A lobbying group representing the interests of Apple has joined a coalition of corporate titans and industry organizations in a concerted effort to derail portions of President Joe Biden’s $3.5 trillion economic agenda.

The Business Roundtable, a group of U.S. business leaders that counts Apple CEO Tim Cook as a board member, is preparing to oppose corporate tax increases designed to fuel the Democratic spending initiative, reports The Washington Post.

Biden proposed a hike in corporate tax rates from 21% to 28%, while placing heftier burdens on profits earned overseas. Democratic lawmakers are hoping to push the laws through as a reconciliation bill, a procedure that allows Congress to pass legislation with a simple majority. Passage is not guaranteed by the 117th Congress, however, as Democrats enjoy only narrow control over both houses, a precarious position potentially vulnerable to intense lobbying.

Business Roundtable’s concerns are part of a wider effort that targets key sections of Biden’s budget plan. A “lobbying blitz” is being organized by the U.S. Chamber of Commerce, which seeks support from all corners to fight the economic package, including its cost, policy scope and tax demands, according to the report.

In a statement, Business Roundtable spokesperson Jessica Boulanger said the group is engaged in “a significant, multifaceted campaign” to fight tax increases, adding that it would “continue to ramp up our efforts in the coming weeks.”

Organizations taking part in the strategy are expected to lean on traditional lawmaker lobbying as well as more modern maneuvering like advertising campaigns, sources told the publication. Companies and lobbying groups have committed to or are already running ads against the reconciliation package.

In addition to Business Roundtable, the RATE Coalition is also at odds with the Democrats’ tax agenda. RATE Coalition includes members Disney, FedEx and Lockheed Martin. Broader opposition might also be mounted by the National Association of Manufacturers, a major advocacy group representing more than 14,000 members. NAM’s board includes executives from Dow Inc., Exxon, Caterpillar and Johnson & Johnson. A parallel effort from the pharmaceuticals industry targets drug pricing proposals.

Guided by Biden’s spending proposals, Democrats are crafting legislation that will expand Medicare coverage, combat climate change, increase access to education, introduce broad subsidies for low- and medium-income families and more.

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Originally Appeared Here

The rest of the world needs to listen to the Haitian people as the country recovers from a devastating earthquake and a presidential assassination, said Daive Dunkley, a University of Missouri professor who studies the Caribbean and its history.

Dunkley is associate professor in the Department of Black Studies, adjunct professor in the Department of History and director of the Peace Studies program at MU.

President Jovenel Moïse was assassinated on July 7. On Aug. 14, a 7.2 magnitude earthquake struck the country, with more than 2,000 dead so far and more than 12,000 injured.

One must look at Haiti’s history to put its present situation in perspective, Dunkley said.

“If we look at the longer history of Haiti, it led the charge against colonialism and slavery,” Dunkley said. “It was the first to abolish slavery. Haiti has received a good deal of backlash from Western countries. Haiti was diplomatically and politically isolated for most of the 19th century.”

Haiti was in debt from its beginning, he said.

“Haiti owed reparations to France for slavery, which is absurd,” Dunkley said.

The island nation’s isolation benefited it at one point in the 1800s, Dunkley said. When the rest of the world was experiencing outbreaks of cholera, Haiti was untouched.

Substituting for development and infrastructure projects has been international aid, he said.

“The aid work is so disorganized,” Dunkley said of international organizations. “They do this work and it makes very little difference to the country as a whole.”

While Haiti is recovering from an earthquake, the attention of the United States and the rest of the world has been diverted to the pandemic, Afghanistan and Hurricane Ida.

“I’m not sure we can blame Afghanistan or the pandemic,” Dunkley said.

There’s nothing sustainable in the aid being provided, he said. What’s needed is infrastructure to withstand earthquakes.

Former U.S. presidents George W. Bush and Bill Clinton established The Clinton Bush Haiti Fund to respond to a 2010 earthquake. If it was useful, there would not be so much destruction now, Dunkley said.

“What sustainable work was done?” Dunkley asked of the 2010 effort. “Where is the evidence? We need to see the evidence.”

The U.S. has a history of intervening in Haiti, Dunkley said.

U.S. Marines occupied Haiti from 1915 to 1934. U.S. business allies benefited, Dunkley said.

“The U.S. occupation exacerbated economic inequality,” he said.

The U.S. military intervened again in 1994 to restore President Jean-Bertrand Aristide to power after a coup. Another coup in 2004 ousted him again, with Aristide claiming it was orchestrated by the U.S. government.

The assassination of the president is part of the country’s history of political instability, Dunkley said.

“Again we are seeing historical continuity rather than change,” he said.

How can Haiti solve its problems?

“The people of Haiti have always known what Haiti needs,” Dunkley said. “Organizations need to work with the government.”

The efforts must be coordinated with the people, he said.

“When we look at the history of the Caribbean, we need to see through the eyes of the people,” Dunkley said. “They understand the landscape. They understand the politics and culture. But nobody listens to them.”

rmckinnney@columbiatribune.com

573-815-1719

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Originally Appeared Here

Published August 31, 2021 1:36PM

by Belinda Mackay, Gisborne Chamber of Commerce president

Belinda Mackay

This weekend, while contemplating the move to Level 3, I happened upon a podcast by Spinoff contributor, Bernard Hickey. In the face of businesses throughout Aotearoa being given half a billion dollars within two days of the wage subsidy version 2021 being available, Hickey made some very salient points. It got us thinking; should businesses, and this includes Tairawhiti businesses, while they qualify for the subsidy during lockdown, take it?

