prosper files earnings statements because it sells its loans to investors. The company had $64 million in unrestricted cash on hand at the end of 2019, but it still suspended its 401(k) match and cut salaries above $100,000 across the board in early 2020 — a collective reduction in compensation almost equal to the $8.4 million PPP loan it received. The pay cut also applied to the C-suite, but they had already received up to 10% base salary bumps in March 2020, so it hurt less.
In November, the company instituted a retroactive two-year bonus plan for executives — potentially totaling $3 million for five people.
Prosper did not respond to a request for comment, and its forgiveness request is still pending.
Some companies did pay the money back. At least 27 companies decided to do so while in the process of going public, since the sale of stock often generates large amounts of cash.
Luminar Technologies, an autonomous driving technology startup, gave back its $7.8 million before its Nasdaq debut.
“We decided to return the PPP loan as soon as we realized we didn’t need it anymore,” said Anthony Cooke, Luminar’s vice president for policy and regulation. “We decided to apply for a PPP loan because it gave us the flexibility to withstand uncertain times while protecting our employees. We were able to protect employees, grow our business and take it public in 2020, and we repaid our PPP loan as soon as it was feasible.”
Other companies kept the taxpayer money, even while paying off other debts.
That’s what another company in the autonomous driving business did. A Ford-backed designer of sensors called Velodyne Lidar got $10 million in government money, which a spokesperson said was “used to support our employees during a time of uncertainty.”
The company went public in September of last year, giving it $222 million in cash. The government forgave Velodyne’s loan this June.
Battery-powered bus maker Proterra got $10 million. Its revenues increased last year, and it went public this year. The company decided to keep the money, which spokesperson Shane Levy said “supported our ability to maintain a full workforce as we’ve navigated the uncertainty caused by the COVID-19 pandemic.” A Volkswagen- and UPS-backed self-driving truck company called TuSimple kept its $4.1 million after going public in a deal that generated about $1 billion; a spokesperson didn’t respond to a request for comment.
Several companies hadn’t yet had any income at all — they had been funded by investors through their entire existence, suggesting that they probably had access to other credit.
A pre-revenue electric vehicle maker called Faraday Future got $9.2 million. This past July, it launched a public offering that generated $1 billion; its loan forgiveness request is still pending. A spokesperson told ProPublica that the investor proceeds will be “budgeted to produce vehicles,” not to pay back taxpayers. Space launch services company Astra took $4.9 million in government money. As it applied for forgiveness in June, it told investors that COVID-19 “has not materially affected our future growth outlook” and that it had seen “some signs of positive effects for its long-term business prospects and partnerships as a result of the pandemic.” Astra’s Nasdaq debut in July generated $463 million, and its PPP loan was forgiven last month. A spokesperson didn’t respond to a request for comment.
Another category of large PPP recipients consisted of clinical and early commercial-stage medical device and pharmaceutical companies, which are heavily investor-backed and which sometimes profited from COVID-related activity. A biotech company called PolarityTE, which makes regenerative tissue products, cut staff by 47% in 2020 and raised revenues by 79% by serving as a COVID-19 testing lab. It received $3.6 million, which was forgiven; the company didn’t respond to a request for comment.
Anything having to do with residential real estate also did well.
Fast-growing homebuilder Dream Finders Homes saw 52% earnings growth in 2020, which it attributed in part to pandemic-induced migration to suburban developments. It went public in January 2021, generating $134 million, and was granted full forgiveness on its $7.2 million loan. The company didn’t respond to a request for comment.
The home improvement services platform Porch told investors that spiking home sales in late 2020 helped it rebound from a spring business dip. It applied for forgiveness for its $8.1 million PPP loan in December, the same month it debuted on Nasdaq. With $122 million of the proceeds from its IPO, it bought four other companies; it hasn’t paid back the PPP loan, which was forgiven in June. A spokesperson declined to comment.
Finally, the type of companies that arranged the capital for all these public offerings and funding rounds — investment advisory firms — also dipped into the PPP.
Cohen & Company, a financial services firm with $2.8 billion under management, got $2.2 million. The firm saw dramatically higher income last year. Nearly all of its loan was forgiven. Another asset manager and investment banking firm, JMP Group, had $3.8 million forgiven despite having $50 million in cash at the end of 2019 and 15% revenue growth in 2020. Neither firm responded to a request for comment.
Some investment advisory firms may have used inflated claims. One study found that at least 6% of the $590 million granted to those firms was more than they could have justified given their payroll, which has to be reported to the SEC.
Writing laws is often a balancing act. One approach draws bright lines that lay out exactly what’s required, which companies often figure out a way to game. The other leaves rules more vague, relying on the regulated party to abide by the program’s intent. That eases the process for beneficiaries who really need help, but runs the risk the others will also benefit.
The PPP leaned toward the latter approach. It told companies that they probably shouldn’t apply if they had other resources at their disposal, but gave them a window to do so if they wanted. In order to make that work, there would need to be a credible threat of enforcement, or at least public shaming if they took advantage of funds meant for the truly disadvantaged.
Erik Gordon, a professor at the University of Michigan’s Ross School of Business, said the SBA should have held public companies to a higher standard of need and then audited them to ensure they’d been truthful.
“If I ran the SBA, I would say, ‘You certified that this loan request was necessary — walk us through that. You had this much cash, or you had this much loan facility open or you had no trouble raising this money,’” Gordon said.
Of course, if you don’t want public companies to apply, you could just bar them from applying. That’s what Congress did when it created a second round of the PPP in December 2020. That time around, companies were also required to demonstrate that their revenues had declined substantially in at least one quarter in order to qualify.
Sam Rosen, a finance professor at Temple University who co-authored the study on public firm participation in the PPP, said it isn’t that complicated. “If we were in a similar situation in the future, do we want public firms to have access to this?” he said. “I think it’s just about being clear up front.”
“Ever notice how ‘deficit hawks’ vote for record-high defense spending, yet claim bills that help people and challenge lobbyists are ‘too much?'” asked Rep. Alexandria Ocasio-Cortez.
Sen. Joe Manchin on Thursday derided his own party’s plan to spend $3.5 trillion over the next decade to combat the climate crisis, invest in child care, and expand Medicare as “fiscal insanity.”
“All this operatic moaning about $3.5 trillion is ridiculous hypocrisy. Manchin has casually voted for nearly three times that for defense spending.”
But progressive lawmakers and commentators were quick to point out that Manchin (D-W.Va.)—along with other conservative Democrats who are currently standing in the way of Democrats’ reconciliation package—have had no problem greenlighting the Pentagon’s increasingly bloated budget year after year after year.
“Ever notice how ‘deficit hawks’ vote for record-high defense spending, yet claim bills that help people and challenge lobbyists are ‘too much?'” Rep. Alexandria Ocasio-Cortez (D-N.Y.) asked in a tweet Thursday evening.
“All this operatic moaning about $3.5 trillion is ridiculous hypocrisy. Manchin has casually voted for nearly three times that for defense spending”
Noting that the reconciliation package includes yearly spending of $350 billion while the proposed military budget for Fiscal Year 2022 is $770 billion, the New York Democrat wrote: “Guess which got rubber stamped and which gets deemed a ‘spending problem.'”
Last week, the House of Representatives passed the $770 billion military policy bill—which includes $740 billion for the Pentagon alone–by a vote of 316-113, with just 38 Democrats voting no. The Senate is expected to pass its version of the National Defense Authorization Act in the coming days.
In a column published late Thursday, The Week‘s Ryan Cooper observed that Manchin “voted for every single one of the military budgets over the last decade—in 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018, 2019, and 2020.”
“He voted for all $9.1 trillion,” Cooper wrote. “While he occasionally complained about wasteful military programs and asked for an audit of the Pentagon, these quibbles were never enough to get him to vote differently. He helped inflate the already-bloated war budget and regularly boasted about thus ‘supporting’ the troops. This year, he did it again.”
“So on one level, all this operatic moaning about $3.5 trillion is ridiculous hypocrisy,” Cooper continued. “Manchin has casually voted for nearly three times that for defense spending—money that killed hundreds of thousands of people and turned half the Middle East into a smoking crater. A modest fraction of that total to help parents pay their bills, give seniors dental coverage, fight climate change, and so forth is not some intolerable burden on the economy.”
West Virginia activists in kayaks presented that critique directly to Manchin on Thursday as the Democratic senator listened from his yacht:
In ongoing talks over the reconciliation package, Manchin is pushing for a top-line spending level of $1.5 trillion. That figure is at least $2 trillion less over 10 years than Democrats’ current plan, which would spend $3.5 trillion over the next decade.
As Win Without War executive director Stephen Miles noted Thursday, Manchin’s preferred $1.5 trillion number is “less than we’ll spend at the Pentagon over the next two years.”
“And Manchin’s talking about a DECADE of spending across the entire rest of the government,” Miles wrote on Twitter. “During that time we’ll spend somewhere north of $8 trillion, possibly closer to $10 trillion. Just. at. the. Pentagon.”
