It’s possible that I shall make an ass of myself. But in that case one can always get out of it with a little dialectic. I have, of course, so worded my proposition as to be right either way (K.Marx, Letter to F.Engels on the Indian Mutiny)
Tuesday, March 29, 2022
‘Why was no one held accountable?’ Gray calls for state audit over water loss
Kent Porter/Press Democrat file
Madeline Shannon
Tue, March 29, 2022
Assemblyman Adam Gray says he has asked California’s Legislative Audit Committee to audit the Department of Water Resources and State Water Resources Control Board after the state miscalculated Sierra Nevada water.
According to a news release from Gray’s office, the loss of 700,000 acre-feet of water last year prompted his audit request. Gray said the water could have supplied 1.4 million California homes for a year.
“Why was no one held accountable after the state grossly miscalculated how much moisture was actually stored in the Sierras last year?” Gray, D-Merced, said in the release.
Other public agencies, including a federal agency that measures the snowpack and local irrigation districts, didn’t make similar mistakes, according to Gray’s office.
The Department of Water Resources released an unknown quantity of water before the spring runoff last year, just before last year’s drought that saw some domestic wells go dry and some cities run out of water completely.
Juvenile salmon in the Sacramento River and its tributaries were also victims of the water loss, Gray’s office said.
“The water is long gone,” Gray wrote in an opinion column published Monday on CalMatters. “All we are left with is questions.”
The announcement of the audit comes the same day as new restrictions ordered by Gov. Gavin Newsom, who mandated that cities and local water agencies reduce their water usage and tighten conservation rules.
While he didn’t agree to institute mandatory urban water use statewide, he ordered urban water agencies to follow through on the second phase of their water shortage contingency plans. Those plans are meant to take effect when water shortages approach 20%.
Just last month, the Department of Water Resources released nearly three times the normal water flows from Lake Oroville, the largest state-operated reservoir despite climatologists all over the country warning of a resumption of the drought, according to the news release.
“Until we understand what has gone wrong with the agencies charged with managing California’s water, we cannot understand how to fix the problem,” Gray wrote.
Drought concerns linger
The announcement comes just weeks after the state announced a cutback to 5% in water deliveries from the State Water Project, citing continuing dry weather. That in itself was a reversal from its previous allocation increase in January, signaling how much state officials are grappling with California’s characteristic wild swings in weather.
Amid the state’s water woes, Merced Irrigation District officials are doing their best to deliver water to local growers despite the challenges from the state.
MID officials just announced last week the completion of a $6 million main canal rehabilitation to bolster water delivery to Merced-area farmers, although surface water allocations from the district were reduced while costs went up.
The latest effort by the state to mitigate the effects of the drought might come too little, too late for many growers here, especially since officials with MID worried in a recent board meeting that the wet season wasn’t wet enough to yield more than one acre-foot of water in the dry season for many of the farmers it serves.
The Bay Delta plan, which was introduced by the state several years ago and will divert 50% of Merced County’s share of Lake McClure water, exacerbate those woes.
Isabella O'Malley, M.Env.Sc
Sun, March 27, 2022
Deploying autonomous robots to scour the seafloor can bring a lot of surprises. For one team of scientists conducting research in Canada, their robot fleet discovered “sinkhole-like depressions” the size of an entire city block of six-story buildings — an alarming discovery that could have serious implications for the global climate.
A team of international researchers affiliated with the Monterey Bay Aquarium Research Institute (MBARI) has been collecting data from the Canadian Beaufort Sea since 2003 to learn more about this extremely remote region. The “sinkholes” that the researchers discovered were actually regions of thawing permafrost.
Permafrost is defined as any type of ground that stays continuously frozen for at least two years. Thawing permafrost has been widely documented across many parts of the Arctic in recent years, but the researchers’ study states this is the first time that permafrost thawing on the seafloor has been observed.
Data collected from 2010 to 2019 revealed that there were “extraordinarily rapid” changes to the seafloor along an area of permafrost that formed between 2,580,000 to 11,700 years ago. The largest sinkhole had an oval shape that measured 28 meters (92 feet) deep, 225 meters (738 feet) long, and 95 meters (312 feet) wide.
This massive sinkhole in the Canadian Beaufort Sea developed in just nine years.
The driving force behind the formation of the sinkholes in the Canadian Beaufort Sea is attributed to permafrost sediment gradually warming up since the last Ice Age due to brackish groundwater flowing across regions of ancient permafrost, which has a warming effect on the ice and eventually causes a collapse.
The researchers note these sinkholes started forming before humans began warming the planet with greenhouse gas emissions, but note that the accelerated warm-up the Arctic is experiencing due to these emissions can hinder our ability to understand how this frozen environment functions without the influence on human activity.
“These rapid changes to the seafloor demand our attention. We need to understand how the decay of relict submarine permafrost will impact the vast areas underlying the Arctic continental shelves. This groundbreaking research has revealed how the thawing of submarine permafrost can be detected, and then monitored once baselines are established,” Charlie Paull, a geologist at MBARI and one of the lead authors of the study, stated in a press release.
