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House Democrats on Monday presented a plan to pay for their expansive social policy and climate change package by raising taxes by more than $2tn, largely on wealthy individuals and profitable corporations. The plan would see taxable income over $450,000, or $400,000 for unmarried individuals, taxed at 39.6%, the top rate before President Donald Trump’s 2017 tax cut brought it to 37%. It would increase the top corporate tax rate to 26.5% from 21%, impose a three-percentage-point surtax on people making over $5m and raise capital-gains taxes. The proposal would also raise taxes in a variety of ways on pass-through entities that distribute profits to their owners, who then pay individual income taxes on them. Those changes, including the extension of an existing 3.8% surtax to include pass-through income, would raise taxes primarily on high earners, generating several hundred billion dollars in revenues. A committee vote is planned on the proposals this week. Business lobbying groups rejected the package, with the U.S. Chamber of Commerce slamming it as “an existential threat to America’s fragile economic recovery and future prosperity.” It also faces Republican opposition: “This reckless bill will hurt working-class Americans at a time when they need support the most,” said T.W. Arrighi, spokesman for the National Republican Senatorial Committee. Eric Toder, a co-director of the nonpartisan Tax Policy Center, described the plan as "extremely modest," adding: “Mostly, it is about raising rates on existing tax bases.”

 

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Toyota and Tesla are embroiled in a dispute with Ford and the United Auto Workers (UAW) union over a proposal by Democrats in the U.S. House to give union-made, U.S.-built electric vehicles an additional $4,500 tax incentive. In a letter to Congress, Toyota said the plan discriminates against nearly half of American autoworkers who do not belong to a union and called on lawmakers to reject giving "exorbitant tax breaks" to wealthy buyers of high-priced cars and trucks. The bill, set to be taken up today by the House Ways and Means Committee as part of a proposed $3.5tn spending bill, boosts the maximum tax credit for these electric vehicles to $12,500, including a $500 credit for using U.S.-made batteries, from the current $7,500, which stays the same for all others. The bill also does away with phasing out tax credits after automakers hit 200,000 electric vehicles sold, which would make GM eligible again, along with Tesla, although Tesla would not receive the higher credit. The bill also proposes a new EV tax credit for commercial vehicles, a 15% credit for electric bicycles and a $2,500 credit for used EVs.

 

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Intuit has agreed to buy digital marketing company Mailchimp for about $12bn, in a move aimed at capitalizing on the growth of small and midsize businesses. The TurboTax maker's cash-and-stock deal would be Intuit’s largest deal ever and sets it up to offer more services, including customer-relationship management. By combining Mailchimp with its bookkeeping software QuickBooks, Intuit said it would enable businesses to do everything from setting up online stores and displaying ads to potential customers to invoicing clients and managing payroll. “The real magic is actually in the power of the data,” said Intuit chief executive Sasan Goodarzi. “When we bring the platforms together, I’ll actually not only know who I marketed it to, but what you bought when you bought it.”

 

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The U.S. budget deficit narrowed to $2.7tn during the first 11 months of the fiscal year from $3tn in the same period a year earlier, with the gap between spending and revenue declining as the recovery from a pandemic-induced slump boosted taxes. Outlays for the 11 months through August rose 4%, to a record $6.3tn, the Treasury Department said Monday, boosted by pandemic-related costs that included tax credits, expanded unemployment compensation, emergency small-business loans and stimulus checks to households. Federal revenue during the 11-month period increased 18% from the previous year to a record $3.6tn, largely due to higher receipts from individual and corporate income taxes. 

 

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Washington, D.C. Attorney General Karl A. Racine has expanded his antitrust complaint against Amazon to include the company's relationships with wholesale retailers. New sections recently added to the district’s legal complaint, first filed in May, focus on Amazon’s contracts with so-called first-party sellers, companies that sell to Amazon, which in turn sells products to customers. The earlier complaint focused on third-party sellers who directly sell to consumers via the Amazon marketplace, alleging that the company acted anti-competitively by effectively blocking them from offering better deals off Amazon’s site. According to the updated suit, the deals allow Amazon to lower its prices to beat out competitors and make the wholesalers who provided it with goods compensate it for any lost profit. This in turn leads wholesalers to increase their prices elsewhere, including when selling to Amazon’s rivals, thus making it harder to compete with the e-commerce giant, Mr Racine alleged. Amazon spokesman Jack Evans pointed to a past statement the company issued about the lawsuit, which said: “The DC Attorney General has it exactly backwards – sellers set their own prices for the products they offer in our store.” The statement added: "The relief the AG seeks would force Amazon to feature higher prices to customers, oddly going against core objectives of antitrust law." Amazon has filed a motion to dismiss the lawsuit.

 

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U.S. consumers' expectations for how much inflation will change over the next year and the coming three years rose last month to the highest levels since 2013, according to a survey released on Monday by the New York Federal Reserve. In its August Survey of Consumer Expectations, the bank said Monday that respondents see inflation a year from now at 5.2%, up from expectations of 4.9% last month. Three years from now, it is expected to be at 4%, up from the 3.7% expected in July. Both readings mark record-high readings for data that goes back to 2013. The report, based on data from a rotating panel of 1,300 households, also found projections of big increases in some of the most important costs Americans face on a regular basis. Food prices are seen rising by 7.9% a year from now, rent by 10% and medical-care costs by 9.7%. The survey also found record-high levels of uncertainty about the path of inflation as well.

 

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Greater competition among audit firms will likely come about only as a result of government action, Lynn Turner, former chief accountant at the Securities and Exchange Commission (SEC) has told an SEC advisory panel. “I don’t see that much is going to be done on competition unless there’s some fundamental changes made, or determined to be made, by the government. In the area of competition, we’ve gone backwards,” Turner, a senior advisor at Hemming Morse, said during a webcast hosted by the SEC’s Investor Advisory Committee, calling the Big Four audit firms an “oligopoly.” “We’ve got to change the culture in the firms where they view the investors as the ultimate client, not the management team who’s paying them,” Turner told the SEC’s advisory committee. “Let’s give the investors more power and make the auditor beholden to the investor.”

 

CFO Dive

The price of Litecoin, a little-used cryptocurrency, jumped more than 30% in early trading Monday to around $230 before falling back, after a news release touting a partnership with Walmart turned out to be fake. According to the release on GlobeNewswire at 9:30 a.m. in New York, Walmart would start letting its customers pay with Litecoin; within an hour, however, the retailer denied the statement, as did Litecoin itself later in the day. The company and the newswire say they are now seeking to determine how the events transpired. Securities lawyers said there was little doubt the phony release would lead to an investigation by the Securities and Exchange Commission. The hoax is also likely to lead to a call for greater regulation of the cryptocurrency industry, which accounts for billions of dollars of trading on largely unregulated markets.

 

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Apple has issued an emergency software update after cyber security researchers said they had uncovered a new vulnerability allowing hackers to deploy Israeli company NSO Group’s spyware tool through iMessage. The Pegasus spyware used a method known as the zero click remote exploit, allowing hackers to n turn on a user’s camera and microphone, record messages, texts, emails, calls, even those sent via encrypted messaging and phone apps like Signal, and send them back to NSO’s clients. The discovery means that more than 1.65bn Apple products in use worldwide have been vulnerable to NSO’s spyware since at least March. The fix stems from research done by The Citizen Lab, a public interest cybersecurity group that found a Saudi activist's phone had been infected with Pegasus. News of the security update comes as Apple prepares to unveil its new iPhones, iPads and Apple Watches later today.

 

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