Originally published on Common Dreams by JAKE JOHNSON and republished under a Creative Commons license (CC BY-NC-ND 3.0).
“We continue to bankroll the very fossil fuel companies responsible for the climate crisis, then wonder why our planet is on fire.”
A new report released Wednesday identifies $86 billion worth of offshore tax loopholes that a dozen U.S.-based oil and gas companies exploit each year as part of a “tax bonanza,” a finding that comes as climate justice advocates push Congress to eliminate subsidies to the fossil fuel industry.
“Our government cannot continue to bankroll climate destruction,” Friends of the Earth tweeted Wednesday.
NEW REPORT: Exxon Mobil currently relies on a tax loophole worth nearly one BILLION dollars. Enough is enough — time to gut all $121 billion in fossil fuel subsidies. Our government cannot continue to bankroll climate destruction.#EndFossilFuelSubsidieshttps://t.co/1gdN6oEgQt
The report (pdf), compiled by Friends of the Earth, Oxfam America, and BailoutWatch, reveals the consequences of “two esoteric provisions in the tax code worth tens of billions of dollars to Big Oil’s multinational majors,” including ExxonMobil, Chevron, ConocoPhillips, and other polluters most responsible for the climate emergency.
As a result of the GOP’s 2017 tax law, corporations that drill overseas benefit from special treatment under the Global Intangible Low-Tax (GILTI) framework, which covers Foreign Oil and Gas Extraction Income (FOGEI).
The Treasury Department estimates that repealing the Trump-era exemption for FOGEI would raise $84.8 billion in revenue from just 12 companies that are currently eligible for the carveout, the report notes.
“It is unfortunate but not surprising that the handful of companies benefitting from these loopholes are lobbying to protect their special treatment.” —Chrive Kuveke, BailoutWatch
Another corporate handout, the so-called dual capacity loophole, is “a longstanding gimmick” wherein fossil fuel giants “artificially inflat[e] their foreign tax bills” to evade U.S. taxes.
Although they are permitted to claim tax credits for taxes paid to foreign governments, U.S. companies are not allowed to do so for non-tax payments such as royalties.
“In practice, however, the categories often are commingled—particularly when companies make a single combined payment including both taxes and fees,” the report explains. “A foreign country may even try to disguise non-tax payments as a tax, knowing that in many cases a multinational company may receive a foreign tax credit from its home country. Existing regulation gives dual capacity taxpayers vast latitude to assert what portions of their payments are taxes eligible to offset U.S. tax bills.”
Eliminating the dual capacity loophole would raise at least an additional $1.4 billion, according to the Biden administration, while the Joint Committee on Taxation puts the figure somewhere between $5.6 billion and $13.1 billion. The report points out that “the estimates vary so widely in part because we have precious little visibility into Big Oil’s payments to governments—and that’s just how the companies want it.”
“As Democrats propose closing loopholes to help cover the cost of their $3.5 trillion reconciliation package,” the report states, “these obscure subsidies present a rare chance to act on climate, fund infrastructure, and promote tax fairness in a single stroke.”
While the House Ways and Means Committee’s markup of the Build Back Better Act includes a tax reform proposal that would reverse the FOGEI carveout and the dual capacity loophole, it would leave intact at least $35 billion in federal subsidies for domestic fossil fuel production—despite President Joe Biden’s call to phase out polluter giveaways over a decade.
House Democrats’ failure to stop showering Big Oil with public money—a move supported by a majority of people in the U.S. and many, though not all, Democratic lawmakers—has drawn progressives’ ire.
“The House bill made a decent start by targeting Big Oil’s international tax loopholes, but it went nowhere near far enough,” Lukas Ross, Climate and Energy Justice program manager at Friends of the Earth, said Wednesday in a statement.
Senate Majority Leader Chuck Schumer (D-N.Y.) “needs to lead on climate and ensure that all $121 billion in fossil fuel subsidies are repealed in the final package,” Ross added.
According to Daniel Mulé, policy lead for Oxfam’s Extractive Industries Tax and Transparency project, “U.S. Big Oil companies like Exxon and Chevron have fought tooth and nail to keep the payments they make to governments around the world a secret, while paying lip service to the global movement for payment transparency.”
“This secrecy,” said Mulé, “has a potential tax impact in the U.S. as well, as it makes it all the more difficult to discern if U.S. oil and gas companies are illegitimately inflating their foreign tax credits.”
The report draws attention to several legislative proposals that would do away with subsidies for domestic fossil fuel production as well as tax exemptions for foreign extraction, including:
The No Tax Breaks for Outsourcing Act from Sens. Chris Van Hollen (D-Md.), Sheldon Whitehouse (D-R.I.), and Dick Durbin (D-Ill.), and Rep. Lloyd Doggett (D-Texas);
The Corporate Tax Dodging Prevention Act from Sens. Van Hollen, Sanders, Whitehouse, Kirsten Gillibrand (D-N.Y.), and Jack Reed (D-R.I.), and Reps. Jimmy Gomez (D-Calif.) and Jan Schakowski (D-Ill.);
The End Oil and Gas Tax Subsidies Act from Reps. Earl Blumenauer (D-Ore.), Sean Casten (D-Ill.), Donald McEachin (D-Va.), and Katie Porter (D-Calif.).
The report was released the same day members of the Congressional Progressive Caucus urged House leaders to include a repeal of domestic fossil fuel subsidies in the Democrats’ Build Back Better Act.
“Instead of creating jobs,” the progressive lawmakers wrote, the subsidies “widen the profit margin of fossil fuel companies.”
We continue to bankroll the very fossil fuel companies responsible for the climate crisis, then wonder why our planet is on fire.
Thank you to the reps calling for an end to Big Oil’s $86 billion in offshore tax loopholes — as well as their $35 billion in domestic handouts! pic.twitter.com/hY0EVsOMK4
The report emphasizes that fossil fuel champions—including the Exxon lobbyist who was caught on camera discussing how the company benefits from offshore tax loopholes and intends to further undermine climate action—are fighting hard to preserve billions of dollars in taxpayer-funded handouts.
“Big Oil isn’t going quietly,” said Chrive Kuveke, an analyst at BailoutWatch. “Since Biden became president, it is unfortunate but not surprising that the handful of companies benefitting from these loopholes are lobbying to protect their special treatment.”
Bond jump should have been seen coming, yet the reaction is nevertheless a big rush to the exits
In what some are calling a Taper Tantrum, the markets dropped with a sense of purpose today, with little bounce after the close in the futures market. With Fed rate hikes now a certainty, inflation concerns real, and bond yields spiking today, there were plenty of things to point to as catalysts.
This could be, and this is extremely likely regardless of what endless permanent-bull commentators would have you believe, the start of a tough two months, with late September and October being known as a very dangerous time in markets, especially whey they exhibit pre-crash signs and warnings.
Insane valuations that have preceded past September / October disasters are back
It’s unbelievable that the fall of 2008, when the financial crisis came to a head with the Lehman Brothers collapse, was 13 years ago, and the prior peak in November 2007 was a full 14 years.
I guess we can observe that we now have the iPhone 13, with the iPhone “1” which was just called “iPhone” at the time, has been marking the time with yearly iterations, not always named in sequence:
iPhone: June 29, 2007
iPhone 3G: July 11, 2008
iPhone 3GS: June 19, 2009
iPhone 4: June 24, 2010
iPhone 4S: October 14, 2011
iPhone 5: September 21, 2012
iPhone 5S & 5C: September 20, 2013
iPhone 6 & 6 Plus: September 19, 2014
iPhone 6S & 6S Plus: September 19, 2015
iPhone 7 & 7 Plus: September 16, 2016
iPhone 8 & 8 Plus: September 22, 2017
iPhone XS, XS Max: September 21, 2018
iPhone 11, Pro, Pro Max: September 20, 2019
iPhone 12, Mini, Pro, Pro Max: October 23, 2020
iPhone 13, Mini, Pro, Pro Max, September 24, 2021
And during all these years, for the most part the artificially inflated Fed “bubble of everything” has continued.
Here is a disturbing chart, courtesy of Elliott wave International at Elliottwave.com:
This behavior, seen across nearly all markets since extreme measures were taken to respond when the March 2020 pandemic crash occurred, has been building to a crescendo. And today was a tiny pin-prick that could augur ill for October.
What this has led to, naturally, is an overvaluation beyond anything seen in modern times, perhaps 500 years. The previous all-time-peak for overvalued stocks (S&P) was in March 2000. August 2021 is far beyond that peak and likely will stand as the most overvalued moment for decades.
Unless, that is, somehow the insane valuations are pushed even higher. Which is unlikely, but not impossible, given the state of delusional euphoria that pervades the financial markets.
