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As President Biden prepares to introduce more government spending plans, the price tag is rising. Economists are busy devising ways to pay for it all \u2014 and The Times\u2019s editorial board is backing a novel approach that could capture huge amounts of uncollected taxes.<\/p>\n
There are hundreds of billions in unreported taxes.<\/strong> A 2019 I.R.S. analysis estimated that Americans reported less than half of all income that wasn\u2019t subject to verification like a W-2, meaning that lots of business profits, rent and royalties go untaxed. That\u2019s the largest reason that unpaid federal income taxes may amount to more than $600 billion this year, and more than $7.5 trillion over the next decade.<\/p>\n A new research paper estimates that the top 1 percent of households fail to report about 21 percent of their income, hidden in offshore businesses, partnerships and pass-throughs. \u201cThere is more revenue than you might have thought at the very top,\u201d Daniel Reck of the London School of Economics, the paper\u2019s lead nongovernment author, told The Wall Street Journal.<\/p>\n Here\u2019s a way to capture that unreported income,<\/strong> proposed by Charles Rossotti, a former I.R.S. chief: a new form, drawn from bank account data, that reports inflows and outflows like a 1099 statement. Filers would need to reconcile that information with their individual tax returns. \u201cIt would have the immediate benefit of scaring people into probity,\u201d The Times\u2019s editorial board asserts. The proposal wouldn\u2019t increase how much anyone owes<\/em> in taxes, just how much people end up paying.<\/p>\n The White House is already planning to collect more taxes,<\/strong> which may include raising rates on income and capital gains taxes for those earning more than $400,000, as well as levies on companies and expanding the estate tax. Charles Rettig, the commissioner of the I.R.S., also backed calls for more funding for enforcement: \u201cIt is not just a body count of how many people we have in enforcement. We need to have specialized agents.\u201d <\/p>\n Mr. Rossotti, with the economist Larry Summers and the law professor Natasha Sarin, argued in an analysis in November that a $100 billion investment in the I.R.S. over the next decade, for personnel and technology, would allow it to rake in more than $1 trillion in taxes that would otherwise go uncollected.<\/p>\n AstraZeneca\u2019s vaccine is 79 percent effective, according to new data.<\/strong> The results from a U.S. clinical trial, which also suggest complete protection against severe disease and death and no serious side effects, could bolster the shot\u2019s appeal. The E.U. is reportedly poised to withhold doses of the vaccine from Britain, escalating a dispute over supplies.<\/p>\n A big railroad deal bets on more international trade.<\/strong> Canadian Pacific and Kansas City Southern agreed to combine in a $29 billion deal, which would create a network that runs from Canada through the U.S. to Mexico. The transaction must still win approval from increasingly skeptical antitrust regulators.<\/p>\n Turkey\u2019s currency plunges after another central bank chief is fired.<\/strong> The lira fell as much as 14 percent after President Recep Tayyip Erdogan dismissed the official, Naci Agbal. During his four-month tenure, Mr. Agbal was credited for restoring confidence in the country\u2019s economy.<\/p>\n The Biden administration weighs new requirements for corporate climate disclosures.<\/strong> The Treasury Department and other regulators are working on ways to reduce \u201cgreenwashing\u201d by force companies to reveal more about their environmental impact, according to Bloomberg.<\/p>\n How the stimulus is lifting the markets.<\/strong> Some day traders are using their $1,400 payouts from the federal economic rescue \u2014 \u201cstimmies,\u201d in their lingo \u2014 to invest in speculative assets like meme stocks and Bitcoin, The Times\u2019s Matt Phillips writes. <\/p>\n As sports leagues seek new sources of income, the investment firm Bruin Sports Capital is betting on a technology that helps teams capture more advertising revenue during broadcasts.<\/p>\n Bruin is investing in TGI Sport,<\/strong> an ad tech company that\u2019s currently owned by the Australian firm Quadrant Private Equity. (A person briefed on the matter said that Bruin was investing about $100 million.) Currently a part of QMS Media, which provides outdoor advertising like digital billboards, TGI focuses on sports advertising \u2014 with a twist. Its \u201cparallel ads\u201d technology allows teams to display different ads on and around the field of play for audiences in different geographies. It has been used by Major League Soccer, New Zealand Rugby and others.