2017 Arctic mapping AUV launch Roberto Gwiazda (Charlie Paull © 2016 MBARI)
In 2022, MBARI will join collaborators from the Geological Survey of Canada, the Department of Fisheries and Oceans Canada, the Korean Polar Research Institute, and the United States Naval Research Laboratory for an expedition aboard the Korean icebreaker Araon (pictured) for further research on the thawing submarine permafrost in the Canadian Beaufort Sea. (Roberto Gwiazda © 2017 MBARI)
Crater formations found on land have also given scientists clues about the changing nature of permafrost in a warming world. A number of enormous sinkholes, including one that measured 20 metres in length, have appeared in Siberia and are linked to eruptions of methane gas that built up underneath the Earth’s surface.
Methane is a greenhouse gas that is 84 times more powerful than carbon dioxide at warming the Earth over a 20-year period. In addition to the direct impacts that the thawing landscape has on individuals in the Arctic, such as those that have homes built on top of permafrost, scientists are concerned about the widespread release of methane as the frozen environments warm.
Melting permafrost on land in the Arctic has been correlated with increasing global temperatures, which raises questions about how human-induced climate change could affect permafrost underneath the ocean. The researchers say there is much to be learned about how thawing permafrost can restructure the Arctic seafloor and that their discovery can help set baselines that will help the monitoring and analysis of future data.
“The Government of Canada and the Inuvialuit people who live on the coast of the Beaufort Sea highly value this research as the complex processes described have implications for the assessment of geohazards, creation of unique marine habitat, and our understanding of biogeochemical processes,” stated Scott Dallimore from the Geological Survey of Canada, who is also one of the study’s lead authors.
Thumbnail credit: Eve Lundsten © 2022 MBARI
Coca Cola and Pepsi Control the Global Beverage Industry
What Is the Power Make-Up of the Global Soft Drink Industry?
Two powerhouses control the market share of the carbonated soft drink and beverage industry: PepsiCo. Inc. (PEP) and The Coca-Cola Corporation (KO).
Since 2004, Coca-Cola Company has been the market leader. Coca-Cola, despite a brand value decline of 13% in 2021, remained the world’s most valued soft drink brand at $33.2 billion in 2021, according to Brand Finance. PepsiCo. takes second at $18.4 billion. Dr. Pepper-Snapple was the fastest growing soft drink brand with a 40% brand value increase, followed by Red Bull’s 15% increase.1
KEY TAKEAWAYS:
- PepsiCo. Inc. and The Coca-Cola Corporation are the two powerhouses controlling the bulk of the carbonated soft drink (CSD) and beverage industry.
- Both companies have a large global presence, controlling several hundred brand names each.
- Since 2004, Coca-Cola Company has been the market leader, according to industry statistics.
- Pepsi ranks second, followed by Dr. Pepper-Snapple.
- In Q1 2022, PepsiCo had a market cap of $229.3 billion while Coca-Cola had a market cap of $268.4 billion.
Understanding the Carbonated Soft Drinks (CSD) Industry
Carbonated soft drinks belong to the non-alcoholic beverage industry. This industry produces regular and diet fizzy drinks, juice, bottled water, sports and energy drinks, and hot and iced coffee and tea. The market leaders in this industry are The Coca-Cola Corporation, PepsiCo. Inc. and Dr. Pepper Snapple.
The Coca-Cola Corporation and PepsiCo have been long-term competitors. Pepsi has been using the famous "Pepsi challenge" as a promotional slogan since 1975. The challenge was originally a taste experiment where consumers were invited to try beverages out of two blank cups—one filled with Pepsi Cola and one containing Coca-Cola. Consumers were asked to compare the two drinks and pick the one that they preferred. Pepsi Cola was the winner
Top Selling CSDs
The top-selling CSDs in the U.S. in 2021 were:2
- Coca-Cola Classic
- Pepsi Cola
- Diet Coke
- Dr. Pepper
- Mountain Dew (a Pepsi brand)
- Sprite (a Coca-Cola brand)
- Diet Pepsi
- Coke Zero
- Fanta (a Coca-Cola brand)
- Diet Mountain Dew (a Pepsi brand)
Market Share and Market Cap
Both Coca-Cola, Inc. and PepsiCo have risen by around 14.5% over the trailing twelve months through Q1 21022. Coca-Cola had a market cap of $268.4 billion and PepsiCo a market cap of $229.3 billion.3
Coca-Cola’s top brands also generally outperformed PepsiCo’s over the past several years. It is difficult to reach a consensus on which company controls more of the market without drilling down to a specific type of drink, for example, diet versus regular. Beverage Digest reports that Coca-Cola’s key diet sodas fared better than PepsiCo’s core diets.4
Both companies face competition from the growing market of healthier alternatives to sugary soda drinks, such as energy and nutritional drinks. This has reduced Coca-Colas's operating margin from about 25% to approximately 20% since the year 2000. To adjust to these changing market conditions, both Coca-Cola and PepsiCo have developed their own alternative beverages but still face competition and market share erosion from other competitors.1
Coca-Cola owns upwards of 500 global brands, with just 21 of which generate approximately $1 billion each, per year, in revenue.5 PepsiCo also, has a wide variety of leading brand-name food and beverage products with 22 of those brands generating more than $1 billion each, per year, in revenue.6
Both companies span the globe, having a leading presence in over 200 countries. The companies and their respective primary brands are household names recognized worldwide, but are possibly most famous for the rivalry between them, which is typically known as the “cola wars.” Regarding longevity, targeted marketing campaigns, and different marketing tricks, this commercial war is considered one of the most epic in history.
