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Pandemic reveals tale of 2 Californias like never before

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As Bay Area tech workers set up home offices to avoid coronavirus exposure, grocers, farm workers and warehouse employees in the Central Valley never stopped reporting to job sites. Renters pleaded for eviction relief while urban professionals fled for suburbs and resort towns, taking advantage of record-low interest rates to buy bigger, better homes. Most of the state’s 6 million public school children are learning remotely, while affluent families opted for private classrooms that are up and running.

California has long been a picture of inequality, but the pandemic has widened the gap in ways few could have imagined. While other states face large budget deficits, California has a $15 billion surplus, thanks to record 2020 gains from Silicon Valley and white-collar workers who pay the bulk of California’s taxes.


Gov. Gavin Newsom unveiled the state’s record-high $227 billion budget last week despite a year in which unemployment soared beyond 10 percent and the homelessness crisis reached devastating levels in Los Angeles and beyond.

He has proposed directing much of California’s bounty toward struggling residents and low-income families, and it remains to be seen whether the state will continue to reap similar tax rewards in future years. If this is a onetime windfall, Newsom and lawmakers will have to find other resources to sustain additional aid — and face pressure to raise tax rates even more on the wealthy.

“There’s a way in which the pandemic has amplified all of these systemic and societal issues we were always aware of,” said Brandon Greene, director of the racial and economic justice program at the ACLU of Northern California. “These gaps persist and are widening. And if it can happen here, in a blue state where you have the political capital, it can happen anywhere.”

California’s low-income workers and people of color have borne the brunt of both the economic fallout of the recession and the physical toll of the virus itself. The Latino Covid-19 death rate is 22 percent higher than the statewide average, and the Black death rate is 16 percent higher, according to California’s health equity tracker.

Even before the pandemic, ZIP codes home to just 2 percent of California’s population held 20 percent of the state’s net worth, according to the nonpartisan Legislative Analyst’s Office. In 2020, more than 40 percent of households making less than $40,000 annually saw reduced work hours or pay, and an equal share had to cut back on food, according to the Public Policy Institute of California.

“Decades-long inequalities, those preexisting conditions around race, around ethnicity, the preexisting conditions around wealth disparities and income disparities, obviously have come to the fore and must be addressed,” Newsom said while outlining his budget proposal last week.

Moments later, he made a stark proclamation about how the other side is doing: “The folks at the top are doing pretty damn well.”

Newsom, 53, is a multimillionaire businessman in addition to being governor, and his own personal life has punctuated the extreme differences in California. His dinner at the French Laundry in November not only enraged the public for his flouting of his own advice against gathering; it served as an optics problem with menu prices that many Californians cannot afford even in normal times. Newsom sent his own children back to private classrooms in late October while most families were stuck in remote learning. When he had to quarantine in November, he said he was “blessed because we have many rooms” in his Sacramento County home.

However, the Democratic governor has prided himself on bridging the equity gap and has branded his efforts as “California for All” since taking office two years ago. He appointed the state’s first surgeon general, Nadine Burke Harris, who has focused her career on addressing childhood trauma in disadvantaged communities and led vaccine discussions mindful of equal distribution. Newsom has pushed hard to reopen public schools this spring because he says students in low-income neighborhoods are struggling the most with distance learning.

Newsom has proposed $600 state stimulus checks to nearly 4 million low-income workers as part of his budget plan. He launched an effort to shelter tens of thousands of homeless Californians in hotel rooms when the outbreak began and then transitioned toward a program that would convert that into permanent housing. He helped enact renter protections from eviction and wants to extend those protections.

Californians saw an array of relief in 2020, as all levels of government tried to lessen the burden. Children who live in communities that have long gone without broadband and quality internet access received hotspots and other Wi-Fi access. Cities stopped using parking tickets and towing as a way to bring in revenue. More lower-level offenders were freed from prisons and jails after virus outbreaks.

Advocates say the jarring juxtaposition in the pandemic, as the state’s richest got richer and its poor got poorer, prove it’s not enough. They are lobbying Newsom and the Legislature to use California’s unexpected windfall to help the state’s neediest by expanding the social safety net and to turn temporary relief granted during the pandemic into permanent solutions. They worry that momentum is already losing steam, and that things will revert to normal when the vaccine reaches the masses and Covid-19 is in the past.