Many 2021 characteristics, such as the Crypto, NFT frenzy will be seen in a similar light to the tech stocks in 2000 or Real estate in 2007
There’s a sense that it is normal for bored apes NFTs to experience a multimillion dollar bidding wars, or for crypto alt coins with dog mascots to explode 10,000% or more during this, possibly final phase, of what has been called the “everything bubble”.
And why not? If you bought and held almost anything in March 2009 or again at the bottom of the crash on March 16, 2020, then you have seen nearly continuous gains that you’d be eager to risk on, well, anything.
And if you were 10 years old in the year 2000, you’d not have known about NASDAQ drops that take around 13 years to regain what was lost after a 1 year bear market, so why worry?
Perhaps the Fed and the markets seemingly infinite ability to expand and inflate will go on for years. Or the next bear, possibly the one that already kicked off today, and will accelerate into October, is one to take seriously.
Shocking. DTJ sues his own niece, Mary Trump along with The New York Times and several reporters (Suzanne Craig, David Barstow and Russ Buettner) for obtaining his tax documents used to investigate his finances.
The 2018 article which won a Pulitzer Prize which showcased how the former president “participated in dubious tax schemes during the 1990’s including instances of outright fraud, that greatly increased the fortune he received from his parents”.
The report reveal confidential tax returns and financial records, highlight that Trump received at least $413 million from his father’s real estate empire, although he always touted himself as a “self-proclaimed” billionaire.
“I think he is a loser, and he is going to throw anything against the wall he can. It’s desperation. The walls are closing in and he is throwing anything against the wall that he thinks will stick. As is always the case with Donald, he’ll try and change the subject.”
Facebook’s Mark Zuckerberg is said to be working on a rebranding plan. According to The New York Times, the plan which has come to be known internally as “Project Amplify” was signed off by the CEO and included a boost of pro-Facebook stories (written by the Facebook Team) onto its billions of users.
An internal meeting back in January hatched the initiative to showcase “positive” stories about the social network platform on its largest digital real estate, the News Feed.
Based on the report from the Times, some executives present at the meeting were “shocked” by the proposal.
Project Amplify also made strong attempts for the Facebook platform to distance itself from any scandals (i.e. minimizing access to negative reports) relating to Zuckerberg, while simultaneously, ramping up new stories that provided a more flattering spin on the social network.
China is at the forefront of government opposition to cryptocurrencies
The central bank of China stated as a declaration that all transactions involving Bitcoin and any “virtual” currencies illegal, according to the AP.
This seems to be an escalation of the various methods being used to block and prohibit the use of any currency or “money” outside the direct control of the Chinese government.
In a notice released by the central bank the reasoning was elaborated on – stating that digital currencies such as Bitcoin, Ethereum and others disrupt the current financial system and encourage and help facilitate money-laundering and other crimes.
“Virtual currency derivative transactions are all illegal financial activities and are strictly prohibited,”
–the People’s Bank of China
The price of Bitcoin fell, to $41,180, in the hours after the announcement. Other major cryptocurrencies also fell. . Ethereum dropped almost 10%, falling from $3,100 to around $2,758.
Those levels appeared to be a short term low as there has been a recovery bounce since the initial reaction selloff.
China is gearing up for it’s own ‘innovations’ involving digital currencies and transactions
This clampdown follows the banning of Bitcoin mining and an exodus of a large number of Chinese mining operations, many relocating to the US, Europe, Southeast Asia and elsewhere. At the peak, Chinese miners accounted for around 3/4 of the world’s electricity consumption related to crypto mining, according to the Cambridge Bitcoin Electricity Consumption index.
That share is still the highest, though far lower, with the USA being the second largest consumer of electricity used for Bitcoin mining.
There is a worldwide “showdown” of sorts building, with cryptocurrency adherents touting, often with great resolve, the privacy, anonymity and “freedom” of using the coins, while many governments, China, and Turkey being outspoken, consider the potential losses that could come from allowing private actors to control financial transactions.
Although fiat currencies all have cash, paper bills, that can also be used anonymously, the potential criminal laundering has government controls and laws in place to minimize (or at least attempt to minimize) the magnitude of the problem.
tumbles
Governments getting increasingly worried as crypto adoption continues to expand worldwide
Many governments, including the People’s Bank of China, are developing electronic versions of the local fiat currency, such as China’s yuan for example. to facilitate cashless transactions which, unlike with Bitcoin, can be more easily tracked and controlled by the local authorities, communist or otherwise.
Calls and warning are also building with Regulators in many countries, including the US, warning of the dangers and emphasizing that they want cryptocurrencies to have greater oversight.
For example, Gary Gensler, chairman of the Securities and Exchange Commission, recently said that investors need more protection in the cryptocurrency market, calling the current state of the largely unregulated market “rife with fraud, scams and abuse” and compared it to the “Wild West.”
The SEC has already cracked down on cases of alleged freud involving crypto, but Gensler believes that the agency will need more authority from Congress to and funding to adequately regulate the market..
As a result, miners have been moving operations out of China.
Two years ago, China alone accounted for around three-quarters of all the electricity used for crypto mining, by far the most in the world, according to the Cambridge Bitcoin Electricity Consumption index.
Expect more government announcements involving crypto and new ways to try to control or inhibit its proliferation
The looming showdown appears heading for a significant and dangerous climax, with both sides, crypto enthusiasts and private holders and users of the coins on the one side, and, in some cases, terrified governments on the other wanting to outlaw and stamp out the entire sector.
In the US this will be difficult, with so many high profile and powerful individuals and companies already embracing the idea that the future will contain, at least for the foreseeable time frame, both the government controlled fiat system and the surging and diverse cryptocurrency systems.
When the iOS 15.1 update drops for the general public (likely soon as it’s already been seeded to beta testers since Monday) it will feature the ability to add your proof of vaccination status to the Health app and then create a vaccination ID card in Apple Wallet.
Many businesses, venues, restaurants, and more are requiring proof of vaccination for entry. For example California is the first state where proof of COVID vaccination or negative test for indoor events over 1,000 people.
The new feature in iOS 15.1 is made possible by the support Smart Health Cards which are valid for California, Louisiana, New York, Virginia, Hawaii, and some Maryland counties, as do Walmart, Sam’s Club, and CVS Health.
Above: ID in iPhone Wallet
Therefore, using this system you would be able to to look up their information in state databases, if you are in any of the states listed above, but if you were vaccinated through at Walmart or CVS it will also be feasible to add your information to the Health and Wallet.
Once you have gone to the web site for your state, for example in California it would be found at https://myvaccinerecord.cdph.ca.gov where you can type in personal information such as name and date of birth to get access to your records and status.
Though iOS 15 already has the ability to download the information to your Health app, and you can do this today, the last step, adding an ID to your wallet from the health app will not be possible until you have upgraded to iOS 15.1.
The record is locked to your name and can only be used by you. There will be a QR code that you will first download to your health app on the iPhone, then, once it is in the health app there will be a prompt to allow you to “add to wallet”. By clicking that link a vaccination ID car, with the QR code will be generated and added to your wallet.
iOS 15.1 is likely to be available under > General > software update in your phone’s Settings app within days. (Our guess is by Monday, September 27, 2021)
Tap the download link on your iPhone or iPod touch.
Tap Add to Health to add the record to the Health app.
House Bill Would Blow Up the Massive IRAs of the Superwealthy
Legislation currently making its way through Congress would take a sledgehammer to the massive individual retirement accounts built up tax-free by a select group of the ultrawealthy.
The proposal, which is part of the infrastructure and tax package advancing in the House, targets the jaw-dropping IRAs accumulated by multimillionaires and billionaires such as tech investor Peter Thiel, which were first reported by ProPublica earlier this year. Those accounts — Thiel’s alone was worth $5 billion in 2019 — have allowed some super-wealthy Americans to turn their Roth IRAs, tools meant to incentivize middle-class retirement saving, into supersized tax shelters.
The proposed reform, put forward by House Ways and Means Chairman Richard Neal, D-Mass., would effectively cap the total amount someone could hold in a Roth at $20 million and compel the holders of the giant accounts to withdraw anything over that limit. Separately, individuals would have to add up the balances of their retirement accounts — including Roths, traditional IRAs, 401(k)s and 403(b)s — and every year withdraw half of any amount over $10 million. The provisions would only apply to individuals with taxable income of over $400,000 or couples making over $450,000.
The reform wouldn’t affect the overwhelming majority of Americans, whose retirement savings (if they have any) are far more modest — the average Roth was worth just $39,108 at the end of 2018.
“Incentives in our tax code that help Americans save for retirement were never intended to enable a tax shelter for the ultra-wealthy,” Neal said earlier this year. “We must shut down these practices.”
Should the bill pass, it could have profound implications for PayPal founder Thiel, whose gargantuan Roth stunned lawmakers, spurring Neal to vow a crackdown. Thiel wouldn’t owe any tax up front and no early withdrawal penalties would apply, but he’d be required to move billions out of the tax-advantaged account. And any gains on investments made with that money would no longer be sheltered from taxes, potentially creating hundreds of millions of dollars in future tax liabilities.
