collapse of Mt. Gox, a Tokyo-based virtual currency exchange that declared bankruptcy in 2014 after huge, unexplained losses of Bitcoin.

If cryptocurrency prices do not recover, “a lot of them will have to go back to work again,” Clinton Donnelly, an American tax lawyer specializing in cryptocurrencies, said of some of those gathered at Bam Bam.

Even so, Mr. Donnelly and other bar regulars said their belief in crypto remained unshaken.

Thomas Roessler, wearing a black Bitcoin shirt and drinking a beer “inspired by” the currency, said he had come with his wife and two young children to decide whether to move to Portugal from Germany. He first invested in Bitcoin in 2014 and, more recently, sold a small rental apartment in Germany to invest even more.

Mr. Roessler was concerned about the drop in crypto values but said he was convinced the market would rebound. Moving to Portugal could lower his taxes and give his family the chance to buy affordable property in a warm climate, he said. They had come to the bar to learn from others who had made the move.

“We have not met a lot of people who live this way,” Mr. Roessler said. Then he bought another round of drinks and paid for them with Bitcoin.

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They Were Entitled to Free Care. Hospitals Hounded Them to Pay.

In 2018, senior executives at one of the country’s largest nonprofit hospital chains, Providence, were frustrated. They were spending hundreds of millions of dollars providing free health care to patients. It was eating into their bottom line.

The executives, led by Providence’s chief financial officer at the time, devised a solution: a program called Rev-Up.

Rev-Up provided Providence’s employees with a detailed playbook for wringing money out of patients — even those who were supposed to receive free care because of their low incomes, a New York Times investigation found.

nonprofits like Providence. They enjoy lucrative tax exemptions; Providence avoids more than $1 billion a year in taxes. In exchange, the Internal Revenue Service requires them to provide services, such as free care for the poor, that benefit the communities in which they operate.

But in recent decades, many of the hospitals have become virtually indistinguishable from for-profit companies, adopting an unrelenting focus on the bottom line and straying from their traditional charitable missions.

focused on investments in rich communities at the expense of poorer ones.

And, as Providence illustrates, some hospital systems have not only reduced their emphasis on providing free care to the poor but also developed elaborate systems to convert needy patients into sources of revenue. The result, in the case of Providence, is that thousands of poor patients were saddled with debts that they never should have owed, The Times found.

provide. That was below the average of 2 percent for nonprofit hospitals nationwide, according to an analysis of hospital financial records by Ge Bai, a professor at the Johns Hopkins Bloomberg School of Public Health.

Ten states, however, have adopted their own laws that specify which patients, based on their income and family size, qualify for free or discounted care. Among them is Washington, where Providence is based. All hospitals in the state must provide free care for anyone who makes under 300 percent of the federal poverty level. For a family of four, that threshold is $83,250 a year.

In February, Bob Ferguson, the state’s attorney general, accused Providence of violating state law, in part by using debt collectors to pursue more than 55,000 patient accounts. The suit alleged that Providence wrongly claimed those patients owed a total of more than $73 million.

Providence, which is fighting the lawsuit, has said it will stop using debt collectors to pursue money from low-income patients who should qualify for free care in Washington.

But The Times found that the problems extend beyond Washington. In interviews, patients in California and Oregon who qualified for free care said they had been charged thousands of dollars and then harassed by collection agents. Many saw their credit scores ruined. Others had to cut back on groceries to pay what Providence claimed they owed. In both states, nonprofit hospitals are required by law to provide low-income patients with free or discounted care.

“I felt a little betrayed,” said Bev Kolpin, 57, who had worked as a sonogram technician at a Providence hospital in Oregon. Then she went on unpaid leave to have surgery to remove a cyst. The hospital billed her $8,000 even though she was eligible for discounted care, she said. “I had worked for them and given them so much, and they didn’t give me anything.” (The hospital forgave her debt only after a lawyer contacted Providence on Ms. Kolpin’s behalf.)

was a single room with four beds. The hospital charged patients $1 a day, not including extras like whiskey.

Patients rarely paid in cash, sometimes offering chickens, ducks and blankets in exchange for care.

At the time, hospitals in the United States were set up to do what Providence did — provide inexpensive care to the poor. Wealthier people usually hired doctors to treat them at home.

wrote to the Senate in 2005.

Some hospital executives have embraced the comparison to for-profit companies. Dr. Rod Hochman, Providence’s chief executive, told an industry publication in 2021 that “‘nonprofit health care’ is a misnomer.”

“It is tax-exempt health care,” he said. “It still makes profits.”

Those profits, he added, support the hospital’s mission. “Every dollar we make is going to go right back into Seattle, Portland, Los Angeles, Alaska and Montana.”

Since Dr. Hochman took over in 2013, Providence has become a financial powerhouse. Last year, it earned $1.2 billion in profits through investments. (So far this year, Providence has lost money.)

Providence also owes some of its wealth to its nonprofit status. In 2019, the latest year available, Providence received roughly $1.2 billion in federal, state and local tax breaks, according to the Lown Institute, a think tank that studies health care.

a speech by the Rev. Dr. Martin Luther King Jr.: “If it falls your lot to be a street sweeper, sweep streets like Michelangelo painted pictures.”

Ms. Tizon, the spokeswoman for Providence, said the intent of Rev-Up was “not to target or pressure those in financial distress.” Instead, she said, “it aimed to provide patients with greater pricing transparency.”

“We recognize the tone of the training materials developed by McKinsey was not consistent with our values,” she said, adding that Providence modified the materials “to ensure we are communicating with each patient with compassion and respect.”