Does Coca-Cola or Pepsi Make More Money?
Coca-Cola outpaces PepsiCo in terms of market share. In 2021, Coca-Cola also brought in more revenue: $38.7 billion compared to PepsiCo's $25.3 billion. This translated into $9.8 billion of net income for KO and $7.6 billion for PEP.78
What Percentage of the Market Does Pepsi Have?
In 2020, PepsiCo controlled around 26% of the U.S. carbonated beverage market, down from 30.5% in the mid-2000s.9 Coca-Cola had around 44% of the U.S. market share.10
How Much of the Carbonated Soft Drink Industry Is Controlled by Coca-Cola and Pepsi?
In the U.S., around three-quarters of the carbonated soft drink and beverage industry is controlled by Coca-Cola and Pepsi alone.109
The Bottom Line
Times have changed since the development of carbonated beverages. Consumers have begun to seek out healthier alternatives. Both cola brands have seen a recent decline amid increased competition, and analysts foresee a continued downward trend for the two main brands. However, these two companies are expected to continue to dominate the overall beverage market
FILE PHOTO: The seal of the U.S. Securities and Exchange Commission (SEC) is seen at their headquarters in Washington, D.C.
Mon, March 28, 2022,
By Katanga Johnson and John McCrank
WASHINGTON/NEW YORK (Reuters) - Wall Street's regulator is considering changes to stock market rules to increase competition for orders and improve deals for retail investors, according to its top official Gary Gensler and industry executives.
The U.S. Securities and Exchange Commission (SEC) is scrutinizing the practice of payment-for-order-flow (PFOF), in which wholesale market-markers pay brokers like TD Ameritrade, Robinhood Markets and E*Trade to route retail customer orders to them instead of to exchanges. The SEC review could lead to the biggest shake-up of U.S. equity market rules in over a decade.
Robinhood makes around 75% of its revenue from PFOF. The trading app and others say the practice on average gives retail investors a fractionally better deal than exchanges, allowing them to drop commissions and democratize investing.
Critics say payment for order flow can create conflicts of interest, and also encourages brokers to add video game-like bells and whistles to their apps and websites that prompt investors to trade more, which boosts the broker's profit but is rarely the best investment strategy. Britain, Canada and Australia have banned PFOF and Gensler suggested in August that the SEC could go that route.
PFOF drew new scrutiny last year when an army of retail investors went on a buying spree of "meme stocks" like GameStop and AMC, squeezing hedge funds that had shorted the shares. Many purchased the shares using commission-free brokers like Robinhood that accept PFOF from a few powerful market-makers.
The largest, Citadel Securities, says it controls 35% to 40% of all U.S. retail order flow. Virtu Financial controls about 25%, according to an analysis of SEC data by BestEx Research.
The SEC is exploring whether retail brokers are sending PFOF customer orders to the wholesaler paying them the most, rather than the venue that offers the best deal.
"When one party is paying a platform for the order flow, that can be in conflict with a retail customer getting best execution," SEC chair Gensler said in an interview. "They're not getting order-by-order competition."
Some brokers, like Fidelity, say they can get good stock prices for customers and offer free stock trading without accepting PFOF.
A Robinhood spokeswoman pointed to a study by two Massachusetts Institute of Technology professors who found Robinhood customers enjoyed more than $8 billion in price improvements from 2020-2021 thanks to PFOF.
A spokesperson for TD Ameritrade said the current market structure delivers "great outcomes" for investors and the company supports efforts to make it even better.
A PFOF ban is on the table, Gensler told Reuters, but he said the practice is also just a symptom of a broader problem: exchanges are not competing on an equal footing with the off-exchange market, where around 40%-50% of trading takes place.
The national benchmark for measuring the best deal is flawed because it does not include these off-exchange trades, he added.
"Here's the focus around new market structure rules: How might we promote a more level playing field?," Gensler said.
The SEC is also mulling making it easier for exchanges to compete with market-makers for orders by allowing exchanges to offer sub-penny pricing, and by changing the definition of "best execution," said Gensler and other industry executives.
Several executives said they doubted the SEC would actually ban PFOF. Virtu Financial CEO Doug Cifu said his firm would be one of many to challenge such a move in court.
"PFOF and rebates have really fostered incredible innovation and competition in the marketplace," Cifu told Reuters, adding that if the SEC bans the practice "they are looking at a very long fight."
He and other industry executives said the SEC should enhance retail brokers' disclosures so small investors are better informed on the pros and cons of PFOF. Gensler said the SEC was also reviewing disclosures.
"As long as it is transparent and disclosed, I don't see a conflict," said Kirsten Wegner, CEO of the Modern Markets Initiative which represents automated trading firms.
COMPETITIVE BOOST
Investor advocates support better disclosures and also want to boost exchanges' competitiveness to improve the reliability of the national pricing benchmark, known as the National Best Bid and Offer (NBBO).