“These things that were implemented as a kind of lifeline are now expiring and folks still need it,” said Jhumpa Bhattacharya, a vice president at the Insight Center for Community Economic Development based in Oakland. “We live in a society where we don’t believe in government intervention, and there’s this narrative that you can pull yourself up by your bootstraps. When the pandemic hit, we saw that’s not true, and my hope is that we will be able to develop a new understanding of how our society works.”

California Democrats have proposed bigger taxes on the ultra-rich as a solution, with groups like the California Teachers Association pushing last year for legislation to hike taxes for residents with more than $30 million in assets. That bill failed, but Assemblymember Luz Rivas (D-Arleta) just proposed raising taxes on corporations by $2 billion to fund housing for people experiencing homelessness.

Newsom made clear last week that he will not entertain major tax proposals, declaring “they’re not part of the conversation.” The pandemic’s remote work culture has shown information-based companies that office location may not matter as much as once thought, while California’s high housing costs, regulations and taxes are a deterrent.

Further taxing the rich is proving to be a political risk and a threat to the very system that makes it possible for California to thrive even in dark times. Just last month, Oracle and Hewlett Packard Enterprise announced they were moving their headquarters to rival state Texas. Elon Musk, now the richest person on the planet, also said he was moving to the Lone Star State, though his company Tesla will remain in California.

“There’s about 1 percent of taxpayers that pay half the income tax in the state, and the reason why state revenues have been so strong is that those taxpayers had a very good year. As long as those people are willing to stay in California and be taxed, the money will come in,” said David Shulman, senior economist emeritus for the UCLA Anderson Forecast. “But there is a point where they will say it doesn’t work anymore. The question is, are we at a tipping point? There’s certainly more evidence that we are getting close to it.”


The last major tax hike in California was a 2012 voter-approved tax on residents making more than $250,000 championed by Gov. Jerry Brown, which voters later extended through 2030. Voters in November, however, rejected a ballot initiative to tax commercial properties at their current value, which would have generated up to $12 billion more annually.

Advocates say another tax hike is overdue, but even without one, the state could change its priorities to make better use of its billions.

“It’s all very frustrating, since with the fifth largest economy in the world, these things are fixable. The money is there,” said Courtney McKinney, spokesperson for the Western Center on Law and Poverty. “It is a question of priorities — whether or not millions of people being plunged into poverty is seen as enough of a destabilizer to encourage the wealthy, business and political class in California to put money into addressing poverty and the trappings of poor environment in smart, sensible ways. Easier said than done.”

Assemblymember Alex Lee (D-San Jose), a coauthor of legislation to extend the eviction moratorium for another year, said resistance to more permanent solutions to help low-income residents is a reminder that California is not as progressive as it claims to be.

In the November election, California proved it’s not the liberal bastion people think it is. Besides rejecting the business property tax increase, they opposed affirmative action and rent control while they sided with gig employers and dialysis companies instead of labor unions.

“Whether or not people should be evicted during a pandemic in a recession … even just having to fight about that says we aren’t where we should be yet,” Lee said. “I think a lot of people are realizing this stuff, and that even though we have Democratic super, ultra majorities, we aren’t living up to the progressive potential we have. I would never characterize us as progressive state.”

This blog originally appeared at Politico on January 17, 2021. Reprinted with permission.

About the Author: Mackenzie Mays covers education in California. Prior to joining POLITICO in 2019, she was the investigative reporter at the Fresno Bee, where her political watchdog reporting received a National Press Club press freedom award.


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Voters pass pro-worker laws where the Congress lags, this week in the war on workers

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The presidential and Senate elections were the headlines on Tuesday and through the rest of the week, but it’s worth noting a few key places where voters said yes to ballot measures making life a little better for working families. In Florida, voters passed a $15 minimum wage amendment. It phases in very slowly, not reaching $15 until 2026, but it’s progress. If you’re wondering WTF is going on with more than 60% support for a minimum wage increase while Donald Trump won the state, welcome to Florida. The state’s voters did the exact same thing in 2004, voting for George W. Bush and a minimum wage increase.