<\/p>\n TGI\u2019s technology is based on special physical panels and does not rely on green-screen special effects, meaning that it doesn\u2019t require special cameras for broadcasters and isn\u2019t affected by slow-motion, said Barclay Nettlefold, QMS\u2019s chief, who will become TGI\u2019s global C.E.O.<\/p>\n \u201cWhy should a fan in New York look at Boston advertising?\u201d<\/strong> asked George Pyne, the founder and C.E.O. of Bruin. As broadcast audiences are getting smaller and more fragmented, sports franchises want to build more of a direct relationship with viewers, and then persuade advertisers to pay to reach those fans.<\/p>\n \u201cThe broadcaster hasn\u2019t done anything to foster the relationship between the club and the consumer,\u201d said Jonathon Pearce, Quadrant\u2019s managing partner. Or, as Mr. Pyne put it, using his favorite soccer club as an example: \u201cThe audience is coming to watch Liverpool because it\u2019s Liverpool. It\u2019s all about the brand, and if McDonald\u2019s or someone wants that audience, they need to engage that brand.\u201d<\/p>\n \u2014 Mike Winkelmann, the artist known as Beeple, <\/em>speaking on the \u201cSway\u201d podcast<\/em> about the frenzy for digital art via nonfungible tokens, or NFTs. He auctioned an NFT-linked image this month that <\/em>sold for $69 million<\/em>.<\/em><\/p>\n <\/polyline><\/g><\/g><\/svg><\/button><\/p>\n Nope. The so-called economic impact payments are not treated as income. In fact, they\u2019re technically an advance on a tax credit, known as the Recovery Rebate Credit. The payments could indirectly affect what you pay in state income taxes in a handful of states, where federal tax is deductible against state taxable income, as our colleague Ann Carrns wrote. Read more. <\/p>\n <\/polyline><\/g><\/g><\/svg><\/button><\/p>\n Mostly. \u00a0Unemployment insurance is generally subject to federal as well as state income tax, though there are exceptions (Nine states don\u2019t impose their own income taxes, and another six exempt unemployment payments from taxation, according to the Tax Foundation). But you won\u2019t owe so-called payroll taxes, which pay for Social Security and Medicare. The new relief bill will make the first $10,200 of benefits tax-free if your income is less than $150,000. This applies to 2020 only. (If you\u2019ve already filed your taxes, watch for I.R.S. guidance.) Unlike paychecks from an employer, taxes for unemployment aren\u2019t automatically withheld. Recipients must opt in \u2014 and even when they do, federal taxes are withheld only at a flat rate of 10 percent of benefits. While the new tax break will provide a cushion, some people could still owe the I.R.S. or certain states money. Read more. <\/p>\n <\/polyline><\/g><\/g><\/svg><\/button><\/p>\n Probably not, unless you\u2019re self-employed, an independent contractor or a gig worker. The tax law overhaul of late 2019 eliminated the home office deduction for employees from 2018 through 2025. \u201cEmployees who receive a paycheck or a W-2 exclusively from an employer are not eligible for the deduction, even if they are currently working from home,\u201d the I.R.S. said. Read more. <\/p>\n <\/polyline><\/g><\/g><\/svg><\/button><\/p>\n Self-employed people can take paid caregiving leave\u00a0if their child\u2019s school is closed or their usual child care provider is unavailable because of the outbreak. This works similarly to the smaller sick leave credit \u2014 67 percent of average daily earnings (for either 2020 or 2019), up to $200 a day. But the caregiving leave can be taken for 50 days. Read more. <\/p>\n <\/polyline><\/g><\/g><\/svg><\/button><\/p>\n Yes. This year, you can deduct up to $300\u00a0for charitable contributions, even if you use the standard deduction. Previously, only people who itemized could claim these deductions. Donations must be made in cash (for these purposes, this includes check, credit card or debit card), and can\u2019t include securities, household items or other property. For 2021, the deduction limit will double to $600 for joint filers. Rules for itemizers became more generous as well. The limit on charitable donations has been suspended, so individuals can contribute up to 100 percent of their adjusted gross income, up from 60 percent. But these donations must be made to public charities in cash; the old rules apply to contributions made to donor-advised funds, for example. Both provisions are available through 2021. Read more. <\/p>\n The Chinese social media company Renren went public in the U.S. in 2011 with great fanfare, fizzled, and soon spun off its investment platform. The spinoff included shares in the SoftBank-backed fintech company Social Finance, or SoFi, in a deal criticized by some Renren shareholders. They sued Renren, its executives and others in New York State Court for $500 million in 2018, in a case that last week survived attempts at dismissal just as they were filing an amended complaint detailing allegations against additional defendants, SoFi and SoftBank.