When we went into lockdown last year the landscape looked very different. We didn’t know what our economy would look like when we came out of lockdown and things looked very scary. This time around, while there is concern, there is not the same uncertainty.

Last year, the wage subsidy worked well. Some may argue it worked too well and is moving our country into a period of inflation. What can’t be disputed is that at the time it saved jobs and stimulated economic activity.

We know that some businesses (including local businesses) did very well after lockdown, particularly construction. Of the top five businesses that received the largest subsidy pay-out (Air New Zealand, Fletcher Building, The Warehouse Group, Downer & Fulton Hogan), one could argue that this time around only Air NZ would truly have a case for claiming an additional wage subsidy. The remainder of those businesses all reported strong profit at the end of their financial year, some paid shareholder dividends. Did those businesses pay back the subsidy in the face of strong profit? Well, The Warehouse paid back the money after they took the subsidy, made staff redundant and then reported a full year profit of $44.5m, and Fulton Hogan paid back $1m. I’m sure that this happened locally too.

Many businesses that took the subsidy, in hindsight, didn’t need it, generated profit, made people redundant, paid out dividends and did not pay the money back. All parties would argue that “at the time they thought they needed it and they received it within the parameters of the scheme”.

Another point Hickey makes in his podcast, which I agree with, is that while government agencies are not concerned with getting money back from business, they have been litigating to ensure beneficiaries pay back the money they owe. This says, “it’s OK for business to keep, say, the $33m that Fulton Hogan got but if you’re a beneficiary, watch out”.

Hickey suggests the Government should have taken the $14 billion that businesses received and distributed that instead amongst our team of 5 million, so each of us received $2800 each. Imagine the impact for the people of Tairawhiti.

For some of us, that would mean spending money with local businesses affected by lockdown. For others, it would mean the ability to help feed, heat and clothe their family which would also benefit local business. Any which way you look at it, that payment would generate economic activity and would help lower-income families, who have not been positively affected by the post-2020 Covid lockdown boom.

The horse has bolted on this idea this time but until we’re a well-vaccinated country, lockdown will continue to be a tool used to deal with Delta.

So, for any future lockdowns, perhaps, before business approaches the Government for yet another wage subsidy, us business owners should ask, “just because our business can qualify, does that mean we should?” And because lockdowns may well continue to occur until we are a well-vaccinated country, the Government should look at the scheme and ask themselves if there is a better way.

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Originally Appeared Here

The largest independent physicians group in Illinois is notifying more than 600,000 patients whose information may have been compromised in a recent breach, DuPage Medical Group said in a statement today.

Through an investigation, the company determined that a July network outage was caused by unauthorized actors gaining access to its network, the statement says. 

Patient information that may have been compromised includes names, addresses, dates of birth and diagnoses, according to the statement. Financial account numbers were not included, but social security numbers for a “small subset of individuals” may have been affected. 

DuPage Medical says it’s offering free credit monitoring and identify theft protection to those potentially affected by the incident.

The Chicago Tribune first reported the breach earlier today.

A surge in cyberattacks on health care organizations during the COVID-19 pandemic prompted the Cybersecurity & Infrastructure Security Agency, the FBI and the Department of Health & Human Services last October to issue a warning “of an increased and imminent cybercrime threat to U.S. hospitals and health care providers.”

Meanwhile, Metro Infectious Disease Consultants reported a breach affecting More than 170,000 individuals to the Department of Health & Human Services on Aug. 16.

The practice recently said in a statement that an unauthorized third party gained access to some employees’ email accounts, which contained personal information like names, addresses, dates of birth, prescription information and social security numbers.

Metro Infectious Disease Consultants is notifying potentially impacted individuals and has arranged for complimentary identity protection and credit monitoring services for those whose social security numbers or driver’s license numbers were impacted.

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Originally Appeared Here

With three weeks to go before reaching court, Prince Andrew’s strategy to deal with the sexual abuse lawsuit he is facing in the US remains uncertain.

The legal team around him are keeping their cards close to their chests on how they plan to approach the civil suit filed in the US by Virginia Giuffre, who alleges she was forced to have sex with Prince Andrew when she was 17.

He has always denied claims that he slept with Ms Giuffre, and says that he has no recollection of ever meeting her.

The Duke of York’s civil case reaches court for a preliminary hearing on 13 September, though it has the potential to go on for years – this is how it could play out:

Case struck out

An initial ploy by Prince Andrew’s lawyers is likely to be an argument that there is insufficient evidence to justify the case being taken any further.

They would have to satisfy the court that Ms Giuffre’s claims and her demands for damages were backed by so little evidence that they had no realistic chance of success.

Equally, a technical mistake in the paperwork on behalf of Ms Giuffre’s lawyers could mean the case meets a dead end. Given the level of scrutiny and the profile of the case, however, this seems an unlikely outcome.

It may also seem unlikely at this stage but there is also the possibility that Ms Giuffre herself decides to put a stop to the case.

David Greenwood, a UK-based lawyer at Switalskis Solicitors with expertise in child abuse compensation, said: “I sometimes have clients, who have suffered child abuse, who feel the pressure and the memories and all the hassle of going through this is too much. And they decide not to pursue them.”

Engaging in the case

How the lawsuit progresses largely depends on Prince Andrew’s level of engagement with it.

A judgment of a US court can be handed down in default because the defendant has not participated in the proceedings by filing a defence.