Colorado voters passed paid family leave. The state legislature had failed to pass such a bill, so organizers took it to the voters, and won. The law, which doesn’t go into effect until 2024, will provide up to 12 weeks of paid leave at between 65% and 90% of their pay, up to $1,100 per week. It’s funded by a payroll tax.

And Arizona voters approved a tax on high-income households that will raise hundreds of millions of dollars for education. That comes after Arizona teachers went on strike for school funding in 2018.

This blog was originally published at DailyKos on November 7, 2020. Reprinted with permission.

About the Author: Laura Clawson is labor editor at Daily Kos.


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The next blow for businesses: Tax hikes that threaten more layoffs

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Businesses across the nation could soon face state tax increases to pay for the surge in Americans filing for unemployment benefits this year, further straining employers at a time when many are fighting for survival.

Massachusetts, New Jersey and Alabama are among the states looking at tax hikes that could cost employers billions of dollars. It would be a gut punch for businesses struggling because of the pandemic — and some fear it could trigger even more layoffs or prevent new hires.

Governors have been pressing the federal government to come through with more funds, but talks between House Speaker Nancy Pelosi and the White House over a new economic relief package have dragged on for months with no deal in sight, and state aid is one of the major sticking points.

“We’re in a situation where we’re trying to actually get employers to bring people back to work,” said Rachelle Bernstein, vice president and tax counsel at the National Retail Federation. “You certainly don’t want to increase the taxes on employment, which is in essence what’s happening here.”

Both the federal government and states tax the wagesbusinesses pay in order to build up a store of funds in case of mass unemployment. Yet the extraordinary increase in the number of workers filing jobless claims since the pandemic hit in March caught the states by surprise, and the scale of layoffs sparked by the crisis already dwarfs those lost in the Great Recession, which lasted more than twice as long.

As a result, 21 states and the Virgin Islands have already exhausted the money in their accounts that pays for jobless benefits and are tapping into the U.S. Treasury-managed Unemployment Trust Fund for billions of dollars in federal loans to stay afloat. Congress waived interest on these loans in March for all states until the end of the year.

Once a state’s unemployment account dips into the red, it has little choice but to borrow from the Treasury or from private entities, because they are required under federal law to pay unemployment benefits.

Many states will need to cut benefit levels or raise taxes on employers to replenish those funds. The process is fairly routine: 27 states have a tax in place that automatically kicks in when the unemployment fund drops below a certain amount, according to the Tax Foundation. Thirteen of the states that are borrowing from the Treasury have laws on the books that call for an automatic tax hike. They include New York, New Jersey, Illinois, Pennsylvania, Texas and Massachusetts.

“It’s going to take many years for states to pay this back,” said Jared Walczak, vice president of state projects at the right-leaning Tax Foundation. “It’s going to mean higher [unemployment insurance] taxes for a very long time; it’s going to mean all of the costs associated with borrowing will be a fiscal constraint on states for many years to come.”

Glenn Spencer, executive vice president of employment policy at the U.S. Chamber of Commerce, said tax increases are inevitable given that more than 20 states are already borrowing tens of billions of dollars.

“That number is only going to go up,” he said. “So the potential tax burden on businesses across the board is only going to go up.”

In Massachusetts, businesses are staring down a tax hike of nearly 60 percent for 2021.

The state had a healthy balance in its unemployment trust fund in February, but job losses from the pandemic dried it up by July. The state now projects that the unemployment fund will have a nearly $2.5 billion deficit by the end of 2020.

Businesses will have to set aside on average $858 per employee in 2021, compared to $539 now. The costs will continue to rise, albeit at a slower pace, until 2024.

Christopher Carlozzi, the state director of the National Federation of Independent Business, said Massachusetts is hurting the job creators at the worst possible time.

“The state is looking to these small businesses to create jobs, but in the same breath, you’re making it more expensive to create that job,” said Carlozzi, whose group represents small businesses.

In New Jersey, unemployment insurance tax rates for employers could increase on average from 0.7 percent of payroll to 1.1 percent in July 2021. In total, businesses would see a hit of $919 million, according to an analysis by the state’s nonpartisan Office of Legislative Services.