<\/p>\n The plaintiffs accuse insiders of stripping Renren of its value,<\/strong> their lead attorney, Bill Reid, told DealBook. Executives took the company\u2019s billion-dollar investment portfolio in a complex arrangement that \u201csplit up the spoils,\u201d he argued. He alleged that SoFi and SoftBank helped unfairly get the best of Renren.<\/p>\n \u201cIn short, this is a dispute between SoFi\u2019s shareholders over who owns SoFi,\u201d Mr. Reid said. The long version of the story runs for more than 150 pages in a complaint that involves recitation of 19th-century Cayman Islands law.<\/p>\n SoFi is going public via a SPAC, in a deal that values it at more than $8.5 billion. <\/strong>Renren\u2019s founder and a defendant in the case, Joe Chen, is on the board of SoFi, which is in the process of merging with Social Capital Hedosophia, a blank-check firm run by Chamath Palihapitiya. In a statement to DealBook, SoFi\u2019s general counsel, Rob Lavet, said, \u201cWhile as a matter of policy we do not comment on ongoing litigation, we do believe the charges against us are meritless and we look forward to vigorously defending ourselves in court.\u201d<\/p>\n SoftBank and Social Capital did not respond to requests for comment.<\/p>\n On Friday, we wrote about the junior bankers at Goldman Sachs who complained about what they saw as workplace abuse, including 100-hour weeks. Our inbox has overflowed with reactions, notably from current and former investment bankers. Here\u2019s what some had to say (most requested anonymity to speak freely about their experiences). The comments have been edited and condensed for clarity:<\/p>\n \u201cMy view is that if it\u2019s not to your liking, quit and find another line of work. It won\u2019t pay as well, but it\u2019s also possible that you won\u2019t learn as much. I am still reaping the benefits of what I learned.\u201d<\/p>\n \u201cI had heard all about the long hours, but once I was in it, I found that I had underestimated. I threw in the towel and left banking, because no amount of money was worth the terrible lifestyle.\u201d<\/p>\n \u201cIn our day, we may have complained to our friends or our family, but we knew that short-term pain was good for long-term gain. I now live a comfortable life enabled by my first years at Goldman Sachs.\u201d<\/p>\n \u201cWe would do the math on the compensation and realize that we were making less than minimum wage per hour. It wasn\u2019t worth being tortured. My health still suffers from my years on Wall Street.\u201d<\/p>\n \u201cYes, we were \u2018abused\u2019 and yelled at, but this was expected and how we learned. My message for these analysts is: If you can\u2019t stand the heat, get out of the kitchen.\u201d<\/p>\n \u201cThe psychological damage lasts a lifetime. I still stay in touch with analysts from 20 years ago and the horror stories are as fresh today in their heads as when they happened.\u201d<\/p>\n \u201cI am an incoming Goldman Sachs intern. I knew about the work conditions before applying to the job. Anyone engaging in a career at a top investment bank knows about it, or else they applied for the wrong reasons.\u201d<\/p>\n Deals<\/strong><\/p>\n Under its heir apparent, Jon Gray, Blackstone is increasingly focusing on growth investments over more traditional private equity targets. (WSJ)<\/p>\n The Chinese ride-hailing giant Didi Chuxing reportedly plans to go public by the summer, at a valuation above $62 billion. (Bloomberg)<\/p>\n Politics and policy<\/strong><\/p>\n The Fed will let expire a regulatory change that effectively lowered bank capital requirements, which was meant to encourage lending during the pandemic. (NYT)<\/p>\nHERE\u2019S WHAT\u2019S HAPPENING <\/span><\/h3>\n
Exclusive: A bet on the future of sports media<\/h2>\n
\u201cThis is for people who are looking to take some risks because a lot of this stuff will absolutely go to zero.\u201d<\/h2>\n
How Has the Pandemic Changed Your Taxes?<\/h4>\n
\u2018Who owns SoFi?\u2019<\/h2>\n
About those Goldman analysts \u2026<\/h2>\n
THE SPEED READ <\/span><\/h3>\n