Current "best execution" rules require retail brokers to route customer orders to a venue offering the best price displayed on the exchange, or better, and market-makers typically improve on the best price by a fraction of a cent.
Exchanges cannot offer sub-penny quotes, but the SEC is considering allowing it. It is also mulling a rule, similar to one in Canada, requiring retail brokers to execute orders on an exchange unless the off-exchange price is significantly better, said Dave Lauer, CEO of financial platform Urvin Finance, and one other industry source with knowledge of the SEC's thinking.
Wholesalers provide a 15% improvement on the NBBO spread, but moving retail flow to exchanges would narrow NBBO spreads by 25%, according to research by Hitesh Mittal, CEO of BestEx Research.
"Institutional investors and market makers would better compete with exchanges for retail flow by narrowing the bid offer spread," he said.
Ty Gellasch, executive director of investor trade Healthy Markets who has also discussed the issue with the SEC, said he expects the agency to clarify that "best execution" requires brokers to obtain the best available price rather than a fractional price improvement.
"I expect it will say to the industry: 'you have to give the customers the best prices,'" he said.
(Reporting by Katanga Johnson in Washington and John McCrank in New York; Editing by Michelle Price and David Gregorio)
Raising the Full Retirement Age from 67 to 70 would be the worst way to cut them
By Alicia H. Munnell
The American Academy of Actuaries — a group of usually sober and sensible people — recently issued a brief making the case for “Raising the Social Security Retirement Age.”
Their argument is straightforward. Social Security is running a 75-year deficit equal to 3.5% of taxable payrolls. The only way to fix the problem is to raise revenues or cut benefits. Life expectancy at 65 has increased, and is projected to continue to increase, which pushes up program costs. Therefore, Congress should make people work longer and postpone claiming their benefits. Raising the full age to 70 could cut the long-run deficit by about a third.
Just to be absolutely clear, increasing Social Security’s Full Retirement Age is not just a question of “postponing” claiming; it is a benefit cut. Those who are able to delay retirement receive one less year of benefits. Those who cannot adjust their retirement behavior get lower benefits due to the increased actuarial adjustment — an adjustment made to keep lifetime benefits constant regardless of claiming age. Currently, those claiming at age 62 receive only 70% of the benefit available at 67. If the Full Retirement Age were increased to 70, that amount falls to 55%.
I’m against any form of benefit cut, because the rest of the U.S. retirement system seems quite wobbly to me. At any moment, only about half of private sector workers are covered by any type of workplace retirement plan. That means some people never are covered and are totally reliant on Social Security, while others move in and out of coverage and end up with modest balances.
Read: Do I need to file a tax return if most of my income is from Social Security?
We actually know how much people have in their retirement accounts from the detailed financial data in the Federal Reserve’s Survey of Consumer Finances. As of 2019 — the date of the latest survey — households (with a 401(k)) approaching retirement (ages 55-64) had $144,000 in 401(k)/IRA balances (see Table 1). That may sound like a lot but if they buy a joint-and-survivor annuity, they will receive only about $600 per month. And this amount is likely to be their only source of retirement income beyond Social Security because the typical household holds no other financial assets. Cutting Social Security benefits would be a disaster for most Americans.
Moreover, increasing the Full Retirement Age is the most pernicious form of benefit cut, because it hurts the most vulnerable who are forced to claim early. And it’s clear who these people are.
Read: You could be getting the wrong Social Security benefit check — here’s how to fix it
In a recent study, my colleagues examined “working life expectancy” for all individuals and by race and education. They looked at individuals who are expected to be working at 62 and calculated the probability that they will still be capable of work if Social Security’s Full Retirement Age were increased to 70 (see Figure 1). The exercise showed that while age 70 might be possible for a large majority of high-education whites, it is out of the question for many men and women with low education — particularly Blacks — and even for many high-education Black workers. These individuals would end up with grossly inadequate benefits.
Yes, it is possible, as the actuaries suggest, that some of the pain created by increasing the Full Retirement Age could be offset by expanding Disability Insurance. But I have no confidence this would happen. So, don’t cut Social Security benefits. And, if for some reason we decide to do so, don’t do it by raising the Full Retirement Age.
The House is ready to vote on H.R. 2954, also known as SECURE 2.0 -- a major revamp to the landmark 2019 law that overhauled retirement tax rules for older Americans – and the changes could mean even bigger savings for your investment portfolio and nest egg.
ROBERT POWELL
2 HOURS AGO
Congress is working on some major revisions to the 2019 law that overhauled retirement tax rules for older Americans – and the changes could mean big savings for your investment portfolio and nest egg.
The U.S. The House of Representatives was expected to vote Tuesday on H.R. 2954, also known as SECURE 2.0.
The first SECURE Act, also known as the Setting Every Community Up for Retirement Enhancement Act of 2019, included major provisions designed to increase access to tax-advantaged accounts and prevent retirees from outliving their assets.
Bigger Changes for RMDs
Under SECURE 1.0, the age for required minimum distributions, known as RMDs, increased from 70½ to 72. The new legislation, SECURE 2.0, would increase the age for RMDs to 73 in 2023, 74 in 2030 and 75 in 2033.