A bill that’s working through the state Legislature would spread out the increase over a few years.

At a September hearing on unemployment issues, the state’s Labor Commissioner, Robert Asaro-Angelo, said what New Jersey really needs is help from the federal government in the form of cash assistance and extending the interest free loans that it’s getting from Treasuryinto next year.

“We are hopeful that there’s going to be relief for trust funds; we’re not the only state requesting this,” he said. “We hope that there will be direct funding for unemployment trust funds because that will ease the burden on employers in New Jersey and across the country.”

New Jersey is not alone. States across the country are seeking a life preserver from Washington with another aid package that could be used to bolster the unemployment trust funds. But President Donald Trump and Republican leaders are balking at giving money to Democratic-governed states like New York, California and Illinois, which they say are mismanaged.

Conservatives also argue that Washington shouldn’t give more money when states haven’t even spent all of the $150 billion that Congress set aside for them in March in the CARES Act to shore up their dwindling trust funds.

“There are a lot of states still sitting on coronavirus relief fund money that they’re allowed to be spending on unemployment compensation benefits right now and are not,” said Walczak of the Tax Foundation. He argues that states have been holding onto the CARES Act funds hoping Congress will pass another aid package that would forgive the loans or provide more flexibility for them to use the money for other priorities.

The New Jersey Business & Industry Association and other business groups have been lobbying for the state to put CARES Act money into the unemployment fund, but to no avail.

“The quicker the fund returns to good health, the more likely it is that the worst of the automatic tax increases can be avoided,” Christopher Emigholz, vice president of government affairs for NJBIA, said in testimony before the Legislature this month.

However, more than three-quarters of state and local governments recently surveyed by the Government Finance Officers Association said they have plans for the money and anticipated spending their share of the aid before the end-of-the-year deadline to use it.

At least a dozen states, including Georgia and Tennessee, used CARES Act funds to replenish their unemployment accounts.

But in some states, the aid wasn’t enough to stave off tax hikes. In Alabama, corporations are still staring at a 200 percent tax increase, even after Republican Gov. Kay Ivey put $300 million in CARES Act dollars into the fund.

Still, this tax rise will be much less severe than it would have been without the money. Alabama’s unemployment insurance tax rate was scheduled to go up from 0.65 percent to 3.95 percent, a more than 500 percent increase. Instead, the rate will increase to 1.95 percent.

“Without this infusion, employers could be facing an unemployment insurance tax increase of more than 500 percent, which could very well force many businesses to close their doors forever, resulting in even more job losses in Alabama,” Alabama Labor Secretary Fitzgerald Washington said in a statement.

On top of the increase in state taxes, businesses could be hit with a tax hike from the federal side as well.

States with dried-up unemployment funds have already borrowed more than $38 billion in interest free loans from the federal government. But the decision to eliminate interest on the loans was a temporary one, and starting next year, states will start accruing interest on what they borrow.

If they haven’t paid back the cash they owe by 2022, businesses in those locations will see a .06 percent increase in their base federal unemployment tax.

In the aftermath of the Great Recession of 2007-2009, 26 of the states and territories that borrowed from the federal government saw their federal unemployment tax go up because they didn’t pay back their loans in time, according to an analysis by the Urban Institute’s Wayne Vroman.

“Many states had debts for multiyear periods, and 11 programs were still making debt repayments in April 2016,” he wrote.

In a letter to congressional leaders earlier this month, the National Association of State Workforce Agencies urged lawmakers to extend the interest moratorium on unemployment insurance trust fund loans through 2021.

“With extreme claim loads, many states are borrowing in order to make UI payments,” the group, which represents unemployment agencies in every state and territory, wrote. “Given the continued economic stress, all state workforce agencies agree that a continued moratorium on interest accrual and payments is critical in order to avoid significant increased taxes and assessments on employers.”

This blog originally appeared at Politico on October 30, 2020. Reprinted with permission.

About the Author: Rebecca Rainey is an employment and immigration reporter with POLITICO Pro and the author of the Morning Shift newsletter.