Richard Marshall, of the law firm Penningtons Manches Cooper, says there is no international convention to recognise and enforce US civil judgments in England unless a defendant voluntarily submits to the jurisdiction of the US court.

He said: “A judgment of a US court therefore can only be recognized and enforced in England as a matter of English common law.

“One of the options therefore that may be considered for those advising the Duke of York would be for him not to participate and accordingly not submit to the jurisdiction of the US court.

“In such an eventuality a default judgment in itself would not be enforceable in England and Wales. This is more likely to be considered as a favourable option where a defendant in the foreign proceedings has no assets in that foreign jurisdiction against which the default judgment can be enforced.”

Under this strategy, a defendant should only participate to contest jurisdiction.

If the defendant chooses to participate in the proceedings, “any award of damages made against that defendant would then be enforceable in England and Wales due to the defendant having, in those circumstances, submitted to the jurisdiction of the US court”, adds Mr Marshall.

However, barrister Ben Keith, a specialist in extradition and international crime at Five St Andrew’s Hill chambers, says it is rather simple for US judgments to be enforced in England at the High Court.

He also points out that it is unclear whether Prince Andrew is covered by diplomatic immunity from the suit due to his time as the UK’s trade envoy.

“It’s a particularly unattractive argument if you are trying to disprove that you are a sexual predator. It’s a legitimate legal argument,” Mr Keith adds.

Case goes to trial

Since Prince Andrew’s disastrous interview on BBC Newsnight in November 2019 about his relationship with the convicted sex offender Jeffrey Epstein, he has remained silent on the lawsuit. But if the case goes to trial, before a federal court jury, he might decide on the nuclear option and instruct his lawyers to fight.

Mr Greenwood says: “He would essentially have to pick holes in her story and attack her credibility, which would be a very, very high-risk strategy… Sometimes it works, but if it doesn’t work, his case in particular, given the sensitivities of what’s alleged, he’s [scored] a huge own goal by doing that if he loses.

“The other possibility is that… she has some evidence that he doesn’t know about yet… and that seals it for her and she wins the case.”

Mr Greenwood adds: “I’ve represented people against organisations with good reputations to protect. They seem to get blinded by the need to protect their reputation. They send in high-powered lawyers to really have a go at claimants’ credibility. And it’s really horrible to watch.”

If the Duke of York continues to say silent, there could be the ruling in his absence.

“If Prince Andrew thinks by saying nothing it’ll go away, that is a strategy that may work in the UK – it is not a strategy to deploy in the United States,” says US business and marketing expert Allyson Stewart-Allen.

Providing her analysis of the situation, she adds: “As the author of a book called Working With Americans, if I were advising him, I would tell him that, ‘We’re very persistent. We seek transparency. We use the rule of law, as the first resort, not the last resort.’ And because of who he is, America is going to be very interested.”

Losing the case means Prince Andrew will owe damages to Ms Giuffre – although the Queen is likely to step in and foot the bill for legal costs and compensation.

However, that will not be the end of the matter. “Definitely the prosecutors will be keeping a very close eye on this case,” says Mr Greenwood.

Criminal cases have the highest possible burden of proof – beyond a reasonable doubt – whereas the burden of proof in civil cases – on the balance of probability – is lower. Nonetheless, a victory in a civil court for Ms Giuffre would be nothing but encouragement for her team, especially as they and investigators may learn more of the strengths and weaknesses of the Prince’s defence.

Regardless of any criminal repercussions, Prince Andrew’s reputation would appear have no chance of recovering given public attitudes to child sex abuse.

Without solid reasons to doubt the fairness of any court finding against him, the prince – who has already stepped back from public duties – would most likely be obliged to step back from the public eye permanently.

Read More

Prince Andrew: what happens next as Virginia Giuffre files lawsuit suing royal and accusing him of sex abuse

A deal

For Mr Greenwood, the most likely scenario in the Ms Giuffre and Prince Andrew saga is a deal. Each side has an awful lot to lose if the case goes against them so it could make sense to opt for a partial victory rather than risk a total defeat.

“When you get to the stage of closing evidence and witness statements, at that point, but still quite a long time before the trial takes place, the lawyers will know all about the case, and will be advising the parties, ‘Look there [are] risks of losing’.

“So they will probably suggest reaching a settlement, perhaps a meeting behind closed doors to work out what’s acceptable to the parties.”

A settlement, though, will not establish guilt or innocence.

“This is a civil claim for damages not criminal proceedings,” says Mr Marshall.

“Legally this is not about guilt or innocence, it concerns one party seeking monetary compensation against another party in respect of alleged tortious claims.

“An admission of guilt or liability is unlikely, but at any stage of these civil proceedings the parties can reach an out-of-court settlement. If so, it is likely to be confidential and without admission of any liability or culpability.”

But Mr Keith believes a deal is very unlikely “given the reputational damage Prince Andrew has suffered”.

The future

PR agent Mark Borkowski , who has experience in crisis management, says of Prince Andrew’s predicament: “It’s a classic story of power and hubris. I don’t know what options are open for him other than how is he going to deal with retirement. 

“What you see sometimes with these types of stories it just sort of disappears into a footnote of history. But this one isn’t going away because it’s unlikely to be resolved. 

“It still remains a bit of a cat-and-mouse game with the truth or the untruths.”  

Asked if there is any possibility that Prince Andrew could return to public duties in the future, Mr Borkowski says: “In my estimation, in the 21st century, not in a million years.”  