Above: “I’ll Take Your Questions” book on inside secrets of the Trump final days, by Stephanie Grisham for aide to both Trump and Melania
The great appeal of the Roth IRA is that once money is inside it, any income generated — such as capital gains from selling a stock, investment interest or dividends — is tax-free, as long as the holder waits until he or she is 59 and a half to withdraw it. (Thiel hits that mark in 2027.) In a traditional IRA, by contrast, money that’s withdrawn counts as income and is taxed.
The IRA reforms are part of a slate of proposals designed to eliminate loopholes and boost tax rates on rich individuals and corporations.
Several of the changes address revelations contained in The Secret IRS Files, a series of ProPublica stories published this year that are exploring the ways the very richest Americans avoid paying taxes. Usually such efforts remain secret, but ProPublica has obtained a trove of tax records covering thousands of the country’s richest people. The records reveal not only the diverse array of tax-avoidance techniques used by the rich, but also that some of the very richest have consistently found ways to avoid taking income, so they pay little or no taxes, even as their wealth multiplied to historic levels.
The current House plan falls short of President Joe Biden’s more ambitious proposals to combat wealth inequality through the tax code. But experts say it would significantly increase the taxes paid by high-income Americans. Among other things, it would all but eliminate a major deduction created by President Donald Trump’s 2017 tax law that, as ProPublica recently reported, showered massive tax breaks on some of the richest families in the country.
Given the stakes for a small group of wealthy and powerful Americans, it’s unclear whether the IRA proposal, along with the rest of the package, will become law. It must pass the House and make it through the Senate, where it will likely need the votes of all 50 Democratic senators to pass. Capitol Hill staffers say the bill remains fluid and provisions could still be cut, added or modified.
For now, however, the proposal has alarmed those who stand to lose the most. Three tax lawyers told ProPublica that clients with giant IRAs have reached out to them, worried about the potential reforms. Already a lawyer and an accountant are offering a paid webinar that pitches strategies to help owners of large IRAs get around the proposed rules.
A spokesman for Thiel didn’t respond to a request for comment.
The tax proposals have drawn opposition from Republicans on Capitol Hill. “This is very bad news for the U.S. economy,” said Ways and Means Committee ranking member Rep. Kevin Brady, R-Texas, in an interview this week.
A budget analyst at the anti-tax Heritage Foundation specifically criticized the IRA reform proposals as “stifling retirement savings and decreasing the economy-wide investment in future productivity.”
Neal announced his plans to curb the size of mega IRAs in July following ProPublica’s story revealing how Thiel and other billionaires had amassed giant retirement accounts using techniques largely unavailable to most taxpayers. Other wealthy investors with giant retirement accounts included financier Michael Milken, Warren Buffett and executives from investment giant Bain Capital.
Neal joined his Senate counterpart, Ron Wyden, D-Ore., who had been pushing for reform of mega IRAs for years without much support from his peers.
With a multibillion-dollar tax-free account on the line, a wealthy investor might try to keep his income below the $400,000 threshold set by the proposal. In Thiel’s case, it’s not clear if that would be possible, given that he’s long reported tens of millions of dollars on his tax returns from capital gains, interest and dividends on investments he holds outside of his Roth IRA. And even if he has to withdraw billions from his Roth, he will never have to pay taxes on years of growth inside the account.
ProPublica has previously reported that several billionaires have had very little taxable income in certain years, including Jeff Bezos and Elon Musk. Musk did not respond to questions for that story and Bezos’ representatives would not designate someone to accept questions related to that story.
The proposal would also add restrictions in areas that congressional investigators have said are ripe for abuse by the wealthy: The owners of IRAs would be barred from using the accounts to either purchase certain nonpublic investments or buy stakes in companies in which they are an officer.
Thiel launched his Roth IRA by purchasing so-called founder’s shares of PayPal in 1999 when he was chairman and CEO of the company, according to tax records and a financial statement Thiel included in his application for residency in New Zealand. Securities and Exchange Commission records show he bought 1.7 million shares for $1,700, or a tenth of a penny per share. (The maximum contribution to a Roth that year was $2,000.) PayPal later told the SEC the shares were sold “below market value.”
The practice has become popular among the founders of Silicon Valley companies, who tuck shares of their startups into IRAs, often after buying them at bargain prices. This can sidestep IRA contribution limits and generate massive tax-free growth if the value of their companies explodes.
The proposal would also shut down the so-called backdoor Roth. ProPublica found that billionaires like Buffett had taken advantage of a maneuver, known as a conversion, that allows the wealthy to sidestep existing income caps to create a Roth IRA. In a conversion, the owner of a traditional IRA can transform it into a Roth by paying one-time tax on the money. Once the account is converted into a Roth, no additional income taxes are ever due. The new provision would bar conversions for individuals with income over $400,000, though the ban would not go into effect until 2031 for budgetary reasons. (Buffett previously didn’t respond to questions about his IRA.)
The proposal also has implications for the holders of giant traditional IRAs, who could suddenly owe a hefty tax bill. Money withdrawn from a traditional IRA counts as taxable income. Milken, the 1980s junk bond king who went to prison for fraud and was later pardoned by Trump, had traditional IRAs valued at $509 million at the end of 2018, according to tax records. If the law passed, Milken could face a tax bill of roughly $100 million, depending on the current size of his account. A spokesperson for Milken declined to comment.
Separately, another part of the bill would tackle the generous business income deductions granted by Trump’s 2017 tax law.
As ProPublica previously reported, the drafting of the deduction was marked by last-minute changes and a rush of lobbying dollars from corporations and the superrich. The result of its passage, confidential tax records show, was a windfall for billionaires such as media mogul Michael Bloomberg, packaging tycoons Dick and Liz Uihlein, and the Bechtel family, owners of a global engineering and construction firm.
Bloomberg received a deduction of roughly $183 million in 2018 alone as a result of the provision, while the Uihleins netted around $118 million.
Under the House proposal, the deduction would be capped at $400,000 for an individual and $500,000 for a couple, virtually wiping it out for the very rich. If such a cap had been in place in 2018, for example, the Uihleins would have gotten a deduction worth just $500,000 instead of $118 million. A competing Senate proposal unveiled by Wyden in July would go even further. A spokesperson for the Uihleins declined to comment on the proposed reforms.
On a broader level, the House plan would spell a significant tax hike on Americans earning more than $400,000, raising their individual income tax rates as well as bumping up the corporate tax rate, the first such hikes in a decade.
But despite the proposal’s ambition, critics say it misses a rare opportunity to capture the massive untaxed wealth of some of the richest individuals in history, including Bezos and Musk, who have often found ways to keep their income low.
As ProPublica reported, they and other billionaires have managed to pay little to no taxes in the past. Some have done so by pursuing the so-called buy, borrow, die strategy. By holding on to his Tesla stock but borrowing money to finance his lifestyle, Musk, for example, can avoid income that is taxable under current law. If he sticks to this strategy till death, the income tax liability on his fortune will evaporate for his heirs.
Some Democrats and policymakers had aspired to even bolder tax code changes that would have targeted the stratospheric increases in the ultrawealthy’s riches. One idea, championed by Sens. Elizabeth Warren, D-Mass., and Bernie Sanders, I-Vt., would be to levy a so-called wealth tax on billionaires’ overall holdings. Another, pushed by Wyden, would tax the annual gains billionaires logged, even if they hadn’t sold the assets. Both ideas foundered, with concerted opposition from billionaires and skittishness from Democratic centrists. Some critics point out that wealth taxes have often failed in other countries. And many policymakers believe it would be too logistically difficult to measure assets properly and enforce such a sweeping rule on gains.
Originally published on ProPublica by Justin Elliott, Patricia Callahan and James Bandler and republished under Creative Commons.
NYMag Article details this deceptive talking point endlessly repeated by the Right
It’s hard to trace the origin of the partially accurate, yet highly misleading, stat that has been so often used to refute the idea that the current tax burden in the U.S. is not falling enough on the richest 1% compared to the rest of society.
The stat, which under the very narrow definition of “taxes” as federal income tax, calculated separately from any other form of tax, is, in this narrow sense, basically true. This isolated and totally meaningless fact does not address the overall taxes paid by the “top 1%” (which itself is an arbitrary category).
The reality, when overall taxes paid are taken into account, as the NT Mag article points out, is actually much less dramatic and has completely different implications for any call to “tax the rich” which was made by Alexandria Ocasio-Cortez’s Dress, as an example.
First, the top 1% represent 21% of all income, which means, by the narrow definition of declared income for tax purposes, that they “earn” more than 20% of the total income declared.
Further, this does not include the loopholes that allow billionaires to have virtually no declarable income and still avoid capital gains taxes via Roth IRAs and other methods, even as the calculated net worth of theses individuals increases by billions.