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Reckoning With the Hidden Rules of Gender in the Tax Code: How Low Taxes on Corporations and the Wealthy Impact Women’s Economic Opportunity and Security

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Reckoning With the Hidden Rules of Gender in the Tax Code: How Low Taxes on Corporations and the Wealthy Impact Women’s Economic Opportunity and Security We’re excited to announce that NWLC, in partnership with Groundwork Collaborative, the Roosevelt Institute, and the Georgetown Center on Poverty and Inequality, released three reports about gender and racial bias in the tax code and how to harness our tax laws as a tool for equity.
Reckoning With The Hidden Rules of Gender in the Tax Code, tackles some aspects of the tax code that shape corporate and individual behaviors in ways that have negative downstream effects on women and especially women of color. Among other things, this report analyzes how the tax code incents or enables exorbitant executive compensation at the expense of worker pay; how the tax code’s treatment of debt fuels predatory behavior by private equity firms; how particular tax provisions could encourage worker misclassification; and how corporations with a high share of women and people of color as employees engaged in big stock buybacks at the expense of increasing worker pay in the wake of the 2017 tax law.  We call out specific examples from Starbucks, Toys R Us, and Hilton.
You can access the final reports and executive summary here, and an article by Annie Lowrey at the Atlantic here.

This article was originally published at National Women’s Law Center. Reprinted with permission.

About the Author: This report, co-authored by Katy Milani (Roosevelt Institute,  https://rooseveltinstitute.org), Melissa Boteach (NWLC), Steph Sterling (Roosevelt Institute), and Sarah Hassmer (NWLC), discusses how low taxes for the wealthy and corporations have played a role in enabling – and in some cases encouraging – those with the highest incomes and the most capital to accumulate outsized wealth and power in our economy. Centuries of discrimination and subjugation of women and people of color interact today with widening income inequality, such that white, non-Hispanic men are disproportionately represented among the wealthiest households, while labor and economic contributions from women of color are consistently undervalued. An agenda to advance racial and gender justice must reckon with provisions in our tax code perpetuate and enable these inequities.

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New study confirms ordinary Americans got fleeced by the Trump tax bill

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Sorry, America’s middle class: President Donald Trump’s signature tax code overhaul has not generated any meaningful new economic growth that wasn’t already underway, the nonpartisan Congressional Research Service (CRS) has found.

The new numbers inject further complexity into a contentious and ongoing debate around the landmark tax legislation as to who actually benefited from its passage. But the study should also offer additional clarity: With hard numbers now available on the economy’s performance in the first full year of the legislation, it’s easier than ever to talk instead about who got what and how — and the answers, so far, aren’t pretty.

Large corporations with shiny accounting departments ended up being the largest beneficiaries of the tax bill’s largesse, with the rate of tax they actually pay dropping by half in 2018, according to the CRS analysis. But the vanishingly insignificant comparative break Trump’s law gave workaday people lays the game bare. This tax bill is already reshaping the real-world economy in ways that limit the prospects of ordinary people, potentially reinforcing the structural inequities that adversely impact democratic society.

Trump and his congressional allies had forecast massive jumps in GDP growth and working-family incomes from the package. None materialized in year one. Annual growth hit 2.9% – identical to the 2015 mark, well below the 3.3% the Congressional Budget Office forecast when it sought to predict the tax bill’s impact in April of 2018, and right in line with what the CBO had predicted the economy would have done without Trump’s corporate-tax munificence.

The report’s findings underscore the deceitful nature of the administration’s first-term sales pitch.

Working people were supposed to benefit from the slashed corporate income tax rate and related rules tweaks intended to lure offshored profits back into the U.S. economy. American companies weren’t hiding $3 trillion in profit outside the country out of malice, the argument went. Rather, they were afraid of seeing it taxed too sternly, and would happily bring it home to make productive and equitable use of it just as soon as they felt it was safe from the taxman.

Some business heads dutifully followed this script in small and symbolic ways shortly after the law was signed, issuing year-end bonuses to their frontline employees and accompanying them with heavy fanfare in the press. But even the high-end estimates of those bonus payments account for less than 3% of the money corporate payers got handed back to them by the tax law. Those bonuses may have had as much to do with firms’ recognition that falling unemployment rates would make it easier for unhappy workers to leave for greener pastures, the CRS report notes.

