preliminary official results reported early Monday.
The federal German election agency posted the results at 4:30 a.m. local time.
The close outcome means the Social Democrats, with only 25.7 percent of the vote, must team up with other parties to form a government. And in the complex equation that can be required in Germany to form a government, it is possible that if the winning party fails to get others on board, the party that placed second could wind up leading the country.
It could take weeks if not months of haggling to form a coalition, leaving Europe’s biggest democracy suspended in a kind of limbo at a critical moment when the continent is still struggling to recover from the pandemic and France — Germany’s partner at the core of Europe — faces divisive elections of its own next spring.
Sunday’s election signaled the end of an era for Germany and for Europe. For over a decade, Ms. Merkel was not just chancellor of Germany but effectively the leader of Europe. She steered her country and the continent through successive crises and in the process helped Germany become Europe’s leading power for the first time since World War II.
Cheers erupted at the Social Democratic Party’s headquarters when the exit polls were announced early Sunday evening. A short while later, supporters clapped and chanted “Olaf! Olaf!” as Olaf Scholz, their candidate, took the stage to address the crowd.
“People checked the box for the S.P.D. because they want there to be a change of government in this country and because they want the next chancellor to be called Olaf Scholz,” he said.
The campaign proved to be the most volatile in decades. Armin Laschet, the candidate of Ms. Merkel’s Christian Democrats, was long seen as the front-runner until a series of blunders compounded by his own unpopularity eroded his party’s lead. Olaf Scholz, the Social Democratic candidate, was counted out altogether before his steady persona led his party to a spectacular 10-point comeback. And the Greens, who briefly led the polls early on, fell short of expectations but recorded their best result ever.
The Christian Democrats’ share of the vote collapsed with only 24.1 percent of the vote, heading toward the worst showing in their history. For the first time, three parties will be needed to form a coalition — and both main parties are planning to hold competing talks to do so.
Nevertheless, Mr. Laschet appeared at his party headquarters an hour after the polls closed, declaring the outcome “unclear” and vowing to try to form a government even if his party came in second.
The progressive, environmentalist Greens appeared to make significant gains since the 2017 election but seemed to fall short of having a viable shot at the chancellery. That positions the Greens, as well as the business-friendly Free Democrats, to join the next government. They will play a key role in deciding what the next German government could look like, depending on which of the larger parties they would like to govern with.
On the outer edge of the political spectrum, support for the far-right Alternative for Germany, or AfD, appeared roughly unchanged, while the Left party appeared to be hovering on the 5 percent threshold needed to win seats in Parliament.
In mid-October the election agency will present the official final results.
BERLIN — What do a traffic light, the Jamaican flag and a kiwi have in common?
Those watching German politics closely will know all three are nicknames for potential governing coalitions.
In the weeks following the election, the parties will try to form a coalition government that has a majority in the German Parliament. The winning party in the election will have the first chance to try to form that coalition, but if it doesn’t succeed the chance goes to the runner up.
For the first time since the founding of the federal republic 72 years ago, it looks as though it will take at least three parties to form a stable government.
Here’s how things might play out:
Traffic Light Coalition 🚦: This could be the most likely combination. Its name derives from the parties that would be included, the Social Democrats (red), the free market liberal Free Democrats (yellow) and the Greens (uh, green).
Jamaica Coalition 🇯🇲: If Chancellor Angela Merkel’s conservative Christian Democratic Union (black) should take the lead, Germany might be looking at a Jamaica coalition — named after the black, green and yellow of the Jamaican flag. That bloc would consist of the conservatives, the Greens and the Free Democrats.
And the kiwi 🥝? That would be a duo of the conservatives and the Greens, who have worked together in several state governments, but on current polling are unlikely to command a national majority.
Given the relatively low polling of the once-mighty Christian Democrats and Social Democrats, the topic of possible coalitions has dominated news coverage for weeks in Germany. For the past five years, the two big parties have governed Germany together in a “Grand Coalition,” but they don’t want to repeat that and it might not have a majority in any case.
The Social Democrats and the Greens have governed Germany together before — a prosaically named “Red-Green coalition” was in power from 1997 until 2005 — and have signaled their willingness to work together again. But this time they are not expected to win the seats necessary to get a majority on their own.
Seeing their popularity slip, Merkel’s conservatives and much of the conservative media have warned that an ascendant Social Democrats would turn to the far-left party, Die Linke, to round out their numbers.
They call it the “Elephant Round”: After the polls close and as the votes are being counted on Sunday, all of the heavy-hitting party leaders sit down together, live on public television, to discuss the outcome that is shaping up.
Those who are winning will exclaim, those who are losing will explain and smaller parties will jockey for position in a new government, cozying up to potential partners or coolly shunning others.
For Germans watching at home, the event, which is scheduled to start at 8:15, is a chance to read the tea leaves about their future government.
For the politicians sitting in the brightly lit studio, the round offers them a chance to try to set the tone for the weeks of negotiations that are expected to follow, given that none of the parties running are expected to win enough votes to allow them to govern alone. Leaders of the smaller parties use the opportunity to make their first demands and draw their lines in the sand.
It is a chance for grandstanding and, occasionally, for grinning. That happened famously in 2005, when Chancellor Gerhard Schröder’s Social Democrats lost by a small margin to Angela Merkel’s Christian Democratic Union. He nevertheless tried to claim victory, on grounds that his party had done much better than predicted in the polls. “We’ve won,” Ms. Merkel replied with a controlled smile. “And after a couple of days of reflection, the Social Democrats will realize that, too.”
This year, fate may be in the favor of the Social Democrats. Ms. Merkel is stepping aside after 16 years in power and Olaf Scholz, her vice chancellor and finance minister, led the polls in the final weeks of the race. His campaign portrayed him as coolheaded and in control. Come Sunday night, Germans will be watching to see whether he can keep that up when faced with the “elephants.”
In Germany, political parties name their candidates for chancellor before campaigning begins, and most of the focus falls on the selections who have a realistic chance of winning.
Traditionally, those have been the candidates of the center-right Christian Democrats (Chancellor Angela Merkel’s party) and those of the center-left Social Democrats. For the first time this year, the candidate for the environmentalist Greens is viewed as having a real shot at the chancellery.
Here are the leading hopefuls:
Current position: Co-leader of the Green Party
About her: Ms. Baerbock aims to shake up the status quo. She is challenging Germans to deal with the crises that Ms. Merkel has left largely unattended: decarbonizing the powerful automobile sector; weaning the country off coal; and rethinking trade relationships with strategic competitors like China and Russia.
“This election is not just about what happens in the next four years, it’s about our future,” Ms. Baerbock told a crowd in Bochum, a western German town, this summer.