But employees who were responsible for collecting money from patients said the aggressive tactics went beyond the scripts provided by McKinsey. In some Providence collection departments, wall-mounted charts shaped like oversize thermometers tracked employees’ progress toward hitting their monthly collection goals, the current and former Providence employees said.

On Halloween at one of Providence’s hospitals, an employee dressed up as a wrestler named Rev-Up Ricky, according to the Washington lawsuit. Another costume featured a giant cardboard dollar sign with “How” printed on top of it, referring to the way the staff was supposed to ask patients how, not whether, they would pay. Ms. Tizon said such costumes were “not the culture we strive for.”

financial assistance policy, his low income qualified him for free care.

In early 2021, Mr. Aguirre said, he received a bill from Providence for $4,394.45. He told Providence that he could not afford to pay.

Providence sent his account to Harris & Harris, a debt collection company. Mr. Aguirre said that Harris & Harris employees had called him repeatedly for weeks and that the ordeal made him wary of going to Providence again.

“I try my best not to go to their emergency room even though my daughters have gotten sick, and I got sick,” Mr. Aguirre said, noting that one of his daughters needed a biopsy and that he had trouble breathing when he had Covid. “I have this big fear in me.”

That is the outcome that hospitals like Providence may be hoping for, said Dean A. Zerbe, who investigated nonprofit hospitals when he worked for the Senate Finance Committee under Senator Charles E. Grassley, Republican of Iowa.

“They just want to make sure that they never come back to that hospital and they tell all their friends never to go back to that hospital,” Mr. Zerbe said.

The Everett Daily Herald, Providence forgave her bill and refunded the payments she had made.

In June, she got another letter from Providence. This one asked her to donate money to the hospital: “No gift is too small to make a meaningful impact.”

In 2019, Vanessa Weller, a single mother who is a manager at a Wendy’s restaurant in Anchorage, went to Providence Alaska Medical Center, the state’s largest hospital.

She was 24 weeks pregnant and experiencing severe abdominal pains. “Let this just be cramps,” she recalled telling herself.

Ms. Weller was in labor. She gave birth via cesarean section to a boy who weighed barely a pound. She named him Isaiah. As she was lying in bed, pain radiating across her abdomen, she said, a hospital employee asked how she would like to pay. She replied that she had applied for Medicaid, which she hoped would cover the bill.

After five days in the hospital, Isaiah died.

Then Ms. Weller got caught up in Providence’s new, revenue-boosting policies.

The phone calls began about a month after she left the hospital. Ms. Weller remembers panicking when Providence employees told her what she owed: $125,000, or about four times her annual salary.

She said she had repeatedly told Providence that she was already stretched thin as a single mother with a toddler. Providence’s representatives asked if she could pay half the amount. On later calls, she said, she was offered a payment plan.

“It was like they were following some script,” she said. “Like robots.”

Later that year, a Providence executive questioned why Ms. Weller had a balance, given her low income, according to emails disclosed in Washington’s litigation with Providence. A colleague replied that her debts previously would have been forgiven but that Providence’s new policy meant that “balances after Medicaid are being excluded from presumptive charity process.”

Ms. Weller said she had to change her phone number to make the calls stop. Her credit score plummeted from a decent 650 to a lousy 400. She has not paid any of her bill.

Susan C. Beachy and Beena Raghavendran contributed research.

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Sen. Sinema Took Wall Street Money While Killing Tax On Investors

The revelation comes after Sen. Sinema single-handedly thwarted her party’s long-standing goal of raising taxes on such investors.

Sen. Kyrsten Sinema, the Arizona Democrat who single-handedly thwarted her party’s longtime goal of raising taxes on wealthy investors, received nearly $1 million over the past year from private equity professionals, hedge fund managers and venture capitalists whose taxes would have increased under the plan.

For years, Democrats have promised to raise taxes on such investors, who pay a significantly lower rate on their earnings than ordinary workers. But just as they closed in on that goal last week, Sinema forced a series of changes to her party’s $740 billion election-year spending package, eliminating a proposed “carried interest” tax increase on private equity earnings while securing a $35 billion exemption that will spare much of the industry from a separate tax increase other huge corporations now have to pay.

The bill, with Sinema’s alterations intact, was given final approval by Congress on Friday and is expected to be signed by President Joe Biden next week.

Sinema has long aligned herself with the interests of private equity, hedge funds and venture capital, helping her net at least $1.5 million in campaign contributions since she was elected to the House a decade ago. But the $983,000 she has collected since last summer more than doubled what the industry donated to her during all of her preceding years in Congress combined, according to an Associated Press review of campaign finance disclosures.

The donations, which make Sinema one of the industry’s top beneficiaries in Congress, serve a reminder of the way that high-power lobbying campaigns can have dramatic implications for the way legislation is crafted, particularly in the evenly divided Senate where there are no Democratic votes to spare. They also highlight a degree of political risk for Sinema, whose unapologetic defense of the industry’s favorable tax treatment is viewed by many in her party as indefensible.

“From their vantage point, it’s a million dollars very well spent,” said Dean Baker, a senior economist at the Center for Economic and Policy Research, a liberal-leaning think tank. “It’s pretty rare you see this direct of a return on your investment. So, I guess I would congratulate them.”

Sinema’s office declined to make her available for an interview. Hannah Hurley, a Sinema spokesperson, acknowledged the senator shares some of the industry’s views on taxation, but rebuffed any suggestion that the donations influenced her thinking.

“Senator Sinema makes every decision based on one criteria: what’s best for Arizona,” Hurley said in a statement. “She has been clear and consistent for over a year that she will only support tax reforms and revenue options that support Arizona’s economic growth and competitiveness.”

The American Investment Council, a trade group that lobbies on behalf of private equity, also defended their push to defeat the tax provisions.