(RMDs? Once you reach a certain age, the IRS wants you to start withdrawing from your retirement account and pay taxes, whether you need the money or not.)
See: What Are Required Minimum Distributions and How Are They Calculated?
That’s just one of the changes being considered. Should SECURE 2.0 be signed into law, Americans’ retirement accounts – and their retirement planning – could be changed substantially, said Lisa Featherngill, the national director of wealth planning at Comerica Bank, in an interview with Bob Powell on TheStreet’s Retirement Daily.
According to Featherngill, increasing the age at which RMDs begin would likely increase the amount of RMDs one might take but it would also increase the number of years in which a retirement account holder would enjoy tax-deferred growth.
“The RMD is based on the value of the account and life expectancy,” she said. “So, assuming there's no change in the life expectancy tables, the distribution would be higher if you wait to 75 versus if you took it at 72. But you have additional years of deferred tax.”
Catch-up Contributions and Inflation
Another provision would Increase catch-up contributions to employer retirement plans for individuals ages 62, 63 and 64 from $6,500 to $10,000. And what’s notable about this provision is the catch-up contribution index for inflation, she said. So, it might be $10,000 in 2023 but for someone who is now age 50 it could be quite higher, say $14,250 if inflation runs at 3%, by the time that person turns 62.
Scroll to Continue
Another provision would provide an option for employer matching contributions to be made into the Roth portion of the retirement plans. Typically, the employer’s contribution goes into the employee’s pre-tax 401(k) account. So, for someone who is young and in a low tax bracket today but expects to be in a higher tax bracket in the future, this option could be “incredibly powerful,” said Featherngill.
“If you could afford to pay the tax on the employer match in the Roth today, then that money builds up tax-free for the rest of your life,” she said.
Employer Contributions, Charitable Contributions
SECURE 2.0 would also allow an employer contribution to an employee retirement plan based on the employee’s student loan payments. “If you've got an employee who's paying back student loans, the student loan payments can qualify as contributions to the retirement plan only for purposes of the employer match,” she said. “That could be really significant to help (workers) save for retirement while at the same time taking care of debt from college.”
SECURE 2.0 would also allow individuals age 70½ and older to make a one-time charitable distribution, up to $50,000, from an IRA to a split-interest trust such as a charitable remainder trust. “Most of my clients love qualified charitable distributions or QCDs,” she said.
Generally, a qualified charitable distribution is an otherwise taxable distribution from an IRA owned by an individual who is age 70½ or over that is paid directly from the IRA to a qualified charity.
The caveat, however, has always been that it has to be a public charity, said Featherngill. “It can't be your remainder trust or anything else where you have an interest,” she said. But SECURE 2.0 would allow an account owner to give up to $50,000 into a split interest trust, a charitable remainder trust. A charitable remainder trust allows a grantor to create a trust that generates revenue for a few years and then transfers the assets to a charity, according to the Legal Information Institute.
The proposed bill, HR 2954, would also allow domestic abuse survivors to take a distribution of the lesser of $10,000 or 50% of the plan balance without penalty for one year following the abuse. “This gives access to additional funds if somebody needs it,” she said.
Of note, there's a version of SECURE 2.0, the Retirement Security and Savings Act, in the Senate. That proposed legislation features many provisions included in the House's Securing a Strong Retirement Act but there are differences as well.
“It will be interesting to see if (the House and Senate) combine these bills,” said Featherngill.
And, of course, any proposed legislation must be signed into law by the President, she noted.
And until then, retirees and would-be retirees should keep an eye on Congress. “Let's see what happens and then we can plan for next year,” she said.
Michael Hiltzik
Mon, March 28, 2022
President Biden has proposed a billionaires tax. (Evan Vucci / Associated Press)
After years of largely theoretical discussion among Democrats, the idea of a billionaires tax has now become official policy.
Kudos to President Biden for putting the billionaires tax on the table as part of his budget proposal for fiscal 2023. As we've reported many times in recent years, a means of forcing the richest of the rich to pay their fair share of taxes has long been overdue.
Until now, the idea has been identified with the liberal wing of the Democratic Party, proposed in the past by Sens. Elizabeth Warren of Massachusetts and Ron Wyden of Oregon, as well as Sen. Bernie Sanders (I.-Vt.).
This approach means that the very wealthiest Americans pay taxes as they go, just like everyone else, and eliminates the inefficient sheltering of income for decades or generations.
President Biden, introducing his billionaires tax
Biden has now made it mainstream, though his plan is somewhat more modest than the others — his proposal for a wealth tax would raise about $360 billion over 10 years, according to the White House, less than Wyden's ($507 billion) or Warren's ($2.75 trillion). The differences arise in part from where the tax would start and how it would be calculated.
The earlier proposals provoked a chorus of hand-wringing from our beleaguered billionaire class.
Billionaire Leon Cooperman objected to Warren's plan with profanity, and billionaire Elon Musk tried to tweak Wyden over his proposal, which like Biden's targeted unrealized capital gains — that is, gains in the value of assets such as stocks and bonds before they're sold. Wyden responded that Musk's approach of turning tax policy into a game merely underscored the necessity of a wealth tax.