Ms. Baerbock, who has not a position in government, has started off on a promising note, but her campaign has struggled as she has been a frequent target of disinformation efforts. She has also been accused by rivals of plagiarism and of padding her résumé, and her Green Party has been faulted for not being able to capitalize on environmental issues in the wake of flooding this summer.
Even so, there is almost no combination of parties imaginable in the next coalition government that does not include the Greens. That makes Ms. Baerbock, her ideas and her party of central importance to Germany’s future.
“We need change to preserve what we love and cherish,” she told the crowd in Bochum. “Change requires courage, and change is on the ballot on Sept. 26.”
Current position: Leader of the Christian Democratic Union; governor of the state of North Rhine-Westphalia
About him: Mr. Laschet has run North Rhine-Westphalia, Germany’s most populous state, since 2017 — a credential he has long said qualifies him to run the country. As the leader of the Christian Democratic Union, Ms. Merkel’s party, he should have been the natural heir to the chancellor. But his gaffe-prone campaign has struggled to find traction among Germans. Extraordinary flooding this summer in the region he runs exposed flaws in his environmental policies and disaster management. He was caught on camera laughing during a solemn ceremony for flood victims.
But Mr. Laschet is known for comebacks, and for surviving blunders.
Among his influences is his faith. At a time when more and more Germans are quitting the Roman Catholic Church, Mr. Laschet is a proud member. Another influence is Aachen, Germany’s westernmost city, where he was born and raised. Growing up in a place with deep ties to Belgium and the Netherlands, Mr. Laschet has been integrated into the larger European ideal all of his life.
Current position: Vice chancellor of Germany and federal finance minister
About him: When Olaf Scholz asked his fellow Social Democrats to nominate him as their candidate for chancellor, some inside his own camp publicly wondered if the party should bother fielding a candidate at all. What a difference a few months make. Today, Mr. Scholz and his once moribund party have unexpectedly become the favorites to lead the next government.
During the campaign, Mr. Scholz has managed to turn what has long been the main liability for his party — co-governing as junior partners of Ms. Merkel’s conservatives — into his main asset: In an election with no incumbent, he has styled himself as the incumbent — or as the closest thing there is to Ms. Merkel.
“Germans aren’t a very change-friendly people, and the departure of Angela Merkel is basically enough change for them,” said Christiane Hoffmann, a prominent political observer and journalist. “They’re most likely to trust the candidate who promises that the transition is as easy as possible.”
He has been photographed making the chancellor’s hallmark diamond-shaped hand gesture — the “Merkel rhombus” — and used the female form of the German word for chancellor on a campaign poster to convince Germans that he could continue Ms. Merkel’s work even though he is a man.
The symbolism isn’t subtle, but it is working — so well in fact that the chancellor herself has felt compelled to push back on it — most recently in what might be her last speech in the Bundestag.
It has been said that Germans are sometimes so organized that chaos reigns. Germany’s election system is no exception. It is so complex that even many Germans don’t understand it.
Here’s a brief primer.
Are voters choosing a chancellor today?
Not exactly. Unlike in the United States, voters don’t directly elect their head of government. Rather, they vote for representatives in Parliament, who will choose the next chancellor, but only after forming a government. More on that later.
The major parties declare who they would choose for chancellor, so Germans going to the polls today know who they are in effect voting for. This year the candidates most likely to become chancellor are Olaf Scholz of the Social Democrats or Armin Laschet of the Christian Democrats. Annalena Baerbock, a Green, has an outside chance.
Who can vote?
Any German citizen 18 or over. They don’t need to register beforehand.
How are seats in Parliament allocated?
Everyone going to the polls today has two votes. The first vote is for a candidate to be the district’s local representative. The second vote is for a party. Voters can split their votes among parties and often do. For example, a person could cast one vote for a Social Democrat as the local member of Parliament, and a second vote for the Christian Democrats as a party.
Parliament has 598 members, but could wind up with many more because of a quirk in the system. The top vote-getter in every district automatically gets a seat in Parliament. These candidates account for half of the members of Parliament. The remaining seats are allocated according to how many second votes each party receives.
But parties may be allocated additional seats according to a formula designed to ensure that every faction in Parliament has a delegation that accurately reflects its national support. So Parliament could easily wind up with 700 members.
Also: A party that polls less than 5 percent doesn’t get any seats at all.
What happens next?
It is very unlikely that any party will wind up with a majority in Parliament. The party that gets the most votes must then try to form a government by agreeing to a coalition with other parties. That has become mathematically more difficult because of the rise of the far-right Alternative for Germany party and the far-left Linke party.
The mainstream parties have ruled out coalitions with either of those parties because of their extreme positions. But it will be a struggle for the remaining parties to find enough common ground to cobble together a majority. The process could take months.
Voter turnout in Germany— as a measure of thepeople visiting polling stations — was down on Sunday when compared to the last election in 2017, officials said. But the number is misleading. Participation could be extraordinarily high once mail-in ballots are counted.
By 2 p.m., 37 percent of eligible voters had cast ballots in person, election officials said, down from 41 percent during the same period in 2017. But at least 40 percent of Germans were expected to vote by mail because of the coronavirus, potentially pushing turnout above the 76 percent recorded in 2017.
Despite the decrease in in-person voting nationwide, there were long lines at polling stations in Berlin, where voters were also choosing candidates for the local government. Some polling places reportedly ran out of ballots and had trouble getting more because many streets were closed because of the Berlin Marathon, which was expected to attract almost 30,000 participants.
With Chancellor Angela Merkel poised to step down after 16 years in office, the stakes are high. Polls showed a close race between the Social Democrats and the Christian Democratic Union, Ms. Merkel’s party, which could encourage turnout. Voting sites remain open until 6 p.m. local time.
The high number of mail-in ballots is not expected to delay the results in the same way that occurred in the United States presidential elections last year, when close races in some states were not decided for days. German officials will only count mail-in ballots that had arrived by Sunday, and should have a good idea by midnight at the latest of which party prevailed.
The Alternative for Germany, or AfD, which shocked the nation four years ago by becoming the first far-right party to win seats in Parliament since World War II, suffered a slippage in support Sunday but also solidified its status as a permanent force to be reckoned with.
“We are here to stay, and we showed that today,” Tino Chrupalla, co-leader of the party, told party members gathered on the outskirts of Berlin.
Early results showed the party with 11 percent of the votes, down from almost 13 percent in 2017. The AfD is likely to no longer be the largest opposition party in Parliament.
If those results hold in final tallies, that will still give the AfD a sizable delegation in Parliament, and the vote showed that the party has a core constituency even when immigration, its main issue, was not a major topic in the campaign.
At the AfD’s post-election gathering Sunday, activists took comfort in the poor showing by the Christian Democrats, the party of Chancellor Angela Merkel, who compete with the AfD for conservative voters. “The C.D.U. got what they deserved,” said Alexander Gauland, the leader of the AfD delegation in Parliament.