“Our team worked to ensure that members of Congress from both sides of the aisle understand how private equity directly employs workers and supports small businesses throughout their communities,” Drew Maloney, the organization’s CEO and president, said in a statement.

Sinema’s defense of wealthy investors’ tax treatment offers a jarring contrast to her background as a Green Party activist and self-styled “Prada socialist” who once likened accepting campaign cash to “bribery” and later called for “big corporations & the rich to pay their fair share” before launching her first campaign for Congress in 2012.

She’s been far more magnanimous since, praising private equity in 2016 from the House floor for providing “billions of dollars each year to Main Street businesses.” After her election to the Senate, Sinema interned during the 2020 congressional recess at a private equity mogul’s boutique winery in northern California.

The soaring contributions from the industry to Sinema trace back to last summer. That’s when she first made clear that she wouldn’t support a carried interest tax increase, as well as other corporate and business tax hikes included in an earlier iteration of President Biden’s agenda.

During a two-week period in September alone, Sinema collected $47,100 in contributions from 16 high-ranking officials from the private equity firm Welsh, Carson, Anderson & Stowe, records show. Employees and executives of KKR, another private equity behemoth, contributed $44,100 to Sinema during a two-month span in late 2021.

In some cases, the families of private equity managers joined in. David Belluck, a partner at the firm Riverside Partners, gave a $5,800 max-out contribution to Sinema one day in late June. So did three of his college-age kids, with the family collectively donating $23,200, records show.

“I generally support centrist Democrats and her seat is important to keep a Democratic Senate majority,” Belluck said, adding that his family has known Sinema since her election to Congress. “She and I have never discussed private equity taxation.”

The donations from the industry coincide with a $26 million lobbying effort spearheaded by the investment firm Blackstone that culminated on the Senate floor last weekend.

By the time the bill was up for debate during a marathon series of votes, Sinema had already forced Democrats to abandon their carried interest tax increase.

“Senator Sinema said she would not vote for the bill .. unless we took it out,” Senate Majority Leader Chuck Schumer told reporters last week. “We had no choice.”

But after private equity lobbyists discovered a provision in the bill that would have subjected many of them to a separate 15% corporate minimum tax, they urgently pressed Sinema and other centrist Democrats for changes, according to emails as well as four people with direct knowledge of the matter who requested anonymity to discuss internal deliberations.

“Given the breaking nature of this development we need as many offices as possible weighing in with concerns to Leader Schumer’s office,” Blackstone lobbyist Ryan McConaghy wrote in a Saturday afternoon email obtained by the AP, which included proposed language for modifying the bill. “Would you and your boss be willing to raise the alarm on this and express concerns with Schumer and team?”

McConaghy did not respond to a request for comment.

Sinema worked with Republicans on an amendment that stripped the corporate minimum tax on private equity from the bill, which a handful of vulnerable Democrats also voted for.

“Since she has been in Congress, Kyrsten has consistently supported pro-growth policies that encourage job creation across Arizona. Her tax policy positions and focus on growing Arizona’s economy and competitiveness are longstanding and well known,” Hurley, the Sinema spokesperson, said.

But many in her party disagree. They say the favorable tax treatment does little to boost the overall economy and argue there’s little compelling evidence to suggest its benefits are enjoyed beyond some of the wealthiest investors.

Some of Sinema’s donors make their case.

Blackstone, a significant source of campaign contributions, owns large tracts of real estate in Sinema’s home state, Arizona. The firm was condemned by United Nations experts in 2019 who said Blackstone’s financial model was responsible for a “financialization of housing” that has driven up rents and home costs, “pushing low-income, and increasingly middle-income people from their homes.”

Blackstone employees, executives and their family members have given Sinema $44,000 since 2018, records show.

In a statement, Blackstone called the allegations by the U.N. experts “false and misleading” and said all employee contributions are “strictly personal.” The firm added that it was “incredibly proud of its investments in housing.”

Another significant financial services donor is Centerbridge Partners, a New York-based firm that buys up the debt of distressed governments and companies and often uses hardball tactics to extract value. Since 2017, Sinema has collected at least $29,000 from donors associated with the firm, including co-founder Mark Gallogly and his wife, Elizabeth Strickler, records show.

In 2012, Centerbridge Partners purchased Arizona-based restaurant chain P.F. Chang’s for roughly $1 billion. After loading the struggling company up with $675 million of debt, they sold it to another private equity group in 2019, according to Bloomberg News. The company received a $10 million coronavirus aid loan to cover payroll, which the federal government later forgave, but shed jobs and closed locations as it struggled with the pandemic.

Centerbridge Partners was also part of a consortium of hedge funds that helped usher in an era of austerity in Puerto Rico after buying up billions of dollars of the island government’s $72 billion debt — and filing legal proceedings to collect. A subsidiary of Centerbridge Partners was among a group of creditors who repeatedly sued one of the U.S. territory’s pension funds. In one 2016 lawsuit, the group of creditors asked a judge to divert money from a Puerto Rican pension fund in order to collect.

A Centerbridge representative could not provide comment.

Liberal activists in Arizona say they plan to make Sinema’s reliance on donations from wealthy investors a campaign issue when she is up for reelection in 2024.

“There are many takes on how to win, but there is no universe in which it is politically smart to fight for favorable tax treatment of the wealthiest people in the country,” said Emily Kirkland, a political consultant who works for progressive candidates. “It’s absolutely going to be a potent issue.”

Additional reporting by The Associated Press.

Source: newsy.com

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Congress OKs Dems’ Climate, Health Bill, A Biden Triumph

The House used a party-line 220-207 vote to pass the legislation.