So will this plan, especially because it takes direct aim at the capital gains tax, the favorite loophole of the wealthy.
Biden's proposal is for a minimum 20% tax on the income of households with more than $100 million in wealth. The White House says that more than half the revenue would come from households worth more than $1 billion.
If it's passed, the proposal would be a major step toward closing the gap in tax rates between the middle- and working-classes on one side and the wealthy on the other.
The White House in September estimated that the 400 wealthiest families in America paid an average federal individual income tax rate of 8.2% on $1.8 trillion of income between 2010 and 2018. "A firefighter or teacher can pay double that tax rate," Biden said in his budget statement Monday, citing the earlier estimate.
The proposal would also draw a bright line between the policies of the Democratic and Republican parties.
The latter has all but defined itself as an agent of the wealthy. Its latest position paper, the "Rescue America" plan issued by Sen. Rick Scott of Florida, called for raising taxes on the poorest American households. (Scott's household net worth of about $220 million, by the way, would put him right in the target zone of Biden's proposal.)
Nor should it be forgotten that the last restructuring of the federal income tax, in 2017, was a GOP project that disproportionately cut taxes on the rich.
Biden's focus on the treatment of capital gains is proper, as we've reported in the past. The reason is that capital gains, which enjoy preferable treatment in several respects, provide most of the income reported by the wealthy. The richer you are, the more of your income receives that happy treatment.
In tax year 2019, the most recent for which the IRS published statistics, those with more than $10 million in reported income attributed 57% of it to net capital gains and dividends (which also receive preferential tax treatment). For households with less than $75,000 in income, the figure was 2.2%.
More than 80% of the income of that latter group came from wages and salaries, which are taxed at higher rate and taxed as they're earned. For the wealthy group, the figure was only 17%.
According to the Federal Reserve, the top 1% of households by wealth (a threshold that starts at about $11.1 million) own about 23% of all the corporate equities and mutual fund shares in the country; the bottom half of all households own a collective 0.7%.
How do capital asset owners make out like bandits at tax time? Let us count the ways. First, the maximum tax rate is lower — 23.8% (including the net investment income tax of 3.8%), compared with the 40.8% top rate on ordinary income.
Then there's the fact, as the late tax expert Edward Kleinbard of USC never tired of pointing out, that the tax is our only voluntary tax: It's levied only if and when the owner chooses to sell.
If it's still in the owner's estate at death, all the embedded tax is extinguished forever — the heirs have to pay tax only on the difference between the asset's value at the previous owner's death and its value when they sell, rather than the difference between its purchase price and their sale price.
This is known as the step-up in basis at death, and it's a crucial driver of the accumulation of wealth within family dynasties.
Biden is absolutely correct in targeting the manipulation of the capital gains tax for eradication by proposing a minimum billionaires tax that includes unrealized capital gains. "The preponderance of capital gains in the portfolios of the wealthy accounts for why it has been so difficult to bring its tax treatment into line with what the rest of us suffer.
"This approach means that the very wealthiest Americans pay taxes as they go, just like everyone else, and eliminates the inefficient sheltering of income for decades or generations," Biden said in a fact sheet issued Monday.
You'll probably be hearing from water-carriers for the rich that taxing unrealized gains doesn't compensate asset owners for their losses in down years. The numbers show that this is a made-up problem: The stock market has been a very reliable engine of wealth growth and remarkably resilient even during what the average person might consider bad times.
Over the last 40 years, or the period from January 1982 through the end of 2021, there were only seven years in which the Standard & Poor's 500 index, the best proxy for the overall stock market, lost money. On average, stocks gained 12.4%. One dollar invested at the beginning of the period was worth $107.13 at the end.
By the same token, through the 21 years of this century (that is, January 2001 through Dec. 31, 2021) there have been only five down years and an average gain of 8.38% a year. One dollar invested when the ball came down at Times Square on New Year's Day 2001 is worth more than five times as much today.
Even during the worst economic stretch of the last 100 years, the Great Depression (defined for our purposes as January 1929 through the end of 1939), the stock market lost an average of 0.6% a year.
In any event, Biden's proposal would give the target households up to nine years to fork over what they owe on existing unrealized gains and five years to pay the tax on new income. That would "smooth year-to-year variation in investment income," the fact sheet states.
The coming debate over Biden's tax proposal will probably focus in part on its constitutionality. This question will be a stalking horse aimed at absolving critics of the charge that they're just out to protect billionaires. But it's been endlessly masticated by experts, many of whom assert that it can be fashioned in a way that passes constitutional muster.
Biden's characterization of the levy as a "Billionaire Minimum Income Tax" — emphasis on the word "income" — is designed to keep the proposal within the exemption for income taxes from the Constitution's strictures on how taxes must be calculated.
That's clever, but it addresses just one of the untold ways that spokespersons for the wealthy will try to eviscerate a plan that hits them in their well-fattened pocketbooks. With so much money at stake, the battle could be ferocious.
This story originally appeared in Los Angeles Times.
Tue, 29 March 2022,
Far-right polemicist Éric Zemmour has vowed to reverse the immigration he blames for undermining France’s identity and core values if he wins the country’s upcoming presidential election. FRANCE 24 spoke to his supporters who gathered by the thousands in Paris on Sunday.