Alternative for Germany held its election party at an event space 45 minutes by subway from central Berlin, perhaps in an effort to discourage counter-demonstrators. Several dozen protesters gathered across the street from the AfD event, holding signs accusing the party of being fascist. But they were probably outnumbered by the police.
As AfD activists ate potato salad and wurst from a buffet, the prevailing view seemed to be that the party’s candidates would have done better if the media and the other parties hadn’t ganged up on them.
“We had to campaign against everyone,” said Daniela Öeynhausen, who appears to have won a seat in the state Parliament of Brandenburg. “It was still an impressive two-digit result considering the unfair attacks.”
Julian Potthast, who said he believed he had won election to a district council in a neighborhood of Berlin, portrayed the party — whose rhetoric has been linked to attacks on immigrants or people perceived as non-Germans — as itself the victim of violence. He said that his vehicle was vandalized and that graffiti was sprayed on his home.
The party was unfairly portrayed as fascist, he complained. But he also conceded the party might have made mistakes, for example in its stance against restrictions to limit the spread of the coronavirus. “It’s not as good as we hoped,” Mr. Potthast said. “We have to look very carefully at why we lost votes.”
Chancellor Angela Merkel will not disappear Sunday night after the votes are counted.
Until a new government is formed, a process that can take several weeks to several months, she will remain in office as head of the acting, or caretaker, government.
Ms. Merkel announced in the fall of 2018 that she would not run again and she gave up leadership of her party, the Christian Democratic Union. After that, her position as chancellor was weakened as members of the C.D.U. jockeyed to replace her. She had hoped to stay out of the election campaign, but as the conservative candidate, Armin Laschet, started to flounder, she made several appearances aimed at bolstering support for him.
Ms. Merkel is expected to try to take a similarly hands-off approach to steering the caretaker government — if world events allow. The last two years of her fourth and final term in office has seen the deadly coronavirus pandemic, what she herself has called “apocalyptic” flooding in western Germany and the chaotic withdrawal from Afghanistan.
Once the new chancellor is sworn in, Ms. Merkel will vacate her office in the imposing concrete building that dominates Berlin’s government district for good.
But, after the last election, in 2017, it took 171 days — or nearly six months — to form a new government, which means she is likely to be around for a while.
What she will do next remains to be seen. In response to that question in repeated interviews, she has said that first and foremost she will take some time off to reflect and reorient herself before making her next move.
“I will take a break and I will think about what really interests me, because in the past 16 years, I haven’t had the time to do that,” she said in July, after receiving an honorary doctorate from Johns Hopkins University.
“Then I will maybe read a bit, and then my eyes might close because I am tired and I will sleep a bit,” she said, with a smile: “And then we’ll see where I emerge.”
BERLIN — German election officials are expecting mail-in ballots to break records in Sunday’s federal election. At least 40 percent and possibly a majority of ballots will arrive by mail, according to Georg Thiel, head of the agency in charge of counting the votes.
Although actual tallies will only be known after polls close, the authorities have seen requests for mail-in ballots grow this year as the pandemic fuels anxiety about crowded polling stations.
Mail-in balloting has been permitted in Germany for more than 60 years. When it was first allowed, in the 1957 election, only 5 percent of voters used the option; during the last federal election in 2017, 29 percent chose to mail in their choice. Vote counters are set up to handle a doubling of that number — nearly 60 percent — this year, Mr. Thiel said.
The postal service in Germany is one of the quickest and most reliable in the world, with letters usually delivered within a day to anywhere in the country. Still, an official warned voters last week that if they wanted their ballot to be counted, it should be in the mail by Thursday; only ballots received by 6 p.m. on Sunday — when polls close — will be tallied.
The populist Alternative for Germany party, segments of which have parroted former President Donald J. Trump’s claims of manipulated mail-in ballots in the U.S., has used slogans like “the mailbox is not a ballot box” to try to dissuade voters from using the option. But those concerns do not appear to have resonated with the electorate.
Sixty million people are eligible to vote in the German national election on Sunday. There won’t be a new government that night, or the next day — it could take the rival parties weeks or even months to settle on a coalition with a parliamentary majority. But the ballots are tallied quickly, and the new shape of Germany’s political landscape is likely to be visible within hours.
Here’s what Election Day will look like, and what to watch for.
8 a.m. local time: Polls opened. Candidates are not allowed to campaign on this day, but some may be seen casting ballots.
6 p.m. (noon Eastern): Polling stations close. Not long after, the first exit polls should be available. These polls can be within percentage points of the final result. But this year, because the race is tight, it could be a few more hours before a clear picture emerges. Mail-in ballots, which have been part of Germany’s voting system since 1957, are expected to play an outsized role given the pandemic, as they did in the U.S. presidential election. Only mail-in ballots received by 6 p.m. Sunday will be counted.
Around 6:15 p.m.: The first projections based on actual counted ballots will be released. These get updated throughout the evening until a fairly clear picture emerges of which party is winning.
8:15 p.m.: The heads of all the major parties meet to discuss successes and failures of their campaigns, and they will signal who they would be willing to work with in a coalition government. This discussion is called the “Elephant Round,” and it lasts an hour.
8 p.m. to midnight: Nearly all votes should be counted.
Early, early morning: The election authorities release something they call the official temporary results. These usually come between 2 a.m. and 3 a.m. — though during the last national election, they didn’t arrive until 5:30 a.m.
During her 16 years as Germany’s chancellor, Angela Merkel has become an international avatar of calm, reason and democratic values for the way she handled crises that included a near financial meltdown of the eurozone, the arrival of more than a million migrants and a pandemic.
Today Germany is an economic colossus, the engine of Europe, enjoying prosperity and near full employment despite the pandemic. But can it last?
That is the question looming as Ms. Merkel prepares to leave the political stage after national elections on Sunday. There are signs that Germany is economically vulnerable, losing competitiveness and unprepared for a future shaped by technology and the rivalry between the United States and China.
During her tenure, economists say, Germany neglected to build world-class digital infrastructure, bungled a hasty exit from nuclear power, and became alarmingly dependent on China as a market for its autos and other exports.
The China question is especially complex. Germany’s strong growth during Ms. Merkel’s tenure was largely a result of trade with China, which she helped promote. But, increasingly, China is becoming a competitor in areas like industrial machinery and electric vehicles.
Economists say that Germany has not invested enough in education and in emerging technologies like artificial intelligence and electric vehicles. Germans pay some of the highest energy prices in the world because Ms. Merkel pushed to close nuclear power plants, without expanding the country’s network of renewable energy sources enough to cover the deficit.
“That is going to come back to haunt Germany in the next 10 years,” said Guntram Wolff, director of Bruegel, a research institute in Brussels.
