Democrats tax billionaires’ unrealized capital gains

Billionaires on the hook?

As Democrats rush to find ways to fund President Biden’s social spending plans – especially as one of their own, Arizona Senator Kyrsten Sinema blocks efforts to raise tax rates businesses and individuals – they are increasingly turning to another type of tax.

Billionaires could be taxed on unrealized capital gains on their cash, Democratic officials said yesterday. This would affect people with $ 1 billion in assets or those who have reported at least $ 100 million in income for three consecutive years, according to news reports. It might trap 700 taxpayers – or the richest 0.0002% – but Democrats hope it generates at least $ 200 billion in revenue over a decade. It would cover not only stocks but also other assets like real estate. (Individuals could claim deductions for annual losses in the value of their assets.)

• One of the proposal’s main selling points is that it limits assets that are not normally taxed and that billionaires often borrow against to spend huge sums of money at relatively low relative cost.

The idea has been around for a while. Senator Ron Wyden, head of the Senate Finance Committee, who is expected to unveil the proposal this week, has been working on different versions of the plan for two years. And Senator Elizabeth Warren proposed a more radical version of a tax on unrealized capital gains during her presidential race. “Raising the rate won’t make Jeff Bezos pay a dime more,” Warren told MSNBC yesterday. “What we need is a tax that focuses on the wealth of the richest Americans.”

But he faces many challenges. Republicans, who have long opposed taxing unrealized gains, argue it would create huge bureaucracies and be difficult to implement. It is also not clear that all Democrats would agree with such a move – and, with very slim majorities in Congress, every Democratic vote would be necessary if Biden and his allies hope to pass their spending plans according to them. party lines.

HERE’S WHAT HAPPENS

PayPal waives a buyout from Pinterest. The digital payments giant has said it is not pursuing a deal, which people briefed on the matter said could have been worth $ 45 billion. While Pinterest shareholders seemed in favor of a deal, PayPal investors were decidedly cooler, based on the companies’ recent stock market performance.

Another tough day for Facebook. Frances Haugen, the former product manager who shared thousands of pages of internal company documents with journalists, is due to testify before the British Parliament today as part of a European tour. Meanwhile, more and more news is emerging from leaked documents, including that Facebook employees knew their platform was being used to spread disinformation and hate speech in the United States and India.

Moscow is accused of having launched a new cyber surveillance campaign. The Russian intelligence agency behind the SolarWinds hack has launched a new effort to target thousands of US government computer networks, businesses and think tanks, Microsoft officials and cybersecurity experts have warned. . Its apparent purpose is to steal data stored in the cloud.

Citigroup accepts racial equity audit. It will become the first major bank to ask foreigners to examine whether its business policies contribute to racial discrimination. While others like BlackRock have agreed to such self-reviews under pressure from investors in the wake of the 2020 racial justice protests, other Wall Street companies have called these audits unnecessary.

The fate of the world’s oldest bank is darkening. UniCredit said last night it was abandoning its efforts to acquire the ailing Monte dei Paschi di Siena in Italy after negotiations with the Italian government failed. This left Rome to come up with complex alternative measures before the December 31 deadline.

Esports joins the SPAC boom

FaZe Clan, the esports conglomerate, today announced that it will go public by merging with a SPAC, in a deal that values ​​it at around $ 1 billion. Founded in 2010, FaZe Clan is part influencer marketing agency, e-commerce company and esports team. (Company CEO Lee Trink once described him as “Dallas Cowboys meet Supreme and MTV”). It will be one of the first major esports companies to go public – and it will likely grab the attention of the retail traders who have helped fuel the PSPC frenzy.

FaZe wants to combine sport, media and marketing. Trink is a former Hollywood entertainment director who worked with Kid Rock. The company’s 85 influencers, who live together in its California player complex, produce viral social media clips, compete in professional gaming leagues for money and accolades, and build a dedicated fan base. FaZe built on this by launching an online store and branded products and signing advertising deals with Burger King.

“We haven’t really spent a lot of time thinking about a traditional IPO strategy,” Trink said in an interview, noting that a PSPC deal allows FaZe Clan to talk about future opportunities as it prepares to go public, unlike a traditional IPO. FaZe, which is unprofitable, generated around $ 38 million in revenue last year and expects to bring in more than $ 50 million this year. Trink said FaZe would use the SPAC to “dub” on content.