Opinion: ultimately, rather than defending the current system as if it is already adequate and somehow fair, the facts show that, on so many levels it’s hard to delineate them all, the system is functioning in a way that is not only unfair, but so corrupt that change would need to be nearly total before it could even be accurate to say that it was functioning fairly for the majority.
According to the article, the actual stat, with the above dodges, that are universally used, still not taken into account, is that: “the richest one percent earn about 21 percent of the income and pay 24 percent of the taxes”.
Which is a far cry from the ubiquitous sound byte that “1% pays 40% of taxes”.
A bill headed to the governor’s desk aims to curb injuries in warehouse distribution centers run by a broad spectrum of employers and outlaw punishment for bathroom breaks
Yesenia Barrera was just finishing up her 10-hour shift at an Amazon fulfillment center in Rialto, Calif., she recalled, when a manager approached her. She said he was concerned that throughout the day she’d racked up about 60 minutes of “time off task,” Amazon parlance for when someone is not directly working on the assignment at hand or taking too long to complete it. He told her he was writing her up and asked what happened, she said.
“I used the restroom today,” Barrera said she told him.
“How many times did you use it?” she remembered he asked.
“Three times,” she said she responded, thinking about how it took five minutes to walk each way across the warehouse floor to get to the bathroom.
When Barrera returned to Amazon for her next scheduled shift two days later, her badge wouldn’t let her into the building. She later learned she’d been terminated. Barrera has since become an organizer with the Warehouse Worker Resource Center, a nonprofit that advocates on behalf of warehouse workers.
The California Senate passed legislation last week that, if signed by the governor, would prohibit a spectrum of employers, including Amazon, from firing warehouse workers like Barrera for policies such as “time off task.” The bill, AB 701, would be the first law in the country to address productivity quotas and strict algometric metrics used to manage warehouse employees. (Governor Newsom’s office did not reply to a request for comment.)
Under AB 701, employers wouldn’t be able to punish workers for failing to meet quotas when health and safety issues come into play, such as a worker’s need to take bathroom and water breaks. And it would prohibit retaliation against workers who complain. The law would also require companies that run warehouses to report to the government—and their own employees—the quotas and speed metrics they mandate for workers.
“Right now, it’s very secretive,” said Christian Castro, communications director for the Los Angeles County Federation of Labor, AFL-CIO, which sponsored the bill. “E-commerce has been growing exponentially, it’s gotten even more popular during the pandemic…. Workers are telling us about an increase in quotas, not even knowing their quotas.”
Amazon spokesperson Rachael Lighty declined to comment on AB 701 and Barrera’s allegations but said in an email, “The health and safety of our employees is our number one priority—and has been since day one,” adding, “We’re committed to giving our employees the resources they need to be successful, creating time for regular breaks and a comfortable pace.”
In opposition to AB 701 is a coalition of about two dozen business groups, including the California Chamber of Commerce, California Farm Bureau, and California Retailers Association. They say the law could raise costs for companies that run warehouses and effectively drive employers from the state.
AB 701 is “burdensome and needlessly overbroad,” Steve McCarthy, vice president of public policy for the California Retailers Association, wrote in an Aug. 30 letter to all state senators. He said the bill could lead to increased litigation “by establishing potentially open-ended employee access to bathroom facilities which will make employers’ ability to enforce production standards even more complex.”
AB 701 would cover all warehouse distribution centers, such as those run by Walmart, Target, and UPS, but the bill’s supporters say Amazon is the main target. The company, they say, is leading the charge to automate workforces, increase the speed of work, and use surveillance technologies to monitor worker productivity.
Advocates who support the bill say they hope it will cause a ripple effect to other states. They say California’s labor laws have often served as a model for policymakers and worker organizations nationwide.
“Chart Topping” Injury Rates
Amazon is the largest private employer in California, with more than 150,000 employees in the state, and the second largest employer in the U.S. Over the years, several Californian cities have welcomed the influx of warehouses, which they say have brought in thousands of well-paying jobs to regions historically plagued by unemployment.
But it’s been well documented that warehouse work can be dangerous. Several studies point to injury rates that exceed those of other industries.
The U.S. Bureau of Labor Statistics cites data that shows warehouse workers are injured nearly twice as often as other workers in the private sector. And when employers, like Amazon, add in productivity quotas, those injuries tend to increase, other studies show. A December 2019 report by the Athena coalition looked at data and internal documents that Amazon provided to OSHA and found the injury rate at the company’s warehouses was nearly three times the combined rate of all other private employers that submitted data to OSHA.
“Primed for Pain,” a report by a coalition of four labor unions called the Strategic Organizing Center, found that not only are injury rates higher at Amazon warehouses, but the injuries also tend to be more severe—with a “serious injury rate” nearly 80 percent higher than that of all other employers in the warehousing industry.
“The rate of injuries at Amazon is astronomical…. It’s chart topping by all measures,” said Irene Tung, senior researcher at the workers’ rights group National Employment Law Project, who co-wrote a report about injury and churn rate at Amazon’s California warehouses. “I don’t think people understand just how different Amazon is as an employer and how they’re ushering in this new paradigm.”
When asked about injury rates at Amazon’s warehouses, spokesperson Lighty said the company has more than 6,200 “safety professionals” throughout its facilities. “We also invest billions of dollars in new operations safety measures, technologies and other innovative solutions that protect our employees, work closely with health and safety experts and scientists, conduct thousands of safety inspections each day in our buildings, and have made hundreds of changes as a result of employee feedback on how we can improve their well-being at work,” she said.
Lighty added that the data on musculoskeletal injuries, such as sprains, strained muscles, and torn ligaments, at Amazon’s warehouses “is skewed.” She said that’s because the company’s workforce has many people in the 18 to 24 age range, which she said is more likely than other age groups to claim work-related musculoskeletal injuries.
In April, Amazon’s executive chairman and former CEO Jeff Bezos called the company “Earth’s Best Employer and Earth’s Safest Place to Work.”
Along with injuries, Amazon has also been accused of not allowing workers enough time for bathroom breaks. In a 2020 letter to Bezos, a group of 15 U.S. senators wrote, “Pressure to meet their quotas is so great that workers report urinating in plastic bottles on the warehouse floor.” Amazon responded, saying workers are “allowed and encouraged to take breaks as needed.”
Last December, Amazon settled a class-action lawsuit in California brought by 27 warehouse workers who said the company violated the state’s labor codes by denying them adequate bathroom and rest breaks. Amazon’s “production clock does not stop when employees need to use the restroom facilities,” the lawsuit said, which meant workers “have been forced to forego bathroom breaks completely, simply out of fear of termination.”
Lighty declined to comment on the lawsuit or settlement.
While California law mandates that employers must allow breaks, warehouses with production quotas can make it difficult for workers to use the bathroom while still being able to meet their tasks. Assemblywoman Lorena Gonzalez, AB 701’s author, said the bill aims to strengthen state law by creating standards around these quota systems.
“To make next-day delivery possible, corporations like Amazon have forced warehouse employees to work faster, service more customers with more orders in record amounts of time, and risk their own bodies in the process,” Gonzalez said in a statement. “No worker should be forced to sacrifice their basic human needs, or accept such undignified conditions for a paycheck.”
When Barrera was working at Amazon’s Rialto warehouse, one of her jobs was scanning boxes on a conveyor belt.
“The conveyor doesn’t stop,” she said. “Time is against you.”
She remembers at one point, she fell behind and boxes started piling up. She set down her scan gun to move some boxes aside, and it got buried in the pile. She said when she tried to pry it free, she pulled too hard, and it bounced back and smacked her in the eye. She said she went to the onsite clinic, where she was given ibuprofen and told to hold a wet paper towel on her eye. Barrera said she asked to sit down, and after about five minutes, both her manager and the clinic medic said she should be good to go back to work.
“You’re being tracked the moment you clock in,” Barrera said. “Unrealistic quotas are why workers are getting injured.”
Amazon’s Lighty did not respond when asked about the incident.
Protecting Workers vs. Increasing Bureaucracy
AB 701 has two major components: creating more transparency around work quotas and banning policies that negatively affect worker health and safety, including “time off task” policies.
For the transparency piece, employers that run warehouse distribution centers would be compelled to tell government agencies the quotas and speed metrics they require of employees and also disclose that information to workers.
“This policy provides the tools that are needed to keep workers safe in a growing industry plagued with widespread injuries and labor violations,” said Ron Herrera, president of the Los Angeles County Federation of Labor and secretary treasurer of Teamsters Local 396, both of which are sponsors of AB 701.
“This kind of speed-up on workers is breaking their bodies and churning them out,” Shadix said. “It undermines the argument that these are good stable jobs.”
While AB 701 would require transparency from companies around quotas, it would not create specific rules on worker surveillance and metrics.
Several Republican lawmakers in California have opposed AB 701, saying it would lead to more lawsuits, higher prices for consumer goods, and that the bill is part of an organized labor strategy to unionize warehouses.