WÜLFRATH, Germany — Hibaja Maai gave birth three days after arriving in Germany.
She had fled the bombs that destroyed her home in Syria and crossed the black waters of the Mediterranean on a rickety boat with her three young children. In Greece, a doctor urged her to stay put, but she pressed on, through Macedonia, Serbia, Hungary and Austria. Only after she had crossed the border into Bavaria did she relax and almost immediately go into labor.
“It’s a girl,” the doctor said when he handed her the newborn bundle.
There was no question in Ms. Maai’s mind what her daughter’s name would be.
“We are calling her Angela,” she told her husband, who had fled six months earlier and was reunited with his family two days before little Angela’s birth on Feb. 1, 2016.
“Angela Merkel saved our lives,” Ms. Maai said in a recent interview in her new hometown, Wülfrath, in northwestern Germany. “She gave us a roof over our heads, and she gave a future to our children. We love her like a mother.”
Chancellor Angela Merkel is stepping down after her replacement is chosen following Germany’s Sept. 26 election. Her decision to welcome more than a million refugees from Syria, Iraq, Afghanistan and elsewhere in 2015 and 2016 stands as perhaps the most consequential moment of her 16 years in power.
It changed Europe, changed Germany, and above all changed the lives of those seeking refuge, a debt acknowledged by families who named their newborn children after her in gratitude.
The chancellor has no children of her own. But in different corners of Germany, there are now 5- and 6-year-old girls (and some boys) who carry variations of her name — Angela, Angie, Merkel and even Angela Merkel. How many is impossible to say. The New York Times has identified nine, but social workers suggest there could be far more, each of them now calling Germany home.
Never before has the issue of climate change played such a role in a German election.
Though it still remained unclear who will lead Germany, nearly every party pledged to put climate change near the top of the agenda for the next government.
Despite entering office in 2005 with ambitions to reduce carbon emissions, four successive governments under Chancellor Angela Merkel failed to significantly reduce Germany’s carbon footprint. It remains in the top 10 of the world’s most polluting countries, according to the World Bank.
It has been young climate activists who have succeeded in bringing the climate debate to the forefront of Germany’s political discussion. This year, they successfully took the government to court, forcing a 2019 law aimed at bringing the country’s carbon emissions down to nearly zero by 2050 to be reworked with more ambitious and detailed goals to reduce emissions through 2030.
On Friday, people of all ages marched through the center of Berlin, then rallied on the lawn before the Reichstag, where Germany’s Parliament meets. Thousands turned out for similar protests in other cities across the country.
They were joined by Greta Thunberg, the 18-year-old climate activist who started the Fridays for Future protests in Stockholm in 2018 by skipping school as a way of shaming the world into addressing climate change, made a guest appearance at a protest in Berlin. Future Fridays were a staple in Germany until the pandemic hit.
“Yes, we must vote and you must vote, but remember that voting will not be enough,” she told the crowd, urging them to stay motivated and keep up the pressure on politicians.
“We can still turn this around. People are ready for change,” she said. “We demand the change and we are the change.”
BERLIN — In the prelude to Sunday’s federal election, one of the strangest questions faced by Armin Laschet, governor of Germany’s most populous state and one of the front-runners, was what his dragon name would be.
Mr. Laschet, apparently nonplused, exhaled loudly. “No idea,” he answered. “What kind of names do dragons have?”
As the vote neared and the competition to replace Chancellor Angela Merkel increasingly turned on the candidates’ characters, the contenders submitted themselves to an exhaustive schedule of interviews, debates and town hall-style discussions — including some inquiries from children. In fact, many of the most memorable moments were prompted by the younger questioners.
On one program, “Can You Do the Chancellery,” each of the main candidates was given 30 minutes to teach a classroom of 8- to 13-year-olds. During their separate sessions leading the class, candidates answered questions and had to explain complex themes (like global taxation or global warming) on a whiteboard.
Pauline and Romeo, the children who asked Mr. Laschet about dragons, were part of a segment on a late-night talk show. The two, both 11, threw Mr. Laschet no softballs. Among other things, they asked if he was planning on quitting smoking (a question he dodged, though he did offer that he did not inhale) and about a far-right candidate in his party.
When the 10-minute segment aired this month, Mr. Laschet was widely panned for his performance. (Two other candidates, Annalena Baerbock of the Greens and Olaf Scholz of the Social Democrats, survived Pauline and Romeo without making any headlines.)
But Mr. Laschet was not the only one to struggle. Tino Chrupalla, co-chairman of the populist Alternative for Germany party, also had a tough time with a younger interrogator.
In a publicly broadcast interview, Mr. Chrupalla told a teenage reporter called Alexander that his party wanted to see more German poems and songs being taught in classrooms. But when Alexander asked him what his favorite German poem was, Mr. Chrupalla struggled to name one.
Unusually long lines at polling stations on Sunday caused several Berlin voting locations to remain open for hours after the 6 p.m. closing deadline. That extension may add hours to the time it will take Germany to tally the votes.
The culprit seems to have been a combination of higher-than-expected in-person voting, missing or wrong ballots, and a road-blocking marathon that delayed restocking supplies.
Paco Mallia, 18, who looked forward to voting for the first time, turned back when he saw the long line at his polling station in the central neighborhood of Moabit on Sunday morning.
When he returned just before closing time, the line remained long, but an election worker assured Mr. Mallia that he would get to vote.
At other polling stations in the city, handwritten notes informed voters that as long as they stood in line by 6 p.m. they could cast a ballot.
Mr. Mallia decided to stay. “This election is kind of a big deal for me,” he said.
Although delays were reported in other jurisdictions, Berlin — where residents also voted in state and local elections — seems to have been hardest hit.
Dirk Behrendt, a Green Party city official, demanded an investigation into the delays.
“I fully complied with Treasury Department conflicts rules by not meeting with PwC representatives” during a two-year “cooling off” period that restricts government officials from meeting with their former employers, Mr. Harter said. Although he was involved in the construction of the offshore tax break and met with corporate lobbyists, Mr. Harter said he did not recall meeting with Ms. Olson or other PwC officials on the topic.
Ms. Olson referred questions to PwC.
An Inside Track
The 2017 tax overhaul included a provision that let some people take a 20 percent tax deduction on certain types of business income. But the law — known as Section 199A — largely excluded an undefined category of “brokerage services.” In 2018, lobbyists for several industries, including real estate and insurance, visited the Treasury to try to persuade officials that the broker prohibition should not apply to them.
On Aug. 1, records show, Ms. Ellis met with her former PwC colleague, Mr. Feuerstein, and three other lobbyists for his client, the National Association of Realtors. They wanted real estate brokers to qualify for the 20 percent deduction.
