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There are other ways to tax the wealthy
A majority of Americans are increasingly open to raising taxes on the wealthy. Lawmakers like Representative Alexandria Ocasio-Cortez and Senator Bernie Sanders have proposed revolutionary ways of reducing wealth inequality. But Andrew writes that there are other ways of bridging the gap — ways that stand a chance of becoming law.
Start with the estate tax. Gary Cohn, the former White House economic adviser, once said, “Only morons pay the estate tax.” Andrew recommends starting there, writing that no fix could work without this. One solution: taxing inherited property at its current worth to capture gains in value made over decades. According to the Congressional Budget Office, closing this loophole could raise more than $650 billion over a decade.
Raise capital gains rates for the wealthy. Andrew suggests introducing two new tax brackets — say, a marginal 30 percent bracket for those earning over $5 million and a 35 percent bracket for over $15 million — so the U.S. could raise money without discouraging investment.
Close the carried-interest loophole. Current tax law allows executives at investment firms to have bonuses taxed as capital gains, not ordinary income. Scrapping that — an idea that President Trump has supported — has clear appeal to Americans’ basic sense of fairness.
Reconsider breaks for charitable giving. At a minimum, Andrew writes, “we ought to consider whether the wealthy should be allowed to take deductions when they move money to their own foundations, or whether they should only take a deduction when the money is spent.”
Support the I.R.S. “The agency is so underfunded that the chance an individual gets audited is minuscule,” Andrew writes.
Deadline extension doesn’t end the trade war
President Trump has delayed his own March 1 deadline to raise tariffs on Chinese goods, Ana Swanson and Alan Rappeport of the NYT report:
• Mr. Trump cited “substantial progress” in trade talks between American and Chinese officials.
• He said that negotiators had forged a compromise on key issues, including intellectual property and the trade of agriculture and energy products.
• The president also expects to meet with President Xi Jinping of China to finalize a deal.
“The extension will prevent the United States from increasing tariffs on $200 billion of Chinese exports to 25 percent from 10 percent on March 2,” Ms. Swanson and Mr. Rappeport write. “The delay, which Mr. Trump had dangled as a possibility in recent weeks, is likely to calm volatile financial markets and reassure business owners who depend on China.”
But there is still uncertainty. “In a hint of how fluid the talks remain, the two sides did not sign an official agreement and the White House did not release details on any agreements,” Ms. Swanson and Mr. Rappeport write. The Chinese state news agency Xinhua says that “new uncertainties” could emerge, and analysts think trade tensions won’t go away.
Tensions are reportedly high inside the White House. Mr. Trump and his top trade negotiator, Robert Lighthizer, “have grown increasingly frustrated with each other,” Bloomberg reports, citing unidentified sources. Mr. Trump was apparently embarrassed when Mr. Lightizer corrected him in front of the Chinese delegation, while Mr. Lightizer “has been growing irritated with Mr. Trump’s interventions.”
Theresa May delayed a crucial Brexit vote
The British prime minister announced yesterday that a final vote on her Brexit deal that had been scheduled for this week will now take place by March 12 — just 17 days before Britain is scheduled to leave the E.U.
She is trying to buy time, so that she can secure tweaks to the agreement that will make it palatable to British lawmakers. “We still have it within our grasp to leave the European Union with a deal on the 29th of March,” she told reporters. The Confederation of British Industry accused her of “running down the clock.”
Parliament could undermine her game plan. Mrs. May is trying to keep the prospect of a no-deal Brexit on the table, hoping that will convince lawmakers to support her deal. Yet a proposal that will go to vote in Parliament this week “would force the government to hand power to Parliament if no U.K.-E.U. withdrawal deal has been approved by March 13,” the FT notes.
The E.U. is reportedly considering a delay. “The European Union is considering telling Theresa May that if she can’t get her Brexit deal through Parliament and wants to delay the departure date, the country will have to stay in the bloc until 2021,” Bloomberg reports.
How the dollar has kept its crown
The U.S. economy looks precarious, thanks to an enormous public debt and turbulent politics. But as Peter Goodman of the NYT points out, the dollar remains the world’s haven, at least when it comes to currencies.
• “Because banks cannot risk jeopardizing their access to the plumbing of the dollar-based global financial network, they have taken pains to steer clear of nations and companies deemed pariahs in Washington.”
• “In a clear indication that the American currency has been gaining power, dollar-denominated lending to borrowers outside the United States, excluding banks, soared between late 2007 and early 2018, according to the Bank for International Settlements.”
• “The Chinese government’s restrictions on taking money out of the country and its alarming detentions of foreigners — often in parallel with geopolitical scrapes — have tested the appeal of holding money embossed with the image of Chairman Mao.”
• “A series of crises within the 19 countries that share the euro has provoked more animosity than unity, revealing a foundational defect: The euro is a common currency lacking a common political structure that can guarantee a robust response when trouble arises.”
• “‘There is no alternative to the dollar,’ said Mark Blyth, an international political economist at Brown University.”