A writer and talk show pundit known for his polarising attacks on Muslims and immigrants, Zemmour emerged as the election’s dark horse early on in the campaign, drawing from both the mainstream conservative camp and voters disappointed by the far right’s traditional champion, Marine Le Pen. He has since slipped down the table in voter surveys, polling at around 10-11 percent, though his supporters still rank among the most raucous and motivated ahead of the first round of the election on April 10.
On Sunday, tens of thousands gathered at the Trocadéro in Paris, facing the Eiffel Tower, hoping to inject new momentum into his campaign. They included veteran far-rightists, staunch Catholics, anti-LGBT activists and anti-vaxxers for whom Zemmour is the best candidate to halt immigration, restore order and uphold traditional French values.
Eugénie, 18, defending ‘Christian values’
Donning a “Zemmour 2022” cap and a baptism medal wrapped around her neck, 18-year-old Eugénie is getting ready to cast her very first ballot on April 10 – and she could hardly be more thrilled about her choice of candidate. “I never thought I’d support someone with such fervour,” she says. “I’m lucky to be casting my first vote for a candidate I really like.” The philosophy student was just 9 years old when she first took part in a Paris rally, back in 2013, to oppose marriage for same-sex couples. Nine years on, she’s back on the streets of the French capital to “prove that Zemmour is not alone, contrary to what the media claim”.
A practising Catholic, Eugénie stresses the former pundit’s “love of France (...) and the fact that he’s the only candidate to defend Christian values”. He’s also “the only one to challenge the transhumanist movement [advocates of human-enhancement technologies]”, she argues, praising Zemmour’s conservative stance on “bioethical debates that undermine society”. While she acknowledges that transhumanism is a niche concern, even for the far-right candidate, Eugénie wholeheartedly subscribes to his core policy: his pledge to halt, and indeed reverse, immigration.
“It’s good to be humane and welcoming towards foreigners, but when there is a refusal to assimilate we cannot surrender our culture,” says the young Zemmouriste, whose champion has called for a ban on “non-French” first names. Eugénie is aware that Zemmour has slipped behind his rivals in the race for the all-important runoff. But she already has a Plan B in the other far-right candidate, Marine Le Pen, who is polling in second place behind the incumbent, Emmanuel Macron.
Marc, 57, dreading a ‘great replacement’
“I live nearby, it’s a nice day, I’ve come to gauge the atmosphere,” says 57-year-old Marc, observing the raucous crowd gathered on the Trocadéro. An anti-vaxxer and opponent of the Covid-19 health pass, he describes himself as the “family’s ugly duckling”. “I didn’t get the Covid jab, unlike my mother and brother who sold out to Macron,” he says. Born to a French mother and Yugoslav father, Marc says he can identify with Zemmour, whose parents left their native Algeria when it was still a French territory. In fact, he claims “lots of people of immigrant background can relate to Zemmour”.
Like the far-right candidate, Marc says he is most concerned about the so-called “great replacement”, a conspiracy theory purporting that white Europeans are being replaced by immigrants from Africa and the Middle East, with the complicity of political elites. “It’s not just a theory, it’s everywhere,” says the self-employed part-time worker in the building industry, pointing to the “growing number of women wearing (Muslim) veils in Paris and its suburbs”. Aside from immigration, Marc also agrees with Zemmour’s stances on education and his opposition to “woke” ideas. “Finally, we have a candidate who challenges all the anti-racist, feminist and LGBT talk we are constantly fed by the media,” he says.
>> Read more: Pushing far-right agenda, French news networks shape election debate
Ana, 53, from Fillon to Zemmour
Portuguese-born “but very well assimilated, like Zemmour wants”, 53-year-old Ana is perfectly at ease with Zemmour’s hardline stance on immigration. “All of my children have French names, it’s important for them to integrate,” says the mother of four, who travelled from Bellême in Normandy to attend the rally in Paris. A longtime Zemmour fan, Ana was first drawn to the far-right pundit by his televised appearances back in the 1990s and has read every one of his books. She’s a regular participant at his rallies, when she isn’t busy running the kitchen of her restaurant.
A devout Catholic, Ana voted for conservative candidate François Fillon in 2017. Five years on, she sees Zemmour as the champion of Christian values. “He’s the only one with a plan to save our civilisation from the ‘great replacement’. Our race is in decline and we’re heading for catastrophe,” she says, describing Zemmour as an opportunity for France. Ana is convinced the former pundit would have averted the war in Ukraine had he been in power. “He would have known how to negotiate with Putin because he is a man of peace,” she says of Zemmour, who has frequently praised the Russian president, once saying he longed for a “French Putin”.
Florent, 40, yearning for order
Another longtime supporter, Florent signed up for Zemmour’s fledgling party “Reconquête !” at the first opportunity. “I like his ideas, his personality and his background too. He’s the only one to cast a lucid eye on the situation, particularly when it comes to immigration,” says the 40-year-old school supervisor from the leafy Paris suburb of Saint-Cloud, for whom the “great replacement” is well underway.