The meeting took place before the first draft of the proposed rules was even made public, which meant that, right off the bat, Ms. Ellis’s former PwC colleague and his client had an inside track.
When the Treasury published its first version of the proposed rules a week later, real estate brokers were eligible. The National Association of Realtors took credit for the victory on its website. (The final rules applied only to brokers of stocks and other securities.)
Ms. Ellis’s meeting with Mr. Feuerstein appeared to violate a federal ethics rule that restricts government officials from meeting with their former private sector colleagues, said Don Fox, the acting director of the Office of Government Ethics during the Obama administration and, before that, a lawyer in Republican and Democratic administrations.
Mr. Fox described the meeting as improper. “It certainly is going to call into question how that regulation was drafted,” he said. “There’s no way to undo the taint that is now going to be attached to that.”
LONDON — The top economic officials from the world’s advanced economies reached a breakthrough on Saturday in their yearslong efforts to overhaul international tax laws, unveiling a broad agreement that aims to stop large multinational companies from seeking out tax havens and force them to pay more of their income to governments.
Finance leaders from the Group of 7 countries agreed to back a new global minimum tax rate of at least 15 percent that companies would have to pay regardless of where they locate their headquarters.
The agreement would also impose an additional tax on some of the largest multinational companies, potentially forcing technology giants like Amazon, Facebook and Google as well as other big global businesses to pay taxes to countries based on where their goods or services are sold, regardless of whether they have a physical presence in that nation.
Officials described the pact as a historic agreement that could reshape global commerce and solidify public finances that have been eroded after more than a year of combating the coronavirus pandemic. The deal comes after several years of fraught negotiations and, if enacted, would reverse a race to the bottom on international tax rates. It would also put to rest a fight between the United States and Europe over how to tax big technology companies.
has been particularly eager to reach an agreement because a global minimum tax is closely tied to its plans to raise the corporate tax rate in the United States to 28 percent from 21 percent to help pay for the president’s infrastructure proposal.
EU Tax Observatory estimated that a 15 percent minimum tax would yield an additional 48 billion euros, or $58 billion, a year. The Biden administration projected in its budget last month that the new global minimum tax system could help bring in $500 billion in tax revenue over a decade to the United States.
The plan could face resistance from large corporations and the world’s biggest companies were absorbing the development on Saturday.
“We strongly support the work being done to update international tax rules,” said José Castañeda, a Google spokesman. “We hope countries continue to work together to ensure a balanced and durable agreement will be finalized soon.”
said this month that it was prepared to move forward with tariffs on about $2.1 billion worth of goods from Austria, Britain, India, Italy, Spain and Turkey in retaliation for their digital taxes. However, it is keeping them on hold while the tax negotiations unfold.
Finishing such a large agreement by the end of the year could be overly optimistic given the number of moving parts and countries involved.
“A detailed agreement on something of this complexity in a few months would just be lighting speed,” said Nathan Sheets, a former Treasury Department under secretary for international affairs in the Obama administration.
The biggest obstacle to getting a deal finished could come from the United States. The Biden administration must win approval from a narrowly divided Congress to make changes to the tax code and Republicans have shown resistance to Mr. Biden’s plans. American businesses will bear the brunt of the new taxes and Republican lawmakers have argued that the White House is ceding tax authority to foreign countries.
Representative Kevin Brady of Texas, the top Republican on the House Ways and Means Committee, said on Friday that he did not believe that a 15 percent global minimum tax would curb offshoring.
“If the American corporate tax rate is 28 percent, and the global tax rate is merely half of that, you can guarantee we’ll see a second wave of U.S. investment research manufacturing hit overseas, that’s not what we want,” Mr. Brady said.
At the news conference, Ms. Yellen noted that top Democrats in the House and Senate had expressed support for the tax changes that the Biden administration was trying to make.
Can I, err, forget to mention my plans to my boss?
It’s risky. Employers need to know where their employees work in case their presence leads to corporate tax obligations abroad. The risk is higher when employees are bringing in revenue for companies, such as in sales positions, said David McKeegan, who co-founded Greenback Tax Services, an accounting firm for U.S. expatriates.
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Still, many companies are operating on a “don’t ask, don’t tell” policy. A science writer in his 50s from California, who was granted anonymity because he did not want senior managers to know he had worked from Costa Rica for a few months, said his human resources department discouraged employees from working outside of California, but did not say anything explicit about working abroad. His setup from an Airbnb by the beach worked perfectly until he lost power because of a hurricane and had to work from a bar a few times. He used his company’s Zoom background, but colleagues started asking about where he was when they heard ocean waves and music. “At a restaurant,” he would tell them, without elaborating.
As more people work from abroad, it may be harder for companies to turn a blind eye. About 10.9 million Americans last year described themselves as digital nomads — people who work remotely and tend to travel from place to place — up from 7.3 million in 2019, according to MBO Partners, which provides services for self-employed workers.
“The tax system globally right now is not prepared for what the work force is going through,” Mr. McKeegan said. “I think at some point we’ll see a system where people are asked on the way in or out if they were working and countries will try and get some more tax revenue from this very mobile work force.”
I want to work remotely while abroad for longer than just a few months. Can I avoid paying U.S. tax altogether?
Potentially. If you qualify for the Foreign Earned Income Exclusion, your first $108,700 is exempt from U.S. income tax. But keep in mind that this applies only if you’re a U.S. citizen who resides in a foreign country for more than 330 days within 12 consecutive months, not including time on planes, or if you are a bona fide resident of a foreign country. (You would still have to pay federal and state taxes on unearned income including interest, dividends and capital gains.)
It is important to track the number of days abroad to be able to prove to U.S. tax authorities that you were there.
Paige Brunton, 30, a Canadian website designer based in Hannover, Germany, learned about how complicated the tax rules are for expats the hard way: One year, she had to file tax returns in three countries. The situation was unavoidable, since she had lived and worked in Germany, Canada and the United States during that tax year, but her biggest advice for others who may have complicated situations is to get an accountant who specializes in international tax right away.
“Don’t congregate in Facebook groups and Google, it’ll really stress you out,” she said.
WASHINGTON — From California to Virginia, many states that faced devastating shortfalls in the depths of the pandemic recession now find themselves flush with tax revenues because of a rebounding economy and a soaring stock market. Lawmakers who worried about budget cuts are now proposing lucrative increases in school spending, tax cuts and direct payments to their residents.
That turnaround is partly the product of strong income tax receipts, particularly in states that heavily tax high earners and the wealthy, whose finances have fared well in the crisis. The unexpectedly rosy picture is raising pressure on President Biden to repurpose hundreds of billions of dollars of federal aid approved this year, in order to help fund a potential bipartisan infrastructure deal.