A divided Congress gave final approval Friday to Democrats’ flagship climate and health care bill, handing President Joe Biden a back-from-the-dead triumph on coveted priorities that the party hopes will bolster their prospects for keeping their hold on Congress in November’s elections.

The House used a party-line 220-207 vote to pass the legislation, which is but a shadow of the larger, more ambitious plan to supercharge environment and social programs that President Biden and his party envisioned early last year. Even so, Democrats happily declared victory on top-tier goals like providing Congress’ largest ever investment in curbing carbon emissions, reining in pharmaceutical costs and taxing large companies, a vote they believe will show they can wring accomplishments from a routinely gridlocked Washington that often disillusions voters.

“Today is a day of celebration, a day we take another giant step in our momentous agenda,” said House Speaker Nancy Pelosi, D-Calif. She said the measure “meets the moment, ensuring that our families thrive and that our planet survives.”

Republicans solidly opposed the legislation, calling it a cornucopia of wasteful liberal daydreams that would raise taxes and families’ living costs. They did the same Sunday but Senate Democrats banded together and used Vice President Kamala Harris’ tiebreaking vote t o power the measure through that 50-50 chamber.

“Democrats, more than any other majority in history, are addicted to spending other people’s money, regardless of what we as a country can afford,” said House Minority Leader Kevin McCarthy, R-Calif. “I can almost see glee in their eyes.”

President Biden’s initial 10-year, $3.5 trillion proposal also envisioned free prekindergarten, paid family and medical leave, expanded Medicare benefits and eased immigration restrictions. That crashed after centrist Sen. Joe Manchin, D-W.Va., said it was too costly, using the leverage every Democrat has in the evenly-divided Senate.

Still, the final legislation remained substantive. Its pillar is about $375 billion over 10 years to encourage industry and consumers to shift from carbon-emitting to cleaner forms of energy. That includes $4 billion to cope with the West’s catastrophic drought.

Spending, tax credits and loans would bolster technology like solar panels, consumer efforts to improve home energy efficiency, emission-reducing equipment for coal- and gas-powered power plants and air pollution controls for farms, ports and low-income communities.

Another $64 billion would help 13 million people pay premiums over the next three years for privately bought health insurance. Medicare would gain the power to negotiate its costs for pharmaceuticals, initially in 2026 for only 10 drugs. Medicare beneficiaries’ out-of-pocket prescription costs would be limited to $2,000 starting in 2025, and beginning next year would pay no more than $35 monthly for insulin, the costly diabetes drug.

The bill would raise around $740 billion in revenue over the decade, over a third from government savings from lower drug prices. More would flow from higher taxes on some $1 billion corporations, levies on companies that repurchase their own stock and stronger IRS tax collections. About $300 billion would remain to defray budget deficits, a sliver of the period’s projected $16 trillion total.

Against the backdrop of GOP attacks on the FBI for its court-empowered search of former President Donald Trump’s Florida estate for sensitive documents, Republicans repeatedly savaged the bill’s boost to the IRS budget. That is aimed at collecting an estimated $120 billion in unpaid taxes over the coming decade, and Republicans have misleadingly claimed that the IRS will hire 87,000 agents to target average families.

Rep. Andrew Clyde, R-Ga., said Democrats would also “weaponize” the IRS with agents, “many of whom will be trained in the use of deadly force, to go after any American citizen.” Sen. Chuck Grassley, R-Iowa, asked Thursday on “Fox and Friends” if there would be an IRS “strike force that goes in with AK-15s already loaded, ready to shoot some small business person.”

Few IRS personnel are armed, and Democrats say the bill’s $80 billion, 10-year budget increase would be to replace waves of retirees, not just agents, and modernize equipment. They have said typical families and small businesses would not be targeted, with Treasury Secretary Janet Yellen directing the IRS this week to not “increase the share of small business or households below the $400,000 threshold” that would be audited.

Republicans say the legislation’s new business taxes will increase prices, worsening the nation’s bout with its worst inflation since 1981. Though Democrats have labeled the measure the Inflation Reduction Act, nonpartisan analysts say it will have a barely perceptible impact on prices.

The GOP also says the bill would raise taxes on lower- and middle-income families. An analysis by Congress’ nonpartisan Joint Committee on Taxation, which didn’t include the bill’s tax breaks for health care and energy, estimated that the corporate tax boosts would marginally affect those taxpayers but indirectly, partly due to lower stock prices and wages.

The bill caps three months in which Congress has approved legislation on veterans’ benefits, the semiconductor industry, gun checks for young buyers and Ukraine’s invasion by Russia and adding Sweden and Finland to NATO. All passed with bipartisan support, suggesting Republicans also want to display their productive side.

It’s unclear whether voters will reward Democrats for the legislation after months of painfully high inflation dominating voters’ attention and President Biden’s dangerously low popularity with the public and a steady history of midterm elections that batter the party holding the White House.

The bill had its roots in early 2021, after Congress approved a $1.9 trillion measure over GOP opposition to combat the pandemic-induced economic downturn. Emboldened, the new president and his party reached further.

They called their $3.5 trillion plan Build Back Better. Besides social and environment initiatives, it proposed rolling back Trump-era tax breaks for the rich and corporations and $555 billion for climate efforts, well above the resources in Friday’s legislation.

With Manchin opposing those amounts, it was sliced to a roughly $2 trillion measure that Democrats moved through the House in November. He unexpectedly sank that bill too, earning scorn from exasperated fellow Democrats from Capitol Hill and the White House.

Last gasp talks between Manchin and Senate Majority Leader Chuck Schumer, D-N.Y., seemed fruitless until the two unexpectedly announced agreement last month on the new package.