A representative for Prince Andrew gave “no comment” on the lawsuit.

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Originally Appeared Here

In recent months, reporting by ProPublica confirmed that some of the wealthiest billionaires in the United States are paying virtually no income tax on the incredible gains in their fortunes. Worse, a massive loophole in the tax code allows these billionaires and other wealthy Americans to escape income tax on their gains for their entire lifetimes—even as regular Americans pay income tax on every paycheck.

To pay for the transformative investments in his Build Back Better agenda, President Joe Biden has proposed tax reforms to close a capital gains loophole favoring the wealthiest Americans. This change is the most important way that Biden’s plan combats the tax code’s preferential treatment of income from wealth over income from work.

Under the American Families Plan (AFP), only a small fraction of Americans—those with very large untaxed gains—would be affected, mainly because the plan exempts the first $1 million of untaxed gains per person. And while critics of the president’s plan have argued that it would harm family farms and businesses, these claims are unfounded. As this issue brief explains, many of these claims are based on flawed studies, including some that do not even analyze the actual Biden proposal.

The fact is that under the AFP, the vast majority of Americans—including family farmers and small-business owners—would be exempt from new taxes, since the proposal is targeted at those with large untaxed gains. Moreover, the proposal includes special protections for owners of family farms and businesses who plan to keep their enterprises in the family. Because of these protections, critics’ harshest claim—that the Biden plan would force families to sell their farms and businesses, thereby preventing transfers from one generation to the next—is simply not true.

The AFP closes a loophole that allows huge fortunes to permanently escape income tax

To support vital public investments, President Biden’s plan would raise $3.6 trillion in revenue from high-income Americans and corporations over the next decade, including nearly $350 billion from reforming the taxation of capital gains. Capital gains are the growth in the value of assets between when they are bought and when they are sold. Because of the extreme concentration of wealth in the United States, capital gains accrue overwhelmingly to the very rich. According to data from the Congressional Budget Office, households in the top 1 percent of the income distribution collect nearly $486,000 per year on average in realized capital gains; those in the bottom 20 percent make just $67. Central to President Biden’s tax reform is his proposal to repeal the stepped-up basis loophole—which shields these types of gains from income tax—while protecting the savings of ordinary Americans.

Figure 1

Stepped-up basis is one of multiple ways that capital gains receive favorable tax treatment. Under the existing tax code, gains on assets are generally not taxed until they are sold. If a wealthy person buys stock for $1 million and it rises in value to $11 million, they do not owe any tax as long as they hold the asset—even though they have become $10 million wealthier. If the person sells the asset, they would realize a $10 million gain and include that amount in their taxable income. Assuming the person has held the asset for more than one year, the gain would be taxed at the rates for long-term capital gains, which are significantly lower than those for other forms of income. Though the asset value grew over years, the tax is deferred until sale and is subject to much lower rates when it is taxed. By contrast, income derived from labor—such as wages—is generally taxed as it is earned and is subject to ordinary rates.

Moreover, stepped-up basis allows gains on assets to permanently escape income tax if the owner never sells the asset during their lifetime. If an individual holds an asset until their death, the gain is simply erased at that time. No one—neither the decedent nor their heirs—pays any income tax on the gain accrued during the decedent’s life.

As the ProPublica reporting illustrates, the wealthiest billionaires in the country pay hardly any income tax from year to year because they often sell little to none of their stock holdings. This means that some of the largest fortunes in human history will permanently escape income tax if Congress fails to change the revenue code before these billionaires pass their fortunes to their heirs.

Biden’s tax reforms only affect a tiny share of Americans

The AFP does not repeal the stepped-up basis loophole entirely. Under the plan, up to $1 million in untaxed gains per person—$2 million per couple—would still be exempt from taxation. This would come on top of other capital gains carveouts, including the exemption of $250,000 of gain on home sales—$500,000 for couples—and the exclusion of sales of qualified small-business stock.

Unsurprisingly, very few people would be affected by these tax hikes. Robert McClelland of the Tax Policy Center estimates that a miniscule 3 percent of households have unrealized capital gains greater than $1 million per person.

Above the exemption levels, President Biden’s plan would repeal stepped-up basis by counting gifts and bequests of appreciated assets as realization events, requiring the original owner to include the appreciation of the asset in their taxable income. In the case of a bequest, this would fall on a decedent’s final income tax return. Taxes on liquid assets such as stocks would be due that year, but taxes on nonliquid assets such as farms and businesses could be paid over 15 years.

Moreover, the AFP allows heirs of family-owned farms and businesses to defer taxes indefinitely so long as the farms or businesses continue to be owned and operated by members of the family. Taxes are only owed on the original owner’s gain when the enterprise is sold or is no longer operated by the family. For this reason, no one inheriting and operating a family farm or business would be forced to sell it for the purpose of paying new taxes under the Biden plan.

Critics of the AFP ignore its specific protections for family farms and businesses

President Biden’s proposals to tax the rich are overwhelmingly popular. Consequently, the president’s critics have been hesitant to attack his plan directly. For example, a recent CNBC profile of the business lobbying group America’s Job Creators for a Strong Recovery (ACJSR) noted the following:

The coalition [ACJSR] aims to turn the narrative away from a debate about taxing the rich and the biggest corporations to pay for roads and bridges. The organizers themselves acknowledge that that rhetorical battleground leans strongly in Democrats’ favor in public opinion polls.