So what happened to the other 97% of the money corporate accountants were handed by the government? A trillion dollars of it went to shareholders, as the law triggered a record wave of stock buybacks – an unproductive back-scratching activity that keeps the money firmly ensconced in upper-class hands that have little reason to spend that new cash back into the economy where working stiffs make their living.

This grand act of class solidarity between wealthy elected officials, wealthy corporate executives, and wealthy investors was entirely predictable. Corporate tax repatriation enticements and rates-slashing typically generate this kind of unproductive reshuffling of capital – thereby reinforcing the working class’s sense that they aren’t even being dealt into the hand.

Such stark differences in outcomes for the masses and the privileged few help fuel the populist anger that’s on the march across nearly every developed democracy on the planet.

Wages – a more stable indicator of how much wealth capitalists are allowing to pass through to their labor than any one-off bonus – offer no respite from the gloomy CRS diagnosis. Blue-collar wages rose just 1.2% in 2018 after accounting for inflation, the report’s authors found, which “indicated that ordinary workers had very little growth in wage rates.”

Out of every three taxpayers, roughly two owed the government less this tax year than they had prior to the new tax law. Many people who got a tax cut in year one appear not to have noticed, as the New York Times’ Jim Tankersley and Ben Casselman reported recently, because the annualized cut was spread across a year’s worth of paychecks instead of lumped together at year end.

But whether working families noticed the new money or not, the combined effect of those modest middle-class cuts and the massive corporate giveaways that make up the bulk of the Trump tax law’s price tag were supposed to load the economy’s engine with high-octane juice. The working theory was that this “2 Fast 2 Furious” boom would rain new revenue down on the treasury with such swift thoroughness that the public would neither notice nor care that a large amount of its collective money got handed over to wealthy multinational companies. The cut, its proponents insisted, would pay for itself.

A year on, the tax bill is miles behind the trajectory required to make that promise plausible. The authors of the CRS study calculate that the tax law’s 2018 performance generated “5 percent or less of the growth needed to fully offset the revenue loss” in year one.

“Much of the tax cut was directed at businesses and higher-income individuals who are less likely to spend,” the CRS researchers wrote. “On the whole, the growth effects tend to show a relatively small (if any) first-year effect on the economy.”

That mathematically correct conclusion misses an important wider point about public policy choices. The bill has had a huge effect on what kind of economy we have, if not on the size of that economy as measured in the stats these analysts parse. Inasmuch as the costs of the bill could have been spent on other people if their government had made other choices, the tax law is redistributing wealth upward, providing the wealthy investor class a jolt of money they have no reason to spend.

Everyone else saw a relative pittance – enough money to make a difference to a working family, but a tiny fraction of the public money federal lawmakers chose to give to private companies and their shareholders through these changes – and none of the wider opportunity-sparking growth promised by the people marketing the bill 18 months ago.

Tax cuts that don’t pay for themselves are not automatically illegitimate. When such subsidies are bestowed on Main Street economies, they can boost the virtuous cycles of consumer spending that working-class communities need in order to provide a stable economic foundation.

The tax cut former House Speaker Paul Ryan (R-WI) put on Trump’s desk has instead subsidized the wealthy, just as the GOP intended.

This article was originally published at Think Progress on May 30, 2019. Reprinted with permission. 

About the Author: Alan Pyke  covers poverty and the social safety net. Alan is also a film and music critic for fun. Send him tips at: [email protected] or


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Uber admits underpaying New York drivers approximately $45 million

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Uber’s gotta pay—with interest.

The infamous ride-sharing app admitted Tuesday that it had been underpaying its New York drivers since November 2014 due to an accounting error that took out more than the company’s 25 percent commission, the Wall Street Journal first reported.

Uber typically takes its commission after taxes and fees are deducted from a driver’s fare, but the accounting glitch that took it out beforehand resulted in a larger pay deduction for drivers. Uber’s terms of service did not specify that it took commissions out of gross fare earnings.

To make things right, Uber is repaying an average of $900 per driver with interest, which is estimated to cost a total of at least $45 million. One driver is receiving a $7,000 payout, Recode reported.