“This bill is sponsored by union leaders as part of a campaign to tip the scales to coerce employees to unionize,” Sen. Brian Jones said in an email, adding that he doesn’t have confidence in Democratic legislators to run the state efficiently. “So now we’re supposed to trust them to micro-manage private warehouses throughout the state? No thanks.”
Jones is one of 11 senators who voted no on AB 701 (26 voted yes, and three had no vote recorded).
At least four senators, including Jones, received campaign donations of $2,500 from Amazon, according to public records from the California secretary of state. Amazon also made payments of $2,500 and $4,900 to various state assembly members, including to nearly half of those who voted no on the bill in May. The company additionally made several donations to senators and assembly members who voted yes (though not to any authors or co-authors of the bill).
When asked about the donations, Jones’s chief of staff, Craig Wilson, said, “Campaign contributions are irrelevant when it comes to how Senator Jones votes on legislation.”
Amazon has hired at least four lobbying firms in California during this year’s legislative session, according to the public records. For comparison, in 2019 and 2020, it hired just two firms per year. And the company spent more than $425,000 on lobbying in the state from January to June. More recent lobbying expenditures aren’t yet publicly available. Amazon’s Lighty didn’t respond to questions about the company’s lobbying activity.
While Amazon hasn’t publicly commented on AB 701, the coalition of business organizations and its members, including the California Retailers Association and California Chamber of Commerce, have spoken out against the bill.
Initially, the California Chamber of Commerce listed AB 701 on its “job killer” list—a label that often leads to dead bills—but then removed it in July after certain provisions around litigation and regulations were amended. The chamber still opposes the bill, however. When asked for comment, spokesperson Denise Davis referred The Markup to the letter McCarthy sent to state senators on behalf of the business coalition.
This bill “establishes anti-retaliation provisions that will make it more costly and difficult to take job actions against underperforming employees,” McCarthy wrote in the letter. He added that AB 701 could “have a chilling effect on production at distribution centers that will ripple through the rest of the supply chain.”
Amazon is on the California Retailers Association’s board of directors. McCarthy didn’t respond to a request for comment.
If AB 701 is signed by California governor Gavin Newsom, it would be slated to go into effect on Jan. 1, 2022. Newsom faces a recall election on Tuesday, but regardless of the outcome, he will determine the bill’s fate. Should Newsom lose Tuesday’s recall election, he would have 38 days to sign or veto all pending legislation before leaving office, according to California law.
Above: Inspiration4 Crew Members / Photo / Netflix
What do a billionaire, cancer survivor, geoscientists and a data engineer have in common?
For the first time on the streaming platform, Netflix will offer a 5 part docuseries covering the SpaceX’s Inspiration4 Mission in near real-time.
The series will cover SpaceX’s first all civilian mission (no astronauts!) as they prepare and train for the mission, the live launch coverage from Kennedy Space Center in Florida, as well as footage from inside the Crew Dragon spacecraft as the 4 passenger crew orbit the Earth on the 3 day mission.
Unlike recent flights from Virgin (Richard Branson) and Blue Orbit (Jeff Bezos) that led suborbital flights, Inspiration4 will reach higher altitudes than that of the International Space Station and make history as first all-civilian mission to orbit.
Multiple firsts and groundbreaking accomplishments that go beyond, way beyond…
Breakdown for Netflix’s “ Countdown: Inspiration4 Mission to Space”
Monday, September 6: Meet the four civilians heading to space
Monday, September 13: Watch them prepare
Wednesday, September 15: Watch the live launch
Thursday, September 30: Spend time with the crew in space
The Inspiration4 Mission which was brokered as a private deal by 38 year old Jared Isaacman, CEO of Shift4 Payments with SpaceX.
Isaacman will lead the mission along with his 3 other crew members: 29 year old Hayley Arceneaux who will act as chief medical officer , 51 year old Dr. Sian Proctor (mission pilot), who will become the fourth Black female American in space and 41 year old Christopher Sembroski, a veteran of the U.S. Air Force who will be the mission’s specialist.
The mission also serves as a $200 million fundraising campaign for St. Jude Children’s Research Hospital.
A day before the launch day, Netflix will also launch “A StoryBots Space Adventure” on Sept.14 which is a live-action/animation special where Inspration4 crew members will participate by answering some of kids’ most pressing space related questions.
“It’s important to address the fact that billionaire heirs may never pay tax on billions in stock gains.”
Sen. Ron Wyden, chair of the Senate Finance Committee, warned Tuesday that House Democrats’ newly released tax plan would let U.S. billionaires off the hook by omitting key reforms that progressive lawmakers, advocacy organizations, and President Joe Biden have embraced.
“It would be a monumental mistake for Congress to pass a bill that really exempts billionaires,” Wyden (D-Ore.) told the New York Times in response to the House Ways and Means Committee’s proposal, which was spearheaded by Rep. Richard Neal (D-Mass.).
While the House plan (pdf) would hike taxes on large corporations and the top 1% of earners in the U.S., analysts and Democratic lawmakers have voiced concerns that it doesn’t go nearly as far as it should to raise revenue for policy priorities and tackle the nation’s runaway income inequality, which the coronavirus crisis has made even worse. According to one recent analysis, the collective wealth of U.S. billionaires has risen by $1.8 trillion—62%—during the pandemic.
Wyden’s committee is in the process of crafting a tax plan of its own as Democrats race to compile their sprawling budget reconciliation package, which is expected to include major investments in green energy, healthcare, housing, and other key areas.
Specifically, Wyden and progressive organizations criticized the House Ways and Means Committee for failing to tackle a loophole that allows the ultra-wealthy to pass on massive fortunes to their heirs tax-free. Earlier this year, Biden released a tax plan that would close the loophole.
“It’s important to address the fact that billionaire heirs may never pay tax on billions in stock gains,” Wyden toldHuffPost on Monday. “The nurses, firefighters, and teachers who pay their taxes with every paycheck know the system is broken when billionaire heirs never pay tax on billions in stock gains.”
Steve Wamhoff, director of federal tax policy at the Institute for Taxation and Economic Policy (ITEP), echoed Wyden’s concern, noting in an interview with the Washington Post that “if the Ways and Means plan was enacted as is, Jeff Bezos and Elon Musk would still pay an effective rate of $0 on most of their income if they pass their assets on to their heirs.”
“It’s obviously a big improvement over the tax code we have now,” Wamhoff said of the House plan, “but there are a lot of things Biden suggested that would go a lot further.”
I agree with Chairman @RonWyden: we need to pass a bill that ensures that billionaires and corporations are finally paying their fair share. A wealth tax and my Real Corporate Profits Tax are two ways to get that done. https://t.co/xTtTQ8PGx2
On Tuesday, the progressive advocacy group Patriotic Millionaires made the House plan’s shortcomings the focus of a new mobile billboard campaign that features an image of Bezos—the richest man in the world—accompanied by the caption, “Oops! Missed me! (Thanks, Richie Neal!)”
“Richard Neal and the House Ways and Means Committee failed the president, failed the country, and failed history. It’s that simple,” Morris Pearl, chair of the Patriotic Millionaires, said in a statement. “This is not what the American people voted for when they elected Joe Biden as president.”
To remedy the proposal, the Patriotic Millionaires urged the House Democratic leadership to make several changes, including:
End the preferential tax rate for capital gains income over $1 million as President Biden requested. There is no intellectual or economic justification for working people in America to pay a higher tax rate than investors.
Eliminate the “stepped up basis” that allows the heirs of billionaires to avoid capital gains taxes on inherited assets (provide a reasonable exemption for family farms and small businesses). The committee’s failure to address this problem at all is particularly troubling.
End the Carried Interest Loophole which allows fund managers to mischaracterize their “ordinary” income as capital gain income for tax purposes. The Ways and Means proposal extends the hold time for investments to five years. Given that most private equity firms hold investments for six years, this change will have essentially zero effect. The loophole should be eliminated entirely.
Rep. Alexandria Ocasio-Cortez (D-N.Y.), whose “Tax the Rich” dress at the lavish 2021 Met Gala made waves on social media, said Tuesday that “members of both parties have tried to halt taxing the wealthiest in our society” even after billionaires made enormous wealth gains during the pandemic.
“It’s unacceptable,” the New York Democrat added. “We must tax the rich.”
According to a June survey released by Americans for Tax Fairness, 72% of U.S. voters support closing “loopholes that let the wealthy avoid paying taxes on the profits from assets they transfer to heirs.” The poll also found that 62% of voters support raising the corporate tax rate from 21% to 28%.
The House Ways and Means Committee proposal would only raise the corporate rate to 26.5%.
As Chuck Collins and Sarah Anderson of the Institute for Policy Studies argued in a blog post on Monday, “The public has a tremendous appetite to do much more to address the grotesque concentrations of democracy-distorting wealth and power—and to shut down the ways that billionaires and a few hundred global corporations manipulate our tax system.”