ACJSR has instead mischaracterized President Biden’s plan as a tax hike on families. Eric Hoplin, one of the group’s leaders, claimed that the Biden proposal would “enact record high taxes on America’s individually and family-owned businesses,” a phrase ACJSR has reiterated in multiple outlets.

Other groups have similarly accused the AFP of harming family farmers. An article in the Northern Ag Network paraphrased Sen. Steve Daines (R-MT) as saying that the president’s plan would “destroy the generational handoff of farms and ranches.” Daines also said that  “[t]he only way Montana farmers and ranchers could get through this, would be to sell off part or even all of the family farm or ranch.” Daines’ quote implies that income tax would be due on family-owned farms or ranches when they are handed down to another generation. But that is not true, for two reasons. First, most family farm and ranch owners would fall well under the exemption thresholds in the AFP. And second, even those with more than $2 million of gain will be able to defer their income taxes indefinitely so long as their farm or business continues to be owned and operated by members of their family.

Critics of the AFP cite misleading and flawed studies

To make these tenuous assertions appear valid, President Biden’s critics have cited two studies: one from the Agricultural and Food Policy Center (AFPC) at Texas A&M University and another from the accounting firm EY, formerly known as Ernst & Young. Both studies dramatically overstate the impact on family farmers and business owners from repealing stepped-up basis, and neither directly examines the Biden plan. Nonetheless, the studies have gained attention because of the novelty of their conclusions, which greatly exceeds the strength of their evidence.

The AFPC study

On July 21, 2021, Sen. John Boozman (R-AR) claimed on the Senate floor that President Biden’s plan would “crush rural America.” He highlighted a study that Republicans on the Senate Committee on Agriculture, Nutrition, and Forestry and the House Committee on Agriculture had requested from the AFPC. Boozman asserted that if President Biden’s plan were implemented, 92 of the 94 “representative farms” selected by the AFPC “would be impacted with an average additional tax liability of more than $720,000 per farm.” In a similar vein, House Agriculture Committee Republicans cited the study to claim that if combined with a wholly separate bill, changes that “mirror” President Biden’s plan would cost those 92 farms an average of $1.4 million each. Finally, Sen. John Thune (R-SD) cited the AFPC study in a Fox News op-ed, writing:

But the Biden administration is targeting this longstanding part of the tax code [stepped-up basis] as it scrambles to pay for its far-left crusade to permanently grow the federal government and fund the massive tax breaks they’re proposing for wealthy Americans in blue states.

The Texas A&M Agricultural and Food Policy Center studied how this new tax would affect family operations, and it found that 98 percent of the representative farms in its 30-state database would pay a big price. How much? On average, the proposal would increase the tax liability by $726,104 per farm.

Nobody likes paying taxes, but this heavy additional burden – again, often on unrealized gains – has the potential to force families to sell off part of the farm or lose the farm entirely just to pay a tax bill.

For starters, policymakers should recognize that the AFPC study does not consider President Biden’s plan. Rather, the study focuses on an estate and gift tax bill—the For the 99.5 Percent Act—introduced in Congress and another proposal—the Sensible Taxation and Equity Promotion (STEP) Act of 2021—put forward as a discussion draft.

The For the 99.5 Percent Act, sponsored by Sen. Bernie Sanders (I-VT) and Rep. Jimmy Gomez (D-CA), would change the taxation of estates, gifts, and trusts in a number of ways, most notably by decreasing the exemption amount and introducing higher marginal rates for the estate tax. President Biden’s budget, however, currently includes no estate tax changes.

Like the AFP, the STEP Act—sponsored by Sen. Chris Van Hollen (D-MD)—seeks to eliminate the stepped-up basis loophole. It also includes a $1 million exemption threshold—$2 million for couples—and allows new tax liabilities to be paid over 15 years. But unlike the president’s proposal, the draft of the STEP Act did not include specific protections for family farms and businesses. The reason that no protections are spelled out in the bill is precisely because it is a discussion draft, and its authors have invited outside input before introducing an actual bill. As noted above, President Biden’s plan guarantees that no taxes will be owed on family-operated farms and businesses until those farms or businesses are ultimately sold; this deferral of tax liability was not included in the STEP Act discussion draft studied by the AFPC.

More importantly, the AFPC study contains multiple methodological flaws. First, the AFPC’s selected farms are hardly “representative” of family farms nationwide. Although the word “representative” makes dozens of appearances in the AFPC report, there is little clarification as to who or what is being represented. At one point, the authors briefly note that “AFPC’s representative farms and ranches are all assumed to be full-time, commercial-scale family operations.”

This means that the AFPC’s 94 farms are unrepresentative of family farms generally. According to 2019 data from the U.S. Department of Agriculture (USDA), just 8.2 percent of all family farmers own commercial farms. Moreover, these commercial farmers are far wealthier than the 91.8 percent of noncommercial farmers. This skews the AFPC study toward the very wealthiest family farmers.

Second, even after limiting itself to commercial farms, the study gives disproportionate weight to large commercial farms. The most recent AFPC study does not discuss the selection criteria for the farms, but in a March 2021 AFPC study of the same 94 farms, the researchers noted:

AFPC has developed and maintains data to simulate 94 representative crop farms, dairies, and livestock operations chosen from major production areas across the United States. … Often, two farms are developed in each region using separate panels of producers: one is representative of moderate size full-time farm operations, and the second panel usually represents farms two to three times larger.