“When you see the number of veiled women increasing in a wealthy town like Saint-Cloud, where I live, it means immigration is everywhere,” he claims. “What will the country look like in 20 years? We must act now.” Florent is also drawn to Zemmour’s education platform, with its focus on discipline. “Every day I see kids falling by the wayside. We must restore order to the system,” he says. However, Florent is increasingly pessimistic about his candidate’s chances of qualifying for the run-off. If he fails, he will vote for Le Pen, “without a doubt” – as he has done in the past. “Everything must be done to get rid of Macron,” he adds.
Séverine, 42, disappointed by Le Pen
A one-time Le Pen supporter, 42-year-old Séverine recently switched her allegiance to Zemmour, angered by Le Pen’s jabs at the former pundit. “I didn’t like it when Le Pen branded him ‘far right’,” she says. “And when she had a go at him for having ‘Nazis’ in his party, it was really absurd, because she has the very same problem.” An administrative worker in a suburb of Paris, Séverine says she leans “neither right nor left” and is drawn to Zemmour’s earnest talk. “He’s not a politician, he’s a man of the people, like a family friend,” she says of the hardline polemicist, who has two convictions for hate speech and is appealing a third.
While she does not live in the countryside, Séverine approves of Zemmour’s promise to hand struggling rural families a €10,000 cheque. She also backs him to halt “the decline in France’s education system”. Holding up a banner that reads “Women with Zemmour”, she dismisses the accusations of misogyny levelled at the far-right candidate, who has repeatedly blasted feminist campaigns and attempts to introduce gender parity in government. “Such accusations are totally unfounded,” she claims. “I even get the impression there are more women than men at his rallies.”
This article was adapted from the original in French.
Ukraine says it has recaptured territory in recent days
Selim Saheb Ettaba
Tue, March 29, 2022
Several days of calm in the southern Ukrainian city of Mykolaiv came to an abrupt end around breakfast-time Tuesday, when a Russian rocket strike ripped a gaping hole through local government building, killing seven people.
AFP journalists saw dust-covered rescue workers in hard hats pull two bodies from the debris as they searched for survivors: a man in uniform and an elderly woman, whose body they covered in a green sheet.
"Most people escaped miraculously," regional governor Vitaly Kim wrote on Facebook, confirming that regional government office had been targeted.
Initially, he said, several civilians and soldiers were unaccounted for.
Later -- during an address to Danish lawmakers -- President Volodymyr Zelensky described the true scale of the strike.
"As far as we know now seven people were killed, 22 were wounded, and people are still going through the rubble," Zelensky said in a video address to the parliament.
"I was having breakfast in my apartment," Donald, 69, a retired Canadian postal worker with Ukrainian residency told AFP. "I heard a whoosh, then a boom and my windows rattled.
"It's scary. We have been lucky here in Mykolaiv. We haven't had that many explosions in the centre of the city," he added.
The tall administrative building was left with a large section torn away, its rows of windows all blown out and its base surrounded by large chunks of concrete.
In the aftermath of the attack, you could look through the massive hole left in the building to see the cloudless spring sky on the other side.
Damaged government building in Mykolaiv, after Russian strike
- 'He wants revenge' -
Mykolaiv, a key southern port city, has seen fierce fighting since Moscow launched its invasion late last month. But it had been quiet in recent days until Tuesday morning's strike.
The Russian army has been falling back southeast towards Kherson, the only major Ukrainian city it claims complete control of -- and now the focus of a Ukrainian counter-offensive.
Outside a nearby residential complex, locals shaken by the blast -- some still in their pyjamas -- exchanged information about the attack and observed the damage.
Among them was Yelena Dovgykh, 65, in slippers and carrying a little dog and a plastic bag with documents under her arm.
She was making breakfast when she heard the strike, she told AFP. "I went down just as I was. I took my papers and my dog."
Another resident, Svetlana Fedorenko, cut her hand picking up broken glass from her balcony and living room kitchen. But she has known worse, she insisted.
"Putin is a bastard. That's all there is to it," said Viktor Gaivonenko, a neighbour who came to help her clean up the debris, referring to Russian President Vladimir Putin.
He was targeting governor Kim and Zelensky because "they boost the morale of the people and our soldiers," said Fedorenko.
"He wants to get revenge for the resistance Mykolaiv is putting up that's blocking him from reaching Odessa," she added.
Governor Kim appeared to agree.
Russian forces "realised they couldn't take Mykolaiv and decided to say hello to me, to say hello to all of us," Kim wrote after the strikes, adding that his own office had been destroyed.
Mykolaiv is a key city on the road to Odessa, Ukraine's biggest port, and its capture would be a significant one for Russia's invasion of Ukraine, launched in late February.
Just a day before the attack, residents had been marking the 78th anniversary of the liberation of Mykolaiv from the Nazis by Soviet Red Army troops towards the end of World War Two.
On Mykolaiv's central avenue, a monument commemorating those soldiers stands a Soviet T-34/85 tank, with fresh flowers lying at its base.
"We drove out the Nazis in 1944," Ukraine's defence ministry said in a statement this week to mark the occasion.
"We will not give the Russian fascists a chance in 2022."
sst-jbr/jj