“House Democratic tax writers do not go far enough to raise revenue or reduce extreme wealth inequality,” Collins and Anderson wrote. “The tax reforms would generate an estimated $2.2 trillion—just barely more than the revenue lost due to the 2017 Republican tax cuts.”
Above: Photo by Michael Krahn on Unsplash with elements added by Lynxotic
Coming after a frenzied run-up the hand wringing is no surprise
On the big El Salvador day for Bitcoin to go live, for the first time as legal tender, naturally there were glitches. And the predictions for crypto in general and Bitcoin in particular to surge on the news were, backwards.
The longstanding stock market adage “buy on rumor, sell on news” once more proved itself as what is now being called a “crypto flash crash” knocked around $400 billion off the market cap of the previous 24 hour period, or almost 12%, as per CoinMarketCap at the time of this writing.
The president of El Salvador announced that his government used the dip to buy an additional 150 Bitcoin, above the 400 he had announced on the previous day, bringing the total to 550.
From CoinMarketCap:The global crypto market cap is $2.07T, a 11.91% decrease over the last day
The total crypto market volume over the last 24 hours is $227.12B, which makes a 66.15%increase.
The total volume in DeFi is currently $30.41B, 13.39% of the total crypto market 24-hour volume.
The volume of all stable coins is now $179.83B, which is 79.18% of the total crypto market 24-hour volume.
Bitcoin’s price is currently $46,893.62.
Bitcoin’s dominance is currently 42.55%, an increase of 1.17% over the day.
By 3:30 PM ET on Tuesday Bitcoin bounced back, the “discount” ended, for now, and recovered to around $47,000 after dipping to $42,870. The recent highroad been $52,732, with the all time high from April still intact above $63,000.
I many ways it seems as if Bitcoin and Cryptocurrencies appeared suddenly in 2021 out of the head of Zeus. Protean and fully formed, with billions and trillions in market caps, and all your sisters, brothers, cousins and even the Uber driver climbing aboard.
And the FOMO blog posts, where every hour an innocent reader is assaulted by a story, perhaps true, perhaps exaggerated and certainly foolhardy in retrospect, of an innocent putting their life savings into Dogecoin and suddenly having, theoretically, huge gains at their disposal.
Meanwhile, craggy faced, ancient stock market mavens would interject famous last words that now appear to be wise. However, all that notwithstanding, this week’s crash is nothing new or unexpected.
In reality, as can be seen from the graphic below, provided by Visual Capitalist, there have been so may crashes / corrections and doomsday prognostications since 2012 in Bitcoin that it seems like a miracle the there’s any thing such as Crypto at all.
There’s a reason it’s not dead and it’s in the DNA
The resiliency, far from a shock to those that have been around more than a fortnight, is kinda the point. When Satoshi Nakamoto built the system architecture of Bitcoin and since then inspired the over 8000 new crypto entities that have been developed, it was, just like the internet itself that was build to survive WWIII, supposed to be as indestructible as possible.
Like physical gold, which is considered have been adopted as a store of value partly due to its indestructibility and immutability (alchemy notwithstanding) the volatility and sometimes violent-seeming life story of Bitcoin is a necessary adjust to its role in finance, commerce and even individual monetary survival.
Not for the faint of heart, perhaps
While the mainstream and those forces opposed to the adoption or survival of Bitcoin and Crypto are out in force pointing to the “unsuitability” of Bitcoin and other cryptocurrencies for any “legitimate” use as a trade or savings vehicle, the progress so far, in spite of the obvious fact that volatility has always been baked in to the situation, is an obvious refutation of that viewpoint.
Will the current drop in dollar values relative to Bitcoin end it’s popularity and strip it of the respect it has thusfrar earned among many? In a word, no. In essence what is happening is, as many have foretold, what happens often and repeatedly, the excess attention and dollars that were pumped into crypto by you brother, sister, cousin and Uber driver are now getting blown out, since those were more speculation and psychosis than any kind of vote for viability or permanency.
And, why not? Where was to concern, shock and hesitation by the masses when the prices seemed to only rise for weeks and even months across so many products and coins it was impossible to keep count? Why was to feeding frenzy and the mania-like piling on not ignored as an anomaly?
The herd does as the herd will do. Diamond hands and Paper hands will ebb and flow as long as the rivers flow to the sea and humans herd like buffalo. And, in all likelihood, dollars and euros and yen will be long forgotten when the last bitcoin is transferred to the final wallet in the sky.
Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Lynxotic does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.
El Salvador has officially legalized bitcoin as legal tender (alongside the U.S. dollar which is the country’s current national currency) starting today; September 7, 2021.
The day before the big day, President Nayib Bukele announced El Salvador had purchased 200 Bitcoins and later in the day confirmed that “we now hold 400 bitcoins”. Given the current market prices, the country’s recent bitcoin purchases amount to roughly $20.8 million.
In June this year, El Salvador’s Congress voted 62 out of 84 votes to establish the crypto coin as legal tender. This will make the small country is Central America the first in the world to recognize bitcoin as an official form of currency.
In a subsequent tweet Bukele’s translated tweet said
Like all innovation, the process of #Bitcoin in El Salvador it has a learning curve. Every road to the future is like this and not everything will be achieved in a day, or in a month.
But we must break the paradigms of the past. El Salvador has the right to advance towards the first world.
-President of El Salvador – Nayib Bukele
Bitcoin climbed nearly 2% to more than $52,680 as of Sept 6, and according to a market analyst with Reuters the cryptocurrency is on track to reach $56,000.
Salvadorians will now have the ability to use the digital coin in exchange for goods and services, and as an accepted form of tax payments by the government. Bitcoin is actually the second legal tender in El Salvador, with the US Dollar also having that status since 2001.
Upon its adoption, users who register with the country’s government supported Bitcoin wallet called Chivo will be awarded with $30 worth of currency pre-loaded (must have a Salvadorian national ID number).
The overall impetus for legalizing bitcoin officially is, according to experts, that savings that will be possible for citizens to receive remittances – transfers, until now in US dollars, without intermediaries and the large fees they charge for international transfers.
Remittances account for more than 20% of GDP for El Salvador – mainly in the form of dollars sent by the approximately 1.5 million ex-patriots living abroad and wiring payments to families in El Salvador.
Western Union, for example, handles these transactions and charges a hefty fee. And those fees would represent a percentage (for small remittances up to 10%) of $5.9 Billion per year that flows into the small country from abroad, mostly from the United Stated, according to World Bank data.
Although there has been a lot of political rhetoric and expressions of opinion against the move, such an obvious adversary as the international wire transfer interests, like Western Union, and the large income from fees that may begin to dry up starting today, could easily explain at least a portion of the well represented opposition opinion.
That being said, the now famous price swings of Bitcoin do represent a real risk for people hoping to transfer directly into the country. Another risk is losing the coin due to lack of experience handling a digital currency, by people who are more likely to know the feel of paper dollars than digital screens, cryptocurrency exchanges and virtual wallets.
For observers, both crypto adherents and detractors, this is a very important opportunity to see what kinds of practical obstacles will arise and what benefits are realized by the El Salvadoran people.
It is also a kind of warning to those in governments, including in the U.S., that hope to stop Bitcoin’s seemingly inexorable rise, and to prevent what they perceive as threats to the public, and perhaps, to the U.S. dollar’s previously unchallenged hegemony.
The news that 400 Bitcoins were purchased by El Salvador was, naturally seen as a positive by the Bitcoin trading community, and there has been speculation of further pricing strength likely continuing going forward.
On the utopian dream side, various experiments have recently been announced related to Bitcoin and crypto. For example, in El Salvador there are emerging plans to make Bitcoin mining a state run operation with power being supplied by geothermal energy drawn from the country’s volcanos. How’s that for cheap, renewable resources?
A town in the U.S., fittingly called Cool Valley, MO has a mayor who recently announced that the city government is considering making payments to all residents of 1000 in Bitcoin. In this case, the idea behind the plan is to give citizens a crypto nest-egg, and the holders would be barred from selling, with the hope that, in the event the currency continues its exponential climb, the residents would benefit from holding it as an appreciating capital asset.
Which leads to the observation that, over the last few years, a fog of confusion appears to hang above the media regarding coverage of cryptocurrencies.
Price speculation is off the charts and there’s a kind of mania afoot. But the biggest confusion seems to come from one simple truth, that the U.S. dollar has gone only in one direction for more than 100 years, since the Federal Reserve was established in December 1913, down.
Against any measure of buying power for goods and services the dollar is continuously worth less, far less, on a yearly basis.
Although many headlines scream “Crypto and Bitcoin are Worthless” the same could be said of the U.S. dollar, in relative terms, against a basket of goods and services which is the traditional measure of “inflation” and against other assets, for example, now that Bitcoin provides a second measuring tool, dollars are worth less over time against bitcoin.