Last week, Senator Mitt Romney, Republican of Utah, suggested that Mr. Biden and Republican negotiators look to “some of the funding that’s been sent to states already under the last few bills” to help pay for that agreement. “They don’t know how to use it,” Mr. Romney said. “They could use that money to finance part of the infrastructure relating to roads and bridges and transit.”
Some economists and budget experts support that push, arguing that the money could be better spent elsewhere and that states’ spending plans could add to a risk of rapid inflation breaking out across the country. Other researchers and local budget officials say that the federal aid is rescuing harder-hit cities and states, like New York City and Hawaii, from a cascade of layoffs and spending cuts.
$1.9 trillion economic assistance package that Mr. Biden signed in March. They say the aid will help ensure that the economic rebound does not repeat the years of state and local budget cutting that followed the 2008 financial crisis, which slowed the recovery from recession and contributed to millions of Americans waiting years to reap its benefits.
“We still feel strongly that the state and local plan is critical to ensuring we have a strong insurance policy for the type of strong growth we want, the type of equitable recovery the country deserves,” Gene Sperling, a senior adviser to Mr. Biden who oversees fulfillment of the March assistance package, said in an interview, “and to coming back from the 1.3 million jobs lost at the state and local level.”
Even if the administration wanted to recoup or divert the funds, it is unlikely that it could repurpose the money or make significant changes to how it is used without congressional action.
The debate over the state and local funding comes as Mr. Biden navigates a critical week of negotiations with Republicans over infrastructure in search of a deal, and as he prepares to travel to Cleveland on Thursday to speak about the economy. How to pay for any new spending is a primary hurdle in the talks, with Mr. Biden pushing to raise taxes on corporations and Republicans preferring increased user fees like the gas tax.
Repurposing unspent funds could help advance an agreement, particularly given Republican opposition to bankrolling state aid in previous rescue packages. Democrats pushed hard to include lucrative financial assistance for states, cities and tribes in Mr. Biden’s rescue bill. Republicans fought those efforts, warning they would serve as a “bailout” to high-tax, high-spend liberal states. They also cited a series of projections from Wall Street firms and other analysts suggesting that many states’ revenues were faring better than officials had feared in the early months of the pandemic.
do not need more federal money. That is particularly true in states that do not rely primarily on the tourism or hospitality industries for tax revenues. Those with progressive tax systems that have caught surging revenues from investment income enjoyed by wealthy residents — like Silicon Valley moguls — are also faring well.
California officials expect a $15 billion surplus this fiscal year, after fearing a $54 billion shortfall. Virginia has seen nearly $2 billion in unanticipated revenues. As has Oregon, where economists recently upgraded the state’s revenue forecasts — moving it from projected deficits to surplus — in a report that surprised and delighted many lawmakers.
“It’s extremely surprising,” said Mark McMullen, the Oregon state economist.
“Obviously, when the shutdowns first set in and we saw these catastrophic employment losses, we treated them as a normal recession in our forecasts,” he said.
But surging income tax revenues and several rounds of federal assistance have now put the state “above our prepandemic forecasts,” Mr. McMullen added.
The strong revenue figures come as more federal relief money is just beginning to roll out the door. The Treasury Department began sending funds to states this month and has so far distributed more than $100 billion — about half of what is available to be disbursed immediately. Local governments are expected to receive the rest next year, although states still experiencing a sharp rise in unemployment will get a lump sum right away.
as a much lower risk than Mr. Summers does.
Other analysts warn that state budget situations could sour if the stock market dips sharply or economic growth fizzles. Many cities, like New York, have struggled with sluggish tax revenues and still are reliant on federal to help avoid further layoffs.
New York expects to receive more than $22 billion in Covid-19 federal aid, according to the nonpartisan Citizens Budget Commission. Despite the funds, the city is still anticipating budget gaps in the coming years, the result of declining revenues like property taxes.
In retrospect, said Lucy Dadayan, a senior research associate at the Tax Policy Center, the March law should have included “more targeted funding” for the states and cities that need it most.
$8.8 billion from the federal government. Ben Watkins, the director of the Florida Division of Bond Finance, said the state was using the relief money to invest in infrastructure and water quality projects and directing some of its surplus funds to hurricane preparedness.
He described the windfall as staggering.
“It’s a good problem to have,” Mr. Watkins said, “but that doesn’t mean that it’s not excessive.”
States have substantial leeway in how they use the money, though they are prohibited from using the funds to subsidize tax cuts. Several Republican-led states have sued the Treasury Department, arguing that the restriction infringes on state sovereignty.
The lawsuits do not appear to be slowing the delivery of the funds. Ohio failed to win an injunction blocking the restrictions from being enforced this month, and Missouri had its case thrown out of court after a federal judge said the state did not demonstrate that the law caused it harm.
$26 million corporate tax cut last week, and lawmakers have told The Omaha World-Herald that they believe that by keeping the federal funds in a separate account from the state’s general fund, they will be in compliance with the law.
Nicholas Fandos and Dana Goldstein contributed reporting.
When reports began to emerge on Wednesday night that the murderous leader of the Islamist terrorist group Boko Haram was dead, many Nigerians dismissed them immediately.
Over the years, the Nigerian military had announced the killing of that leader, Abubakar Shekau, several times before. And then he would show up online weeks later, taunting his supposed killers in video diatribes.
“If you have killed us, why are we still alive?” he asked in 2018, after the Nigerian military claimed to have “broken the heart and the soul” of Boko Haram, a group that has killed tens of thousands of people and displaced millions.
But this time feels different. It wasn’t the military announcing they had killed him. In fact, for hours on Wednesday night and on Thursday, the military was silent.
the 2014 kidnapping of the Chibok Girls, 276 schoolgirls who were abducted from their dormitories at night and who Mr. Shekau later vowed he would “sell in the market.”
over 100 are missing or remain in captivity, along with many other less famous, but often even younger victims.
Bunu Bukar, secretary of the Hunters’ Association in Borno State, who has played a key role in demobilizing Boko Haram fighters and is in contact with past and present members of the group. He said that 200 heavily armed ISWAP members descended on Mr. Shekau’s hide-out in Sambisa forest.
“When Shekau discovered that these people are very powerful and he also realized that it’s not Nigerian army, it’s ISWAP — he just planned to use explosive devices,” Mr. Bukar said. “He wore them all and confronted them directly. When the explosion came, Shekau was in pieces. And they also lost at least 40 fighters — ISWAP fighters.”
wrote Ahmad Salkida, the Nigerian journalist often credited with — and sometimes criticized for — having stellar sources inside Boko Haram.
In Maiduguri, people gathered in small groups to talk about the news, but most assigned it no greater status than another rumor. Likely a false alarm.