“We made a mistake and we are committed to making it right by paying every driver every penny they are owed, plus interest, as quickly as possible,” Uber’s regional manager in the U.S. and Canada, Rachel Holt, said in a statement. “We are working hard to regain driver trust, and that means being transparent, sticking to our word, and making the Uber experience better from end to end.”

Uber has had a rough year with multiple public relations disasters spanning a consumer and driver backlash for the company’s tepid response to the Trump administration’s immigration ban and a sprawling sexual harassment scandal. But the company’s issues with drivers over pay have also persisted.

In January, Uber settled a lawsuit that claimed the company misled drivers regarding earning potential and conditions of the company’s auto financing program. Drivers protested against poor pay throughout 2016, demanding higher pay.

Through it all, Uber has fought drivers on granting employee status and benefits, fair pay, and unionization. But despite the influx of lawsuits, it appears that drivers are going to keep fighting the company on issues.

Following news of Uber’s repayment of New York drivers, the Independent Drivers Guild, which represents more than 50,000 app drivers, called for a widespread investigation into the company’s payment practices.

“Drivers have been complaining about this and other shady accounting tactics to no avail,” said IDG’s executive director Ryan Price in a statement. “Drivers are relieved to be paid the money they are owed plus interest and we hope other companies follow suit.”

“We also call for regulators to launch an immediate investigation into ride hail applications fare and payment practices in our city.”

This article was originally published at ThinkProgress.org on May 24, 2017. Reprinted with permission.

About the Author:  Lauren C. Williams is the tech reporter for ThinkProgress with an affinity for consumer privacy, cybersecurity, tech culture and the intersection of civil liberties and tech policy. Before joining the ThinkProgress team, she wrote about health care policy and regulation for B2B publications, and had a brief stint at The Seattle Times. Lauren is a native Washingtonian and holds a master’s in journalism from the University of Maryland and a bachelor’s of science in dietetics from the University of Delaware.


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Last Chance to Make Corporations Come Clean on Tax Havens

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Isaiah J. PoolePeople who want multi;national corporations to be held accountable for their tax-dodging tactics only have a few more hours Thursday to tell the Security and Exchange Commission to support a tough rule that would go a long way toward making that happen.

The SEC is soliciting comments until 11:59 p.m. Eastern time on a new business and financial disclosure rule that would require corporations to make public more information about their overseas subsidiaries.

This rule would affect the estimated $2.4 trillion in profits that corporations ranging from Apple to Walmart have shunted offshore in order to avoid paying U.S. corporate taxes. Right now, the rules for disclosing corporate use of offshore tax havens is, as the tax code itself, riddled with loopholes.

For one thing, companies are not required to report their tax liabilities on a country-by-country basis, so the public – including investors in these companies – have no way to accurately judge how a company is lowering its tax liabilities or what would happen if a country decides to radically change its tax policies. Nor do companies routinely report the names and locations of their subsidiaries; no one knew, for example, that Walmart had 78 subsidiaries in overseas tax havens, with $76 billion in assets, before researchers for Americans for Tax Fairness ferreted out the information.

Another Americans for Tax Fairness report found that the pharmaceutical company Pfizer was holding twice as much of its offshore profits in overseas subsidiaries as it was reporting to the public.

This lack of transparency does harm to investors – who should know details of how the companies they invest in are funneling their profits and the risks associated with their tax-avoidance strategies – and harms the public as a whole, which is shortchanged every time corporations game the system to avoid paying the taxes they owe.

That is why it’s important for people to take a few minutes now to tell the SEC to require corporations to tell the truth about their overseas subsidiaries. After all, expecting a corporation to be honest about how and where it earns its profits should not be too much to ask.

This blog originally appeared at OurFuture.org on July 21, 2016. Reprinted with permission.

Isaiah J. Poole worked at Campaign for America’s Future. He attended Pennsylvania State University and lives in Washington, DC.


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Financial Transactions/Wall Street Speculation Tax Picks Up Steam

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Dave JohnsonThe idea of putting a small “Robin Hood” tax on financial transactions has been kicking around for a while, but in the last month the idea has picked up some real steam.