With prominent people and companies around the world and in the U.S. already supporting the idea of Bitcoin and Cryptocurrencies with their dollars and by choosing to hold crypto, it will be very interesting to see what transpires as these “currency wars” mutate and expand around the globe.
Extreme Weather Accelerates in Frequency and Destructive Power
Ida hit Louisiana with extreme force, causing damage and mayhem, and leaving hundreds of thousands without power earlier this week. The remnants of that destruction have now moved Northeast. Next, Hurricane Larry is expected to become a major storm by Friday according to the National Hurricane Center.
Effects of Hurricane Ida unloaded in the New York City metro area, creating, unprecedented extreme rainfall. So much so that for the first time ever, a “flash flood emergency” was initiated and both New York Mayor Bill de Blasio and New Jersey Governor Phil Murphy declared states of emergency starting late Wednesday.
“This is a PARTICULARLY DANGEROUS SITUATION. SEEK HIGHER GROUND NOW!,” the National Weather Service wrote. And example of the extreme nature of the deluge comes via the stat that Central Park got more rain in one hour than it normally would in the entire month of September. More than 2.5 times the previous highest count even, which was tallied just recently.
Parts of New York City and the Tri-State, covering a population of where near 9 million people reside have been affected. Roads flooded, transforming the paths to looks more like raging rivers and rendering subways, cars, and basements of homes useless.
At least 9 people have been reported dead as a result of storm.
Images posted throughout social media overnight showed the insane amount of watering surging over roads as public transportations attempt to navigate and cars get stuck in the water. Even a frightening video of tornado happening in real time in Mullica Hill, New Jersey.
All too familiar the Elephant in the room needs acknowledgment
Although barely mentioned in the midst of chaos and people desperately trying to get to work on Thursday, climate change is giving a kind of early warning signal via extreme weather evens like this, as well as influencing the severity of the massive drought worsening daily in the west, immense wildfires and natural disasters that are being seen with unprecedented frequency and intensity.
If there was ever a wake up call to change and respond with speed and action, this is it.
On twitter there was a thread that likened the photos and videos to the prescient sci-fi film “The Day After Tomorrow” which depicted an ice-age occurring as a result of climate change, and also had scenes of massive flooding (due to the sea level rising which is currently happening, day by day).
The comparison is a stark one, with the Hollywood generated special effects stills not nearly as chilling as the current reality showed in photos being shared and tweeted.
There’s an all too familiar thread building here – larger more intense and devastating events that many keep saying are a coincidence or “random”. I think any child can see (@gretathunberg ?) that there is zero chance anymore that coincidence plays any more that a minuscule role in these tragedies growing, expanding and increasing exponentially.
Unfortunately, we can expect more of the same, no only here in this country, as mentioned above with Larry queuing up of shore, but around the world with extreme and dangerous droughts, heatwaves, polar vortex episodes, floods, deadly wildfires and more becoming the “norm”.
The time to recognize the origin of these mounting calamities has passed, but any proactive, powerful response by governments and industry has barely begun. Perhaps the images and tragedies now being documented and shared (such as below) can help to harden our resolve to see that a change, toward the drastic measures required to combat this climate emergency will finally begin in earnest.
Queens Boulevard in Maspeth/Corona is a literal river at the moment. Bus fully flooded driving through, multiple cars stuck in the water. Absolutely insane. pic.twitter.com/LuSL9uWCEl
Thousands crowded near the only way out of Afghanistan ahead of U.S. August 31 deadline
It has been reported that at least two explosions and gunfire occurred just outside Kabul airport. The blast happened around one of the entry gates of the Hamid Karzai International Airport on Thursday August 26, 2021.
Based on an AMN report and Pentagon statements, the blast may have been the result of a suicide attack. There have been casualties and injuries, including U.S. service members among Afghan citizens, however no additional details have been confirmed.
This is an emerging, breaking story and various outlets, including Fox News, The Wall Street Journal and others have reported multiple, sometimes conflicting totals regarding the dead and wounded.
Fox News reported 10 Marines were killed, up from four, according to U.S. officials
“We can confirm that the explosion at the Abbey Gate was the result of a complex attack that resulted in a number of US & civilian casualties. We can also confirm at least one other explosion at or near the Baron Hotel, a short distance from Abbey Gate. We will continue to update,” Pentagon spokesman John Kirby tweeted.
— Maj. Gen. Patrick Ryder (@PentagonPresSec) August 26, 2021
The following bullet points were published in the Fox News article cited above:
A suicide bombing outside the Abbey Gate at Kabul’s airport in Afghanistan Thursday has killed at least 10 U.S. Marines and soldiers, U.S. officials tell Fox News.
A U.S. official indicated that the attack set off a firefight at Abbey Gate, where last night, there were 5,000 Afghans and potentially some Americans seeking access to the airport.
A second explosion happened outside the Baron Hotel, sources say.
Starlink is way out ahead of the pack, which simultaneously grows in its shadow
The SpaceX’s Starklink satellite internet service has hit a milestone and Elon Musk took to Twitter to share the news. He confirmed that 100,000 terminals have been shipped out. According to an article from Slash Gear there are also more than half a million people on the waitlist globally.
This is all happening at a time when SpaceX is under siege from Jeff Bezos‘ Blue Origin and potential rivals are launching their own satellites to try and catch up. Richard Branson’s Virgin Orbit is going public and hopes to launch satellites for iOT connectivity, while OneWeb recently launched 34 internet satellites into space, while Amazon’s “kuiper” system is still planning its launches to proceed.
100K is huge considering the satellite launches only began back in November 2019 and the initial beta program was only available for select customers a year later.
Starlink’s main goal, also mentioned in Musk’s tweet is for the company to go global and serve the whole world. Currently, service is available for 14 countries: United States, Canada, United Kingdom, Germany, France, Austria, Netherlands, India, Belgium, Switzerland, Denmark, Portugal, Australia and New Zealand.
Chair of the Federal Trade Commission Lina Khan posted on her Twitter the official press release of its position against Facebook.
Pulling no punches the language of the filing leaves no doubt as to the direction of the FTC going forward in this case. Illegal, Bribery, “Buy-or-Bury Scheme” these are characterizations that go to the heart of anticompetitive and monopolistic behavior of the giant. FTC Bureau of Competition Acting Director, Holly Vedova, said ““This conduct is no less anticompetitive than if Facebook had bribed emerging app competitors not to compete. The antitrust laws were enacted to prevent precisely this type of illegal activity by monopolists.”
While The Federal Trade Commission’s mandate has traditionally been “to promote competition and protect and educate consumers” the attempt by big tech to appear “helpful” to consumers with hidden costs and deflated pricing is finally at issue with Kahn in the chair. Khan’s famous 2017 article; “Amazon’s Antitrust Paradox“ helped to re-define a new direction for antitrust law for the digital age, which appears to be in the early stages of fulfillment at the agency under her leadership.
FTC Alleges Facebook Resorted to Illegal Buy-or-Bury Scheme to Crush Competition After String of Failed Attempts to Innovatehttps://t.co/tR9yokuyFo
As described in the amended case, upon Facebook starting out as an open space for third party developers, the company quickly reversed (pulling a bait-and-switch) by requiring developers to terms that would have prevented successful applications from emerging as competitive threats to the company.
As reported from Reuters, in the 80 page new complaint, the U.S. Federal Trade Commission (FTC) accuses Facebook of illegally monopolizing power. The refiled case includes additional evidence which is intended to support FTC’s case that Facebook dominates the U.S. personal social networking market.
In the headline of its press release, FTC alleges the company resorted to “illegal buy-or-bury- scheme to crush competition after string of failed attempts to innovate”.
“Despite causing significant customer dissatisfaction, Facebook has enjoyed enormous profits for an extended period of time suggesting both that it has monopoly power and that its personal social networking rivals are not able to overcome entry barriers and challenge its dominance,”
AMENDED complaint – federal trade COMMISSION
The FTC voted 3-2 to file the amended lawsuit. They also denied Facebook’s request that Lina Khan be recused, Khan participated in the filing of the new complaint.
Evacuations resume with green light from Afghanistan’s new rulers
Although no concrete timetable for the evacuation of Americans and Afghan allies has been solidified with Taliban, according to AP, Biden’s national security adviser, Jake Sullivan reports that the Taliban has agreed to allow U.S. directed “safe passage” from Afghanistan.
Despite some civilians encountering resistance and even violence as they attempted to reach Kabul international airport, “very large numbers” were reaching destinations. After interruptions (due to Afghans rushing onto tarmac) , per Pentagon officials, the airlift is back on track and schedule being accelerated.
“I cautioned them against interference in our evacuation, and made it clear to them that any attack would be met with overwhelming force in the defense of our forces”
-Gen. Frank McKenzie, head of U.S. Central Command
A total of more than 6,000 U.S. troops are expected to be involved in securing the airport. The White House reports 13 flights on Tuesday airlifted 1,100 U.S. citizens. President Biden wants the evaluation to be completed by the end of the month, August 31, 2021.