How do we fight disinformation? Join Times tech reporters as they untangle the roots of disinformation and how to combat it. Plus we speak to special guest comedian Sarah Silverman. R.S.V.P. to this subscriber-exclusive event. But Mr. Shekau and his group would have an indelible effect on Mr. Hamza, who had to flee Maiduguri for two years, and his family.“I lost a brother, a cousin and an uncle killed by Boko Haram,” he said. “Thousands of innocent people killed or displaced, especially women and children. How can God forgive such a heartless person?”For many, particularly those connected with the country’s armed forces, if Mr. Shekau was dead, it was not necessarily a positive development overall. It could mean that ISWAP, already powerful, posed much more of a threat to Maiduguri and other garrison cities, some said.If it really happened, “Shekau’s death is not an end to Boko Haram. It is only the beginning of another chapter in the group,” said Audu Bulama Bukarti, an expert on extremist groups in Africa at the Tony Blair Institute for Global Change.Warfare between the factions has killed hundreds of their members previously, he said, and if that continued, they would be weakened.“It will be two violent groups eating up themselves and that will be positive news for Nigeria,” he said. On the other hand, if the two factions teamed up, he said: “It will open an even deadlier chapter for security forces.”It would also make it harder to win the battle of ideas, he said, as ISWAP tends to be more benign to civilians.“Where Shekau alienated civilians with his capricious and often massive and violent seizures of cattle and grain, ISWAP has substituted a fairer, cash-based taxation of trade and agricultural production,” wrote the analyst Vincent Foucher in a recent report for the International Crisis Group.
Those who have suffered at Mr. Shekau’s hands almost hoped he had not been killed in the way it was reported on Thursday, feeling it was too easy a way out for him.
“I would have wished that he was caught alive, released to the military authorities and taken round the city of Maiduguri,” Mr. Hamza said. “We would surely have skinned him alive.”
The Biden administration proposed a global tax on multinational corporations of at least 15 percent in the latest round of international tax negotiations, Treasury Department officials said on Thursday, as the U.S. looks to reach a deal with countries that fear hiking their rates will deter investment.
The rate was a lower-than-expected proposal from the United States, and the Treasury Department hailed its positive reception among other countries as a breakthrough in the negotiations. The fate of the talks is closely tied to the Biden administration’s plans for overhauling the corporate tax code in the United States, and the White House is pushing to reach an international agreement this summer and pass legislation later this year.
President Biden has proposed raising the corporate tax rate in the United States to 28 percent from 21 percent, which would be higher than the rate in many other countries. A deal over a global minimum tax would better allow the United States to make the increase without putting American companies at a disadvantage or encouraging them to move operations offshore.
Treasury has been holding meetings this week with a panel of negotiators from 24 countries about the so-called global minimum tax, which would apply to multinational companies regardless of where they locate their headquarters.
said in a statement after the meetings.
The negotiations over the global minimum tax are part of a broader global fight over how to tax technology companies, and they come as the Biden administration is trying to fix provisions in the tax code that it says incentivizes moving jobs overseas. The talks have dragged on for more than two years, slowed by the recalcitrance of the Trump administration and the onslaught of the pandemic.
As part of its American Jobs Plan, the Biden administration called for doubling a tax called the global intangible low-taxed income (or GILTI) to 21 percent, which would narrow the gap between what companies pay on overseas profits and what they pay on earned income in the United States. Under the plan, the tax would be calculated on a per-country basis, which would have the effect of subjecting more income earned overseas to the tax than under the current system.
If the 15 percent global minimum tax rate is adopted, it would still leave a gap between that rate and the Biden administration’s proposed U.S. domestic rate. Treasury officials have argued that the new gap would be smaller than the current one and therefore would not diminish the competitiveness of American companies. A large delta between the global minimum tax and what U.S.-based companies face on their foreign income gives companies that are based outside of the United States an advantage.
American companies have been watching the different moving parts of the negotiations closely. Big businesses have been generally wary of the Biden administration’s tax plans.
also expressed skepticism this week.
Manal Corwin, a former Treasury Department official in the Obama administration who now heads the Washington national tax practice at KPMG, said that other countries had been under the impression that the United States was set on a 21 percent global minimum tax, which would match the tax rate the Biden administration has proposed for U.S.-based companies’ foreign income. The fact that the U.S. is ready to negotiate from a lower rate is important, she said.
“To get a deal, it was important for the U.S. to clarify that they’re not necessarily saying 21 percent or nothing,” Ms. Corwin said.
Still, she added, the 15 percent “floor” could be too high for some countries to accept and too low to win approval from some members of Congress in the United States.
Rohit Kumar, leader of PwC’s Washington National Tax Services office, said that the reaction from Ireland and other countries to the proposal will be crucial because a tax agreement reached through the negotiations would be far from ironclad.
“Do countries actually change national law and enact it? Or is it just a political agreement where everyone is says, ‘That’s nice, but we’re not doing it?’” Mr. Kumar, a former top aid to Senator Mitch McConnell, the Senate minority leader, said. “As U.S. lawmakers are examining these proposals, that is the several trillion dollar question.”
Treasury officials said that they never insisted on the 21 percent rate, but that they believed that other countries were receptive to the idea of adopting a rate higher than 15 percent depending on the fate of the changes to the American tax system that are under consideration.
Ms. Yellen has warned that a global “race to the bottom” has been eating away at government revenues, and she has adopted a more collaborative approach to the negotiations than the Trump administration employed.
She is expected to continue talks about global tax reform with her international counterparts at the Group of 7 finance ministers meeting next month.
Paul Romer was once Silicon Valley’s favorite economist. The theory that helped him win a Nobel prize — that ideas are the turbocharged fuel of the modern economy — resonated deeply in the global capital of wealth-generating ideas. In the 1990s, Wired magazine called him “an economist for the technological age.” The Wall Street Journal said the tech industry treated him “like a rock star.”
Today, Mr. Romer, 65, remains a believer in science and technology as engines of progress. But he has also become a fierce critic of the tech industry’s largest companies, saying that they stifle the flow of new ideas. He has championed new state taxes on the digital ads sold by companies like Facebook and Google, an idea that Maryland adopted this year.
And he is hard on economists, including himself, for long supplying the intellectual cover for hands-off policies and court rulings that have led to what he calls the “collapse of competition” in tech and other industries.
“Economists taught, ‘It’s the market. There’s nothing we can do,’” Mr. Romer said. “That’s really just so wrong.”
free-market theory. Monopoly or oligopoly seems to be the order of the day.
The relentless rise of the digital giants, they say, requires new thinking and new rules. Some were members of the tech-friendly Obama administration. In congressional testimony and research reports, they are contributing ideas and credibility to policymakers who want to rein in the big tech companies.