Manchin won billions for carbon capture technology for the fossil fuel industries he champions, plus procedures for more oil drilling on federal lands and promises for faster energy project permitting. Centrist Sen. Kyrsten Sinema, D-Ariz., also won concessions, eliminating planned higher taxes on hedge fund managers and helping win the drought funds.

Additional reporting by The Associated Press.

Source: newsy.com

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House Dems Set To Overcome GOP For Climate, Health Care Win

The GOP opposes the bill, but the same was true Sunday when Dems used Vice President Harris’ tie-breaking vote to power it through the 50-50 Senate.

A flagship Democratic economic bill perched on the edge of House passage Friday, placing President Joe Biden on the brink of a back-from-the-dead triumph on his climate, health and tax goals that could energize his party ahead of November’s elections.

Democrats were poised to muscle the measure through the narrowly divided House Friday over solid Republican opposition. They employed similar party unity and Vice President Kamala Harris’ tie-breaking vote Sunday to power the measure through the 50-50 Senate.

The package is but a shadow of President Biden’s initial vision and was produced only after a year of often bitter infighting between party leaders, progressives and centrists led by Sen. Joe Manchin,  empowered by that chamber’s even split. Ultimately, Democrats thirsty to declare victory forged a compromise on abiding goals like reining in pharmaceutical costs, taxing large companies and, especially, curbing carbon emissions. They are hoping to show they can wring accomplishments from an often fractiously gridlocked Washington that alienates many voters.

“Climate is a health issue. It’s a jobs issue. It’s a security issue. And it’s a values issue for us,” House Speaker Nancy Pelosi told reporters this week. “I want more, of course, we always want more, but this is a great deal.”

The bill’s pillar is about $375 billion over 10 years to encourage industry and consumers to shift from carbon-emitting to cleaner forms of energy, hailed by experts as Congress’ biggest climate investment ever. That includes $4 billion added to cope with the West’s catastrophic drought.

Spending, tax credits and loans would bolster technology like solar panels, consumer efforts to improve home energy efficiency, emission-reducing equipment for coal- and gas-powered power plants and air pollution controls for farms, ports and low-income communities.

In a pair of top Democratic health priorities, another $64 billion would help 13 million people pay premiums over the next three years for privately bought health insurance. Medicare would gain the power to negotiate its costs for pharmaceuticals, initially in 2026 for only 10 drugs. Medicare beneficiaries’ out-of-pocket prescription costs would be limited to $2,000 starting in 2025, and starting next year they would pay no more than $35 monthly for insulin, the costly diabetes drug.

The bill would raise around $740 billion in revenue over the decade, over a third from government savings from lower drug prices. More would flow from higher taxes on some $1 billion corporations, levies on companies that repurchase their own stock and stronger IRS tax collections. Around $300 billion would remain to defray budget deficits, a fraction of the period’s projected total of $16 trillion.

Republicans say the legislation’s tax hikes will force companies to raise prices, worsening the nation’s bout with its worst inflation since 1981 that is wounding Democrats’ election prospects. Nonpartisan analysts say the measure will have negligible inflation impact one way or the other.

Echoing other culture war themes, the GOP has criticized initiatives like tax breaks for clean energy and electric vehicles as wasteful liberal daydreams. “If the Green New Deal and corporate welfare had a baby, it would look like this,” said Rep. Kevin Brady of Texas, the House Ways and Means Committee’s top Republican.

Republicans say Democrats’ plan to expand the IRS budget, aimed at collecting about $120 billion in unpaid taxes, envisions 87,000 agents who’d be coming after families. Democrats called foul, saying their $80 billion IRS budget boost would be to replace waves of retirees, not just agents, and to modernize equipment, and say families and small businesses earning below $400,000 annually would not be targeted.

The GOP also says the bill would raise taxes on lower- and middle-income families. An analysis by Congress’ nonpartisan Joint Committee on Taxation, which didn’t include the bill’s tax breaks for health care and energy, estimated that the corporate tax boosts would marginally affect those taxpayers, partly due to lower stock prices and wages.

The bill caps a fertile three months in which Congress has voted to improve veterans’ health benefits, gird the semiconductor industry, moderately strengthen gun restrictions for younger buyers, finance Ukraine’s war with Russia and add Finland and Sweden to NATO. All passed with bipartisan support, suggesting Republicans also want to display their productive side.

It’s unclear voters will reward Democrats for the legislation after months of painfully high inflation dominating voters’ attention. Though record gasoline prices have dipped, President Biden’s popularity dangles damagingly low and midterm elections have a consistent history of ending careers of lawmakers from the party that holds the White House.

Democrats’ economic bill had its roots in early 2021, after Congress approved a $1.9 trillion measure over GOP opposition to combat the pandemic-induced economic downturn. Emboldened, the new president and his party reached further.

They initially produced an ambitious 10-year, $3.5 trillion environment and social plan they called Build Back Better. It featured free prekindergarten, paid family and medical leave, expanded Medicare benefits, increases for education and housing and an easing of immigration restrictions. It sought to roll back Trump-era tax breaks for the rich and corporations and proposed $555 billion for climate efforts, well above the resources in Friday’s legislation.

With Manchin opposing those amounts, it was sliced to a roughly $2 trillion measure that Democrats moved through the House in November. Just before Christmas, Manchin unexpectedly sank that bill, citing fears of inflation and international uncertainty and earning brickbats from exasperated fellow Democrats from Capitol Hill and the White House.

With on-and-off closed-door talks between Manchin and Senate Majority Leader Chuck Schumer, seemingly dying, the two lawmakers shocked Washington and announced agreement last month on the new, pared-down package.

Manchin won billions for carbon capture technology for the fossil fuel industries he champions, plus procedures for more oil drilling on federal lands and promises for faster energy project permitting.