For AFPC farm households, median net worth was roughly five times the national median, and average net worth was nearly four times the national average. (see Table 1) This discrepancy cannot be explained away by confounding factors. For example, even if one were worried about the USDA’s inclusion of small residential farms in its sample, this would not explain the large differences in net worth between AFPC commercial family farms and the commercial family farms surveyed by the USDA.

Table 1

The AFPC study exaggerates the burden of taxes in other ways as well. For example, consider the center’s assessment of the For the 99.5 Percent Act. The AFPC study highlights the act’s “average” tax increase for “impacted” family farmers, and those modifiers create two distortions. First, by limiting its analysis to “impacted” farmers, the AFPC excludes all farmers who would pay zero estate taxes under the For the 99.5 Percent Act. Second, the use of an average greatly exaggerates the effect on most farmers. If 99 individuals each owed $1 in taxes and one person owed $99,901, it would be misleading to declare that the “average” person owed $1,000 in taxes. This problem arises in the AFPC study, where a large share of the estate tax burden is borne by a minority of extremely wealthy farmers.

The AFPC researchers determine that with the For the 99.5 Percent Act’s provisions in place, 41 of the 94 farms would pay the estate tax, with an “Average Additional Tax Liability Incurred for Farms Impacted” of just less than $2.2 million. Using data from their March 2021 paper, the AFPC’s results have been replicated for this issue brief. The authors follow the AFPC methodology of ignoring the increased deduction for Section 2032A special use valuation—an estate tax break for farms. According to this replication, an estimated 39 farms would pay estate taxes under the For the 99.5 Percent Act, and the average liability per affected farm would be $2.5 million.

The authors’ results show just how distortionary the words “average” and “impacted” are. The average estate tax for the 39 affected farms is $2.5 million, yet the average for all 94 farms is $1 million—just 41 percent as much. Moreover, the vast majority of the average tax would be paid by a small group of farmers. Fifty-five farmers would owe no estate taxes; 27 farmers would owe below-average amounts; and just 12 would pay more than the average per affected farm. These 12 estates—12.8 percent of farms in the survey—would be responsible for 65.8 percent of the total tax bill. And again, as noted above, these farms come from a sample that cherry-picks extremely large commercial farms.

Although the AFPC researchers published the net worth of all 94 farms in their March 2021 report, they have not made similar statistics available for each farm’s unrealized capital gains. If their data for unrealized capital gains are as dominated by a few rich farms as their data for estate values, then most of the STEP Act’s average burden will be borne by a small subset of AFPC farmers.

Finally, the AFPC study overstates the STEP Act’s impact on farmers by assuming that none of them are married, even though nationwide, roughly 4 in 5 farmers have a spouse. That is important because the exemption for unrealized capital gains is $2 million per couple but only $1 million for single individuals. In assessing the impacts of the STEP Act, the AFPC researchers assume that the farms in their study would be allowed to use the stepped-up basis provision for just $1 million, effectively underestimating the true step-up threshold by 50 percent.

The EY study

Opponents of the AFP have also cited a study by the accounting firm EY. As with the AFPC study, the EY study has been used to attack the Biden plan even though it never comments on the president’s proposal.

The EY study has two component parts. In the first part, the researchers give examples of how five hypothetical family businesses would be harmed by taxation at the time of the owner’s death. With business resale values averaging $74 million and ranging from $20 million to $200 million, EY’s hypothetical businesses do not remotely resemble typical family businesses in the real world.

In the second part of their study, the researchers translate their hypothetical stories to real-world data. In that section, EY concludes that the economic cost of taxing capital gains at death would be just 0.04 percent of gross domestic product (GDP). Moreover, just one-third of the cost would be borne by labor.

As insignificant as that would be, it overstates the cost of the Biden plan for two reasons. First, the EY study—like the AFPC study—is not an assessment of the Biden plan. Rather, it looks at the effects of immediate taxation upon the death of a business owner. As such, the EY researchers do not account for how tax deferral would protect family businesses, nor do they account for the Biden plan’s exemption of $2 million per couple. When the EY researchers analyze a second proposal more akin to true tax deferral, they find that the total economic cost would be just 0.02 percent of GDP—exactly half of an already small number. Critics who cite the EY study should be more forthright in noting both this point and that the $2 million exemption preserves stepped-up basis for the great majority of family farmers and business owners.

Second, EY’s analysis fails to account for the economic benefits of eliminating the lock-in effect associated with stepped-up basis. With stepped-up basis, investors and business owners have an incentive to hold assets until their deaths even if they otherwise would have sold the assets. This harms economic efficiency and growth. Repealing stepped-up basis would make capital more liquid since there would be less incentive to hold assets indefinitely.

Extrapolating from the conclusions reached in the EY study, the macroeconomic cost of the Biden plan would be somewhere between trivial and nonexistent. Meanwhile, the $350 billion in revenue from reforming capital gains taxes would be invested in ways that enhance growth and support working families. The EY study also fails to analyze President Biden’s proposals on the spending side. Instead, it merely includes assumptions about generic government spending.

The AFP taxes the rich, not working-class families

While there would be no additional taxes under the Biden plan for farms and businesses that remain family-owned and -operated, taxes would go up substantially for wealthy individuals who are only passive business owners.