“It is the beginning of a new ascent of the game in the air of the cultural time” he added. The $ 176 billion video game industry has exploded during the pandemic, though some sales fear slowing down as the pandemic abates. Esports is set to become a billion dollar business this year; Already, the Evil Geniuses esports team has received an investment from Chinese group Fosun Sports which valued it at over $ 250 million.

The coming week

A decisive moment for climate change: COP26, the annual climate summit organized by the United Nations, begins next Sunday in Glasgow. In what the meeting chair called a watershed moment in the fight against climate change, governments around the world will come together to set new targets for reducing carbon emissions. But major carbon emitters like China, Australia, Russia and India have yet to submit their new pledges to reduce their pollution.

More vaccines: On Tuesday, an FDA advisory committee is expected to discuss emergency clearance of the Pfizer vaccine for children aged 5 to 11. The White House has said it is ready to quickly roll out vaccines to children if they are cleared by the FDA and CDC.

The state of the economy: The Commerce Department will release gross domestic product data for the United States on Thursday. Economists expect the report to show economic growth slowed over the summer, to around 0.9% in the third quarter. They will look for evidence that supply chain disruptions and labor shortages are holding back the recovery and driving inflation up.

Speaking of supply chains: Corporate financial reports this week may shed new light on the severity of global supply shortages caused by a pandemic, which have affected everything from cars to iPhones, and contributed to inflation. GE and Microsoft report tomorrow; Coca and GM on Wednesdays; and Amazon, Apple, Anheuser-Busch InBev and Ford Motor on Thursday. In the meantime, you might want to start your holiday shopping.

“I’m behind on the bills, all because the payroll messed up. I am crying while writing this email.

– Tara Jones, a Amazon warehouse worker, in an email last year to then-CEO Jeff Bezos. The email was triggered an internal investigation that found Amazon neglected new parents, patients with medical crises and other vulnerable workers on leave.

The Crypto Climate Problem

While U.S. companies have pledged to go greener, the systems behind the most popular cryptocurrencies, Bitcoin and Ether, are power-hungry by design. This created an image problem for crypto, leaving the industry to scramble for a solution.

“Urgent progress is needed towards decarbonization” was the conclusion of a new report by sustainability researchers and crypto industry players including the Cambridge University Center for Alternative Finance, the Green Bitcoin Project and Digiconomist. But, the report adds, the data currently available “is not widely understood and can be taken out of context.” Because crypto’s carbon footprint is “a partisan and highly emotional issue,” the information and debate around it has not been “open and reasoned.”

This is mainly a Bitcoin and Ethereum problem, according to Alex DeVries, the founder of Digiconomist who studies crypto’s energy consumption. “The impact of these two reflects poorly on the rest of the cryptocurrency landscape,” he said in a statement. Greening crypto is relatively easy, at least at a technological level, according to the report’s authors, and other parts of the cryptocurrency community have been working to address the issue.

READING SPEED

Offers

• Goldman Sachs offered top executives, including CEO David Solomon, huge retention bonuses a year after cutting their pay in the wake of the 1MDB scandal. (NYT)

• HSBC will buy back $ 2 billion of its shares after the UK lender reports better-than-expected financial results. (FT)

• Brex, which provides payment cards to start-ups, has raised $ 300 million for a valuation of $ 12.3 billion. (TechCrunch)

• Hertz would have placed an order for 100,000 Teslas, sending shares of the electric vehicle maker up more than 4 percent in pre-market trading. (Bloomberg)

Politics

• New data shows how a World Health Organization plan to deliver Covid vaccines to poorer countries is failing. (FT)

• An upcoming Supreme Court case will reveal how judges will handle the issue of religious exemptions from government vaccine mandates. (Voice)

• “Meet the donors at the heart of the last indictment of a member of Congress” (Politico)

The best of the rest

• Wall Street is betting more and more that the era of cheap oil is over. (Bloomberg)

• The darling of this year’s Milken Institute World Conference was not one of the financiers in attendance. It was the outspoken columnist Bari Weiss. (FT)

• “Sneakers generated $ 70 billion last year. Black retailers have seen little of this. (NBC News)

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