Centrist Sen. Kyrsten Sinema also used her leverage for late concessions, eliminating planned higher taxes on hedge fund managers and helping win the drought funds.

Additional reporting by The Associated Press.

Source: newsy.com

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How a New Corporate Minimum Tax Could Reshape Business Investments

WASHINGTON — At the center of the new climate and tax package that Democrats appear to be on the verge of passing is one of the most significant changes to America’s tax code in decades: a new corporate minimum tax that could reshape how the federal government collects revenue and alter how the nation’s most profitable companies invest in their businesses.

The proposal is one of the last remaining tax increases in the package that Democrats are aiming to pass along party lines in coming days. After months of intraparty disagreement over whether to raise taxes on the wealthy or roll back some of the 2017 Republican tax cuts to fund their agenda, they have settled on a longstanding political ambition to ensure that large and profitable companies pay more than $0 in federal taxes.

To accomplish this, Democrats have recreated a policy that was last employed in the 1980s: trying to capture tax revenue from companies that report a profit to shareholders on their financial statements while bulking up on deductions to whittle down their tax bills.

reduce their effective tax rates well below the statutory 21 percent. It was originally projected to raise $313 billion in tax revenue over a decade, though the final tally is likely to be $258 billion once the revised bill is finalized.

would eliminate this cap and extend the tax credit until 2032; used cars would also qualify for a credit of up to $4,000.

Because of that complexity, the corporate minimum tax has faced substantial skepticism. It is less efficient than simply eliminating deductions or raising the corporate tax rate and could open the door for companies to find new ways to make their income appear lower to reduce their tax bills.

Similar versions of the idea have been floated by Mr. Biden during his presidential campaign and by Senator Elizabeth Warren, Democrat of Massachusetts. They have been promoted as a way to restore fairness to a tax system that has allowed major corporations to dramatically lower their tax bills through deductions and other accounting measures.

According to an early estimate from the nonpartisan Joint Committee on Taxation, the tax would most likely apply to about 150 companies annually, and the bulk of them would be manufacturers. That spurred an outcry from manufacturing companies and Republicans, who have been opposed to any policies that scale back the tax cuts that they enacted five years ago.

Although many Democrats acknowledge that the corporate minimum tax was not their first choice of tax hikes, they have embraced it as a political winner. Senator Ron Wyden of Oregon, the chairman of the Senate Finance Committee, shared Joint Committee on Taxation data on Thursday indicating that in 2019, about 100 to 125 corporations reported financial statement income greater than $1 billion, yet their effective tax rates were lower than 5 percent. The average income reported on financial statements to shareholders was nearly $9 billion, but they paid an average effective tax rate of just 1.1 percent.

“Companies are paying rock-bottom rates while reporting record profits to their shareholders,” Mr. Wyden said.

told the Senate Finance Committee last year. “This behavioral response poses serious risks for financial accounting and the capital markets.”

Other opponents of the new tax have expressed concerns that it would give more control over the U.S. tax base to the Financial Accounting Standards Board, an independent organization that sets accounting rules.

“The potential politicization of the F.A.S.B. will likely lead to lower-quality financial accounting standards and lower-quality financial accounting earnings,” Ms. Hanlon and Jeffrey L. Hoopes, a University of North Carolina professor, wrote in a letter to members of Congress last year that was signed by more than 260 accounting academics.

the chief economist of the manufacturing association. “Arizona’s manufacturing voters are clearly saying that this tax will hurt our economy.”

Ms. Sinema has expressed opposition to increasing tax rates and had reservations about a proposal to scale back the special tax treatment that hedge fund managers and private equity executives receive for “carried interest.” Democrats scrapped the proposal at her urging.

When an earlier version of a corporate minimum tax was proposed last October, Ms. Sinema issued an approving statement.

“This proposal represents a common sense step toward ensuring that highly profitable corporations — which sometimes can avoid the current corporate tax rate — pay a reasonable minimum corporate tax on their profits, just as everyday Arizonans and Arizona small businesses do,” she said. In announcing that she would back an amended version of the climate and tax bill on Thursday, Ms. Sinema noted that it would “protect advanced manufacturing.”

That won plaudits from business groups on Friday.

“Taxing capital expenditures — investments in new buildings, factories, equipment, etc. — is one of the most economically destructive ways you can raise taxes,” Neil Bradley, chief policy officer of the U.S. Chamber of Commerce, said in a statement. He added, “While we look forward to reviewing the new proposed bill, Senator Sinema deserves credit for recognizing this and fighting for changes.”

Emily Cochrane contributed reporting.

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How Jack Welch’s Reign at G.E. Gave Us Elon Musk’s Twitter Feed

When Jack Welch died on March 1, 2020, tributes poured in for the longtime chief executive of General Electric, whom many revered as the greatest chief executive of all time.

David Zaslav, the C.E.O. of Warner Bros. Discovery and a Welch disciple, remembered him as an almost godlike figure. “Jack set the path. He saw the whole world. He was above the whole world,” Mr. Zaslav said. “What he created at G.E. became the way companies now operate.”

Mr. Zaslav’s words were meant as unequivocal praise. During Mr. Welch’s two decades in power — from 1981 to 2001 — he turned G.E. into the most valuable company in the world, groomed a flock of protégés who went on to run major companies of their own, and set the standard by which other C.E.O.s were measured.

Yet a closer examination of the Welch legacy reveals that he was not simply the “Manager of the Century,” as Fortune magazine crowned him upon his retirement.

broken up for good.

the fateful decision to redesign the 737 — a plane introduced in the 1960s — once more, rather than lose out on a crucial order with American Airlines. That decision set in motion the flawed development of the 737 Max, which crashed twice in five months, killing 346 people. And while a number of factors contributed to those tragedies, they were ultimately the product of a corporate culture that cut corners in pursuit of short-term financial gains.