What to expect from the world’s biggest mobile show
Mobile World Congress, the world’s largest mobile technology event, takes place in Barcelona this week. Here’s what will be grabbing headlines:
• So much 5G. The next-generation wireless standard has been making political as well as technological headlines recently. Carriers will announce their plans, while countries continue to weigh the security implications of using Huawei hardware in their networks.
• Folding phones. Samsung was first with its Galaxy Fold. Now Huawei has unveiled its own folding phone, the Mate X, and other manufacturers are expected to follow suit.
• Eye-watering prices. The $1,000 iPhone X seemed expensive initially. But experimental smartphones like the Galaxy Fold and Mate X cost twice as much. (Don’t worry: Tim Culpan of Bloomberg Opinion argues that you aren’t expected to buy one just yet.)
Hacking attacks escalate at financial services firms
Britain’s Financial Conduct Authority says that financial services companies in the country experienced a fivefold rise in data breaches last year, the FT reports:
• “Companies reported 145 breaches to the F.C.A. last year, up from 25 in 2017, with investment banks reporting the highest number of incidents at 34, up from just three the previous year.”
• “Last year’s jump in reported attacks can partly be explained by the introduction of the E.U.’s General Data Protection Regulation last May, which requires businesses to identify and report cyber attacks within 72 hours or face penalties.”
• “But executives at major banks and payments companies said they were now under almost constant fire from attackers. A chief information officer at one U.K. bank said: ‘We are seeing a lot more threat actors knocking at the front door.’”
How long until Netflix wins a best picture Oscar?
The big winner of last night’s Academy Awards was “Green Book,” which took the best picture trophy. Commentators regarded the decision as a deliberate snub of Netflix, which had pushed aggressively for “Roma.”.
Netflix didn’t play by the rules. The company spent millions promoting “Roma,” but refused to let it run exclusively in movie theaters for an industry-standard three months. (It ran for three weeks before being streamed.) Netflix also refused to release box-office data.
That annoyed Hollywood traditionalists. Several theater chains refused to show “Roma.” Steven Spielberg is among those who think Netflix films shouldn’t contend for an Oscar: “Once you commit to a television format, you’re a TV movie,” he has said. “You certainly, if it’s a good show, deserve an Emmy — but not an Oscar.”
The reluctance will be tested. “That debate is only going to grow more contentious as Netflix commissions more and more films from A-list filmmakers,” Gregg Kilday of The Hollywood Reporter writes.
Revolving door
Ev Williams, one of Twitter’s co-founders, is stepping down from its board after 12 years.
AutoNation hired Carl Liebert as its new C.E.O., succeeding Mike Jackson.
Tony Nicely stepped down as C.E.O. of Berkshire Hathaway’s Geico insurer last year, Warren Buffett disclosed on Saturday.
Caesars Entertainment reportedly offered to let Carl Icahn help pick its next C.E.O.
The White House nominated Kelly Kraft, the U.S. ambassador to Canada, as its pick for U.S. ambassador to the U.N.
The British insurer Legal & General named Michelle Scrimgeour as chief of its investment management unit.
The speed read
Deals
• Barrick Gold unveiled a $17.8 billion unsolicited takeover bid for Newmont Mining. (Barrick)
• Roche said it planned to buy Spark, a gene therapy company, for $4.3 billion. (Reuters)
• The Chinese insurer Ping An reportedly plans to stage an I.P.O. for its cloud-computing unit at an $8 billion valuation. (Bloomberg)
• KKR is reportedly considering buying Walmart’s Asda grocery unit. (Sunday Times)
• The exercise equipment maker Peloton has reportedly picked Goldman Sachs and JPMorgan Chase to lead its I.P.O. (Bloomberg)
Politics and policy
• Before a meeting with Kim Jong-un this week, President Trump said North Korea could enjoy fast economic growth if it gives up its nuclear weapons program. The U.S. may declare an end to the Korean War as part of the talks. (Bloomberg, NYT)
• The Trump administration is denying more H-1B visa applications. (WSJ)
• A sentencing memo from the special counsel’s office argued that Paul Manafort “repeatedly and brazenly” broke the law. (NYT)
• Meet Karl Racine, the official quietly coordinating states’ legal challenges to Trump administration policies. (Politico)
Tech
• After an investigation revealed that popular apps were sharing personal user data with Facebook, many of the companies involved have curtailed that flow of information. (WSJ)
• Why investors can’t ignore the tech battle between China and America. (Barron’s)
• Bitcoin saved Carlos Hernández’s family. Could it save Venezuela? (NYT Op-Ed)
• How one NYT writer tried to overcome his reliance on a smartphone. (NYT)
• Inside the rise and fall of a multimillion-dollar Airbnb scheme. (NYT)
Best of the rest
• Bad news: Over three-quarters of business economists expect a U.S. recession by the end of 2021. (Bloomberg)
• Good news: The Fed says that the U.S. financial system is “substantially” safer than before the 2008 financial crisis. (WSJ)
• How America learned to love deficits and debt. (Upshot)
• Chinese entrepreneurs are becoming increasingly wary of Beijing. (NYT)
• ICYMI: Here’s what Warren Buffett said in his annual letter to Berkshire Hathaway shareholders. (DealBook)
Thanks for reading! We’ll see you tomorrow.
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