Consider family farms. The word “operated” ensures that tax deferral will only extend to actual farmers—not to wealthy individuals who happen to own farmland. According to 2014 data from the USDA, 31.1 percent of the country’s farmland is owned by nonoperating landlords—people who rent out the land but do not farm it themselves. For example, before their recent divorce, Bill and Melinda Gates owned more farmland than any other couple in the country. Because the Gateses do not operate their own farmland, they would not qualify for tax deferral under the Biden plan.

Moreover, the Gateses and their heirs are not an exception to the rule. Of the 283 million acres of farmland currently owned by nonoperating landlords, 53.8 percent were either inherited or gifted. Had the Biden plan been in place when these nonfarmers inherited their land, they would have paid taxes on unrealized capital gains above the $2 million threshold.

The AFP protects genuine family farmers even as it taxes wealthy landlords. According to the USDA, 98 percent of family-owned and -operated farm estates would not incur any additional taxes when parents’ assets are passed to their heirs. Under the Biden plan, such families would have their tax payments deferred so long as the farm remained in the family. The remaining 2 percent would pay higher taxes only on their nonfarm assets. For example, even if Bill Gates were to begin farming his own land and could thus take advantage of the Biden exemption for family-operated farms, he would still have to pay taxes on the gains from his Microsoft stock and any other nonfarm assets he owned.

Conclusion

Under the AFP, working-class parents could pass their farms and businesses to their children without having to pay any capital gains taxes at the point of transfer. Yet proponents of the tax code status quo are hiding behind family farmers and business owners to protect a far different group: the extremely rich.

Middle-class Americans generally do not have significant capital gains. Households in the middle fifth of the income distribution realize just $333 in capital gains each year. If they accrue similar amounts of unrealized gains, it would take more than 6,000 years to surpass the American Families Plan’s $2 million exemption threshold. Although life expectancy is projected to rise in the future, it is unlikely that the Biden plan will raise taxes for ordinary working people.

Families who work their own land or operate their own businesses will receive similar treatment. Typical family farms are not worth $7.2 million, and normal family businesses are not worth $74 million. The studies reporting enormous tax hikes for family farms and businesses cherry-pick their examples from a few exceptionally wealthy estates—because that is who will pay taxes under the Biden plan.

Those affected by the Biden proposal will not be family farmers or family business owners, but rather the heirs of stockholders, bondholders, and landlords. The working class will be protected, even as the passive rich will not.

Nick Buffie is a policy analyst specializing in federal fiscal policy on the Economic Policy team at the Center for American Progress. Bob Lord is an associate fellow at the Institute for Policy Studies and tax counsel for Americans for Tax Fairness.

Endnotes

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A sign displays the price for shirts as a shopper peruses the offerings at a Costco warehouse in this photograph taken Thursday, June 17, 2021, in Lone Tree, Colo. Growth in U.S. consumer spending slowed in July to a modest increase of 0.3% while inflation over the past 12 months rose to the fastest pace in three decades.

AP Photo/David Zalubowski

WASHINGTON (AP) — Growth in U.S. consumer spending slowed in July to a modest increase of 0.3% as infections from the delta variant spread, while inflation over the past 12 months hit its fastest pace in three decades.

Last month’s spending was not even a third of the 1.1% rise in June, the Commerce Department reported Friday.

It was the clearest signal yet that the surge in the delta variant of the coronavirus has had an impact on consumer spending, the driving force in the economy.

Consumer prices over the past 12 months have risen 4.2%, the biggest 12-month gain since a 4.5% increase for the 12 months ending in January 1991. This price index tied to consumer spending is the inflation gauge preferred by the Federal Reserve.

The 4.2% increase over the past year is well above the Fed’s annual inflation target of 2% but so far Fed officials view the jump in inflation as transitory and have not changed their easy-money policies in the belief that rising infections could become a threat to future growth.

In a speech Friday, Fed Chairman Jerome Powell continued to express optimism that the jump in inflation is temporary and will not require the Fed to raise interest rates to tamp down inflation.

“The spike in inflation is so far largely the product of a relatively narrow group of goods and services that have been directly affected by the pandemic and the reopening of the economy,” Powell said, effects that “should wash out over time.”

Powell did say the Fed could begin trimming its $120 billion in monthly bond purchases later this year, a maneuver used to lower long-term interest rates, as long as the labor market continues to improve.

Rising inflation and infections are taking a toll on consumer confidence.

The University of Michigan’s consumer sentiment index, released Friday, fell sharply in August to a reading of 70.3, down from 81.2 in July. But economists said they are looking for a rebound in confidence once the inflation spike and COVID-19 cases begin to recede.

Incomes, which provide the fuel for future spending, rose a solid 1.1% in July reflecting in part the strong job gains that month.

The government reported Thursday that the overall economy as measured by the gross domestic product, rose by a solid 6.6% in the April-June quarter. While economists have trimmed their forecasts for growth in the current quarter based on the virus resurgence, analysts still believe if COVID-19 cases recede in the final four months of 2021, the country will experience its strongest growth since the mid-1980s this year.

“We believe cooler consumer spending growth is more likely than consumers retrenching and the economy going into reverse,” said Lydia Boussour, lead U.S. economist at Oxford Economics.

The pandemic crushed spending on services like travel and restaurants, though Americans continued to spend on goods as they holed up at home. There is some evidence that the spread of the delta variant may again be cooling spending on services, which had begun to rebound as more people became vaccinated.

Southwest Airlines is reducing flights for the rest of the year because infection rates in the U.S. are starting to cut into demand for plane tickets.

The airline said Thursday it would cut its September schedule by 27 flights a day and trim 162 flights a day, or 4.5% of its schedule, from early October through Nov. 4.