Even today Boeing is run by a Welch disciple. Dave Calhoun, the current C.E.O., was a dark horse candidate to succeed Mr. Welch in 2001, and he was on the Boeing board during the rollout of the Max and the botched response to the crashes.

When Mr. Calhoun took over the company in 2020, he set up his office not in Seattle (Boeing’s spiritual home) or Chicago (its official headquarters), but outside St. Louis at the Boeing Leadership Center, an internal training center explicitly built in the image of Crotonville. He said he hoped to channel Mr. Welch, whom he called his “forever mentor.”

The “Manager of the Century” was unbowed in retirement, barreling through the twilight of his life with the same bombast that defined his tenure as C.E.O.

He refashioned himself as a management guru and created a $50,000 online M.B.A. in an effort to instill his tough-nosed tactics in a new generation of business leaders. (The school boasts that “more than two out of three students receive a raise or promotion while enrolled.”) He cheered on the political rise of Mr. Trump, then advised him when he won the White House.

In his waning days, Mr. Welch emerged as a trafficker of conspiracy theories. He called climate change “mass neurosis” and “the attack on capitalism that socialism couldn’t bring.” He called for President Trump to appoint Rudy Giuliani attorney general and investigate his political enemies.

The most telling example of Mr. Welch’s foray into political commentary, and the beliefs it revealed, came in 2012. That’s when he took to Twitter and accused the Obama administration of fabricating the monthly jobs report numbers for political gain. The accusation was rich with irony. After decades during which G.E. massaged its own earnings reports, Mr. Welch was effectively accusing the White House of doing the same thing.

While Mr. Welch’s claim was baseless, conservative pundits picked up on the conspiracy theory and amplified it on cable news and Twitter. Even Mr. Trump, then merely a reality television star, joined the chorus, calling Mr. Welch’s bogus accusation “100 percent correct” and accusing the Obama administration of “monkeying around” with the numbers. It was one of the first lies to go viral on social media, and it had come from one of the most revered figures in the history of business.

When Mr. Welch died, few of his eulogists paused to consider the entirety of his legacy. They didn’t dwell on the downsizing, the manipulated earnings, the Twitter antics.

And there was no consideration of the ways in which the economy had been shaped by Mr. Welch over the previous 40 years, creating a world where manufacturing jobs have evaporated as C.E.O. pay soars, where buybacks and dividends are plentiful as corporate tax rates plunge.

By glossing over this reality, his allies helped perpetuate the myth of his sainthood, adding their own spin on one of the most enduring bits of disinformation of all: the notion that Jack Welch was the greatest C.E.O. of all time.

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Treasury Secretary Yellen Looks to Get Global Tax Deal Back on Track

“I think the reality of turning a political commitment into binding domestic legislation is a lot more complex,” said Manal Corwin, a Treasury official in the Obama administration who now heads the Washington national tax practice at KPMG. “The E.U. has moved and gotten over most of the objections, but they still have Poland and it’s not clear whether they’re going to be able to get the last vote.”

With President Emmanuel Macron of France heading the European Union’s rotating presidency until June, his administration was eager to get a deal implemented. But at a meeting of European finance ministers in early April, Poland became the sole holdout, saying there were no ironclad guarantees that big multinational companies wouldn’t still be able to take advantage of low-tax jurisdictions if the two parts of the agreement did not move ahead in tandem, undercutting the global effort to avoid a race to the bottom when it comes to corporate taxation.

Poland’s stance was sharply criticized by European officials, particularly France, whose finance minister, Bruno Le Maire, suggested that Warsaw was instead holding up a final accord in retaliation for a Europe-wide political dispute. Poland has threatened to veto measures requiring unanimous E.U. votes because of an earlier decision by Brussels to block pandemic recovery funds for Poland.

The European Union had refused to disburse billions in aid to Poland since late last year, citing separate concerns over Warsaw’s interference with the independence of its judicial system. Last week, on the eve of Ms. Yellen’s visit to Poland, the European Commission came up with an 11th-hour deal unlocking 36 billion euros in pandemic recovery funds for Poland, which pledged to meet certain milestones such as judiciary and economic reforms, in return for the money.

Negotiators from around the world have been working for months to resolve technical details of the agreement, such as what kinds of income would be subject to the new taxes and how the deal would be enforced. Failure to finalize the agreement would likely mean the further proliferation of the digital services taxes that European countries have imposed on American technology giants, much to the dismay of those firms and the Biden administration, which has threatened to impose tariffs on nations that adopt their own levies.

“It’s fluid, it’s moving, it’s a moving target,” Pascal Saint-Amans, the director of the center for tax policy and administration at the Organization for Economic Cooperation and Development, said of the negotiations at the D.C. Bar’s annual tax conference this month. “There is an extremely ambitious timeline.”

Countries like Ireland, with a historically low corporate tax rate, have been wary of increasing their rates if others do not follow suit, so it has been important to ensure that there is a common understanding of the new tax rules to avoid opening the door to new loopholes.

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How to Fight Inflation With Lessons From History

Annual spending in the Union reached a staggering 16 times its prewar budget. Despite the need for funds, there was great fear in Congress of increasing taxes because of Americans’ well-known antipathy to taxation.

But Salmon P. Chase, the fiscally conservative Treasury secretary, was mortally afraid of inflation. He recognized that without revenue the government would have to resort to the printing press. After the southern states seceded, interest rates on the country’s debt soared and foreigners refused to lend.