The Financial Transaction Tax (FTT), also called a “Wall Street Speculation Tax,” proposal asks for a small tax on financial transactions. Such a tax would slow down extreme speculation while raising money to pay for essential public services. The idea has been called a “Robin Hood Tax” because it takes from the rich. The FTT is a very tiny tax. Some proposals have suggested a tax of just three hundredths of a percent – a mere 30 cents on a $1,000 stock transaction.

This small tax would raise a lot of money, largely from automated “high-frequency trading.” This is an extreme practice of using computers to place extremely high volumes of stock orders at extremely high speeds, buying and selling the same shares sometimes in a fraction of a second. As much as half or more of all stock trading volume now comes from this high-speed trading. This practice makes extreme profits from a few traders but increases “volatility” (risk) in the market while doing nothing that benefits the economy.

A small FTT would make high-speed trading more costly, slowing it down while raising money for public services. For stocks, bonds and other financial transactions, the tax would be so small as to be practically unnoticed, while still raising significant sums because of the volume of trading.

An FTT has been endorsed by the 2016 Democratic Party Platform draft, which says:

“We support a financial transactions tax on Wall Street to curb excessive speculation and high-frequency trading, which has threatened financial markets. We acknowledge that there is room within our party for a diversity of views on a broader financial transactions tax.”

Hillary Clinton’s financial services reform proposal include a piece of the idea, applying it only to high-frequency trading:

Impose a tax on high-frequency trading. The growth of high-frequency trading has unnecessarily placed stress on our markets, created instability, and enabled unfair and abusive trading strategies. Hillary would impose a tax on harmful high-frequency trading and reform rules to make our stock markets fairer, more open, and transparent.

Bernie Sanders proposed an FTT on “high-speed trading and other forms of Wall Street speculation; proceeds would be used to provide debt-free public college education.” He hadalso supported previous FTT proposals, the 2011 and 2013 Harkin-DeFazio bills calling for a 0.03 percent tax on the sales of stocks and bonds.

A year ago Jared Bernstein explained the benefits in a New York Times op-ed, “The Case for a Tax on Financial Transactions,” writing:

An itty-bitty, one-basis-point transaction tax (a basis point is one-hundredth of a percentage point, or 0.01 percent) would raise $185 billion over 10 years… That would be enough to finance an ambitious expansion of prekindergarten programs for 3- and 4-year-olds and restore funding of college assistance for low-income students.

What’s more, a financial transaction tax could significantly reduce the amount of high-frequency trading.

… A one-basis-point tax on $1,000 worth of stock would cost the stock trader a dime. A $100,000 trade would generate a tax of only $10.

[. . .] 75 percent of the liability from the tax would fall on the top fifth of taxpayers, and 40 percent on the top 1 percent. The tax would also fall more on high-volume traders than on long-term investors, of course.

New DeFazio FTT Bill Introduced

This week Rep. Peter DeFazio (D-Ore.) introduced a FTT bill. His bill would raise $417 billion over 10 years, which could be used to fund national priorities like free higher education or job-creating infrastructure repair. At a news conference DeFazio said:

“Thanks to the reckless greed of Wall Street over the past few decades, the American economy is a grossly unbalanced playing field,” said Rep. DeFazio. “The only way we can level it is if we rein in reckless speculative financial trading and curb near-instantaneous high-volume trades that create instability in the stock market and our national economy. These financial practices have no intrinsic value, and exist to make a quick buck for already-wealthy speculators. If we want to give middle-class families a fair shot at a strong economy that works for all Americans, we need to put Main Street first.”

The legislation is supported by the Take On Wall Street Coalition. Learn more about the FTT/Wall Street Speculation Tax at the Take On Wall Street website.

This post originally appeared on ourfuture.org on July 14, 2016. Reprinted with Permission.

Dave Johnson has more than 20 years of technology industry experience. His earlier career included technical positions, including video game design at Atari and Imagic. He was a pioneer in design and development of productivity and educational applications of personal computers. More recently he helped co-found a company developing desktop systems to validate carbon trading in the US.


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Bowles-Simpson ‘B-S’ Zombie Plan Tells Working People to ‘Drop Dead’

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Jackie TortoraIt’s back. No matter how many times working people reject the Bowles-Simpson “B-S