The 4.2% rise in overall U.S. inflation over the past 12 months was up from a 4% gain for the 12 months ending in June. Core inflation, which excludes energy and food, was up 3.6% for the 12 months ending in June, also the fastest increase since 1991.

The 1.1% rise in incomes was the best showing since a 21% surge in March when the government was disbursing economic support payments from the $1.9 trillion rescue plan that President Joe Biden pushed through Congress. The increase in July reflected strong hiring and the initial payments from the expanded Child Care Tax Credit.

With incomes outpacing spending, the personal saving rate rose sharply to 9.6% of after-tax incomes in July. Economists estimate that the excess savings of households now totals around $2.5 trillion, giving consumers plenty of spare cash to keep spending.

For July, the spending gain reflected a 1% rise in spending on services which includes everything from restaurant meals to utility bills. Spending on durable goods such as autos fell a sharp 2.3% while spending on nondurable goods such as clothing was down 0.4%.

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The increase in unemployment claims likely reflects volatility in the weekly data against a backdrop of elevated labor demand. The delta variant that’s fueled a recent surge in new infections across the country poses a risk, though there’s so far been little evidence to suggest that health concerns are leading to dismissals.

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Still, lawmakers are wary of the threat the highly infectious variant poses to a broader economic recovery.

Companies are postponing a return to the office and issuing mask requirements and vaccine mandates to curb the spread. The Biden administration has emphasized the need to reopen the economy, but cautioned that businesses need to protect workers and consumers.

A separate report out Thursday showed U.S. economic growth in the second quarter was revised slightly higher, reflecting stronger business investment and exports than previously estimated.

Initial claims in Michigan, Texas and Virginia saw the biggest declines last week. Maryland posted the largest increase, followed by California and Illinois.

More than 20 governors have prematurely ended federal unemployment programs — including an extra $300 weekly payment — put into place during the pandemic, hoping that removing the enhanced benefits would incentivize workers to look for jobs. Lawsuits in some of those states challenging the governors’ legal authority to end the aid could restore the halted benefits until they officially expire in early September.

While the White House has indicated it will not extend jobless aid any further, it did inform states last week that unused pandemic-relief funds can be used to continue providing assistance to unemployed workers.

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Tim Cook

 

BBC: Apple Chief Executive Tim Cook has received more than five million shares in the technology giant, as he marks 10 years in the job.

A company filing with the US Securities and Exchange Commission (SEC) watchdog shows that he sold most of the shares for more than US $ 750 million (£550 million).

It is part of a deal he struck when he took over from co-founder Steve Jobs.

The award depended on how well Apple’s shares performed compared to other firms on the S&P 500 stock index.
According to Apple’s filing with the SEC, Cook was eligible for the award as the company’s shares had risen by 191.83 percent over the last three years.

It also noted that Apple’s share price has increased 1,200 percent since he became Chief Executive on August 24, 2011.

The company behind the iPhone, iPad and MacBook now has a market valuation of almost US $ 2.5 trillion.
Last year, Cook agreed to a new pay package that runs to the end of 2026.

A SEC filing also showed that earlier this week Cook donated almost US $ 10 million worth of Apple shares to charity, without naming the recipient.

In 2015, Cook said he would give away his entire fortune before he dies and is known to have donated tens of millions of dollars to charity.

He currently has a net worth of around US $ 1.5 billion, according to the Bloomberg Billionaire’s Index.

Cook has often spoken publicly about his concerns over issues including HIV and Aids, climate change, human rights and equality.

He follows other mega-rich US business people who have said they would give away all or a significant portion of their fortunes in their lifetimes.

In 2010, Microsoft co-founder Bill Gates and investment veteran Warren Buffett launched the Giving Pledge, which called on billionaires to give away at least half of their fortunes.

Earlier this year, Buffett donated to charity another US $ 4.1 billion worth of shares in his company Berkshire Hathaway.

 

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“Consumers’ extreme reactions were due to the surging Delta variant, higher inflation, slower wage growth, and smaller declines in unemployment,” said Richard Curtin, director of the survey, in a statement.

“The extraordinary falloff in sentiment also reflects an emotional response, from dashed hopes that the pandemic would soon end and lives could return to normal without the re-imposition of strict COVID regulations,” he said.

If the slide in confidence translates to a pullback in spending, economic growth may decelerate further in the coming months.

The survey period, July 28 to Aug. 23, also coincided with the Taliban’s takeover of Afghanistan and the start of the chaotic evacuation operation of U.S. and Afghan citizens.

Respondents said they expect inflation to rise 2.9% over the next five to 10 years, a three-month high. They expect prices to advance 4.6% over the next year — just shy of the 4.7% seen in the July survey, which was the highest in more than a decade.

Severe supply chain disruptions and a broader reopening of the economy have fueled swift price gains for a variety of goods and services. Soaring rents and home prices are further burdening Americans’ finances.

Meantime, the recent surge in COVID-19 cases has disrupted return-to-office and back-to-school plans, forced the cancellation of events and led many cities to reintroduce mask mandates.

A measure of expectations dipped further in the second half of the month, falling to 65.1 from 65.2 in the preliminary reading, still the lowest since 2013. The current conditions gauge improved slightly from the initial reading but remains its weakest since April of last year at 78.5.

An alternative gauge of consumer sentiment — which places greater emphasis on views of the labor market — will be released by the Conference Board on Tuesday, Aug. 31.

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