Thaddeus Stevens, the chair of the House Ways and Means Committee, went further than Mr. Chase imagined by inventing an entirely new tax code. Previously, the Union had funded itself with tariffs on foreign trade, which it raised several times. Alongside that it created a system of “internal taxes,” on everything from personal income to leaf tobacco, liquor, slaughtered hogs and fees on auctioneers. Congress also created a new bureau to collect taxes, a forerunner of the Internal Revenue Service, underscoring its commitment to raising revenue this way.

Mr. Stevens had no idea how much revenue the taxes would raise, or if people would even pay them. (“Everything on the earth and under the earth is to be taxed,” one Ohioan groused.) But by 1865, the Treasury netted $300 million from customs and internal taxes — six times its prewar tax revenue.

That revenue helped moderate the inflation created by the issuance of “greenbacks,” notes that circulated as money, to pay for the war. The country’s credit improved and Mr. Chase was able to borrow prodigious sums. Ultimately, inflation in the Union was no greater than during the two World Wars in the following century.

The Confederacy faced similar financial challenges. Christopher Memminger, its German-born Treasury secretary, warned that printing notes was “the most dangerous of all methods of raising money.” But the South was ideologically opposed to taxation, especially by the central government.

The South approved a very modest tax (half a percent on real estate), but collection was left to the states and few tried to collect it. With cotton shipments to Europe pinched by the Union blockade, Mr. Memminger soon found he had little choice but to print notes to cover the cost of the war. These inflated at a catastrophic rate.

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Biden Finds Raising Corporate Tax Rates Easier Abroad Than at Home

ROME — President Biden and other world leaders endorsed a landmark global agreement on Saturday that seeks to block large corporations from shifting profits and jobs across borders to avoid taxes, a showcase win for a president who has found raising corporate tax rates an easier sell with other countries than with his own party in Congress.

The announcement in the opening session of the Group of 20 summit marked the world’s most aggressive attempt yet to stop opportunistic companies like Apple and Bristol Myers Squibb from sheltering profits in so-called tax havens, where tax rates are low and corporations often maintain little physical presence beyond an official headquarters.

It is a deal years in the making, which was pushed over the line by the sustained efforts of Mr. Biden’s Treasury Department, even as the president’s plans to raise taxes in the United States for new social policy and climate change programs have fallen short of his promises.

The revenue expected from the international pact is now critical to Mr. Biden’s domestic agenda, an unexpected outcome for a president who has presented himself more as a deal maker at home rather than abroad.

end the global practice of profit-shifting, celebrated the international tax provisions this week and said they would be significant steps toward Mr. Biden’s vision of a global economy where companies invest, hire and book more profits in the United States.

But they also conceded that infighting among congressional Democrats had left Mr. Biden short of fulfilling his promise to make corporations pay their “fair share,” disappointing those who have pushed Mr. Biden to reverse lucrative tax cuts for businesses passed under Mr. Trump.

The framework omits a wide range of corporate tax increases that Mr. Biden campaigned on and pushed relentlessly in the first months of his presidency. He could not persuade 50 Senate Democrats to raise the corporate income tax rate to 28 percent from 21 percent, or even to a compromise 25 percent, or to eliminate incentives that allow some large firms — like fossil fuel producers — to reduce their tax bills.

“It’s a tiny, tiny, tiny, tiny, step,” Erica Payne, the president of a group called Patriotic Millionaires that has urged tax increases on corporations and the wealthy, said in a statement after Mr. Biden’s framework announcement on Friday. “But it’s a step.”

The Treasury Department said on Friday that even the additional enforcement money for the I.R.S. could still generate $400 billion in additional tax revenue over 10 years and said that was a “conservative” estimate.

An administration official said that the difficulty in rolling back the Trump tax cuts was the result of the fact that the Democrats are a big tent party ideologically with a very narrow majority in Congress, where a handful of moderates currently rule.

In Rome, Mr. Biden’s struggle to raise taxes more has not complicated the sealing of the international agreement. The move by the heads of state to commit to putting the deal in place by 2023 looms as the featured achievement of the summit, and Mr. Biden’s surest victory of a European swing that also includes a climate conference in Scotland next week.

Briefing reporters on Friday evening, a senior administration official, speaking on the condition of anonymity in order to preview the first day of the summit, said Biden aides were confident that world leaders were sophisticated and understood the nuances of American politics, including the challenges in passing Mr. Biden’s tax plans in Congress.

The official also said world leaders see the tax deal as reshaping the rules of the global economy.

The international tax agreement represented a significant achievement of economic diplomacy for Mr. Biden and Ms. Yellen, who dedicated much of her first year on the job to reviving negotiations that stalled during the Trump administration. To show that the United States was serious about a deal, she abandoned a provision that would have made it optional for American companies to pay new taxes to foreign countries and backed away from an initial demand for a global minimum tax of 21 percent.

For months, Ms. Yellen cajoled Ireland’s finance minister, Paschal Donohoe, to back the agreement, which would require Ireland to raise its 12.5 percent corporate tax rate — the centerpiece of its economic model to attract foreign investment. Ultimately, through a mix of pressure and pep talks, Ireland relented, removing a final obstacle that could have prevented the European Union from ratifying the agreement.

Some progressives in the United States say that Mr. Biden’s ability to follow through on his end of the bargain was a crucial piece of the framework spending bill.

“The international corporate reforms are the most important,” said Seth Hanlon, a senior fellow at the liberal Center for American Progress, who specializes in tax policy, “because they are linked to the broader multilateral effort to stop the corporate race to the bottom. It’s so important for Congress to act this year to give that effort momentum.”

Jim Tankersley reported from Rome, and Alan Rappeport from Washington.

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