Their policy recommendations vary. They include stronger enforcement, giving people more control over their data and new legislation. Many economists support the bill introduced this year by Senator Amy Klobuchar, Democrat of Minnesota, that would tighten curbs on mergers. The bill would effectively “overrule a number of faulty, pro-defendant Supreme Court cases,” Carl Shapiro, an economist at the University of California, Berkeley, and a member of the Council of Economic Advisers in the Obama administration, wrote in a recent presentation to the American Bar Association.
Some economists, notably Jason Furman, a Harvard professor, chair of the Council of Economic Advisers in the Obama administration and adviser to the British government on digital markets, recommend a new regulatory authority to enforce a code of conduct on big tech companies that would include fair access to their platforms for rivals, open technical standards and data mobility.
his Nobel lecture in 2018 prompted him to think about the “progress gap” in America. Progress, he explained, is not just a matter of economic growth, but should also be seen in measures of individual and social well-being.
Mr. Romer pushed the idea that new cities of the developing world should be a blend of government design for basics like roads and sanitation, and mostly let markets take care of the rest. During a short stint as chief economist of the World Bank, he had hoped to persuade the bank to back a new city, without success.
In the big-tech debate, Mr. Romer notes the influence of progressives like Lina Khan, an antitrust scholar at Columbia Law School and a Democratic nominee to the Federal Trade Commission, who see market power itself as a danger and look at its impact on workers, suppliers and communities.
That social welfare perspective is a wider lens that appeals to Mr. Romer and others.
“I’m totally on board with Paul on this,” said Rebecca Henderson, an economist and professor at the Harvard Business School. “We have a much broader problem than one that falls within the confines of current antitrust law.”
Mr. Romer’s specific contribution is a proposal for a progressive tax on digital ads that would apply mainly to the largest internet companies supported by advertising. Its premise is that social networks like Facebook and Google’s YouTube rely on keeping people on their sites as long as possible by targeting them with attention-grabbing ads and content — a business model that inherently amplifies disinformation, hate speech and polarizing political messages.
So that digital ad revenue, Mr. Romer insists, is fair game for taxation. He would like to see the tax nudge the companies away from targeted ads toward a subscription model. But at the least, he said, it would give governments needed tax revenue.
In February, Maryland became the first state to pass legislation that embodies Mr. Romer’s digital ad tax concept. Other states including Connecticut and Indiana are considering similar proposals. Industry groups have filed a court challenge to the Maryland law asserting it is an illegal overreach by the state.
Mr. Romer says the tax is an economic tool with a political goal.
“I really do think the much bigger issue we’re facing is the preservation of democracy,” he said. “This goes way beyond efficiency.”
It’s May 17 and it’s Tax Day, the deadline for filing your 2020 taxes. The Internal Revenue Service in March said that Americans who needed it could take extra time to file their taxes. That time has arrived.
The one-month delay from the usual April deadline did not offer as much extra time as the I.R.S. gave people last year, when the filing deadline was pushed to July 15. But the aim was the same: to make it easier for taxpayers to get a handle on their finances — as well as tax changes that took effect this year with the signing of the American Rescue Plan.
Still have questions? Here are some articles that might help.
How the Pandemic Has Changed Your Taxes
New rules for a new reality, from stimulus payments to retirement withdrawals to unemployment insurance, could cut your bill or even generate extra refunds.
Goldbelly’s growth surpassed its expectations. Sales more than quadrupled last year, and it nearly doubled the number of restaurants on its platform, to 850. That, according to Joe Ariel, its co-founder and C.E.O., was because the company allows restaurants like Di Fara pizzeria in Brooklyn and Parkway Bakery and Tavern in New Orleans to go national: “We’re basically opening up a 3,000-mile radius for restaurants.”
Can that good fortune continue? As in-person dining resumes across the U.S., Ariel concedes that Goldbelly’s phenomenal growth rate last year “is not going to happen forever.” But its newest backers believe that restaurants will keep making online sales part of their businesses. Goldbelly is also counting on maintaining its lead by spending more on marketing, offering livestreamed cooking classes and relying on the loyalty of chefs.
Ariel didn’t deny that the company has its eye on an I.P.O. “In the future, we do want to be a public company,” he told DealBook.
The crypto tax thicket
Cryptocurrency’s rise to prominence is reflected in the latest U.S. tax documents (due today, in case you forgot). This year, a virtual currency question tops Form 1040, the individual income tax return form, right after the personal identifying information. The I.R.S. wants to know: “At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?”
Yes means no, sort of. If you only bought crypto with “real currency” then you aren’t required to answer “yes,” per the I.R.S. But this guidance is not binding, which means you can’t entirely rely on it. This relatively simple question, which is generating consternation among accountants, reflects the greater state of disarray when it comes to digital asset taxation.
“There’s very limited guidance on crypto,” Michael Meisler, a lawyer who leads EY’s crypto tax center, told DealBook. Basic tax principles apply to digital assets and many concepts translate from the physical to digital realm, but crypto is evolving fast. The approach taxpayers take depends on their tolerance for risk, Meisler said.
Cryptocurrency is property for tax purposes.That means that there is a tax liability for every sale or purchase using crypto, said Amy Kim, the chief policy officer of the Chamber of Digital Commerce, a trade group: “Imagine reporting the gain or loss on every cup of coffee you bought at Starbucks.”
Big Crypto wants the I.R.S. to flip its script. The tax authorities have engaged in an “enforcement-focused approach,” Kim said. “We believe this approach should be reversed — issue practical guidance, then enforce that guidance against those who do not comply.”
THE SPEED READ
Alex Rodriguez and the Jet.com cofounder Marc Lore agreed to buy the N.B.A.’s Minnesota Timberwolves and the W.N.B.A.’s Minnesota Lynx for $1.5 billion. (NYT)
George Soros’s investment fund was among those that scooped up stocks at a steep discount when they were offloaded by Archegos during its implosion. (Bloomberg)
The influential proxy adviser I.S.S. backed three of four candidates for Exxon Mobil’s board put forth by the climate-minded activist investor Engine No. 1. (Bloomberg)
Politics and policy
Rural areas are counting on President Biden’s infrastructure proposal, in particular its expansion of broadband access, to help attract more workers. (NYT)
Proponents of Biden’s planned revival of the International Entrepreneur Rule to grant start-up founders special visas say it will create thousands of new jobs. (Axios)
“The Deadly Toll of Amazon’s Trucking Boom” (The Information)
Goldman Sachs’s online consumer banking unit lost another top executive as its C.F.O., Sherry Ann Mohan, defected to JPMorgan Chase. (CNBC)
Best of the rest
Leslie Moonves, who was fired from CBS in 2018, will receive nothing from the $120 million the company set aside in a potential severance package. (NYT)
Some advice on how to prevent the re-emergence of workplace cliques as people return to the office. (FT)
The publicly traded New Jersey deli with a $100 million market cap that David Einhorn identified as a symptom of irrational markets has fired its C.E.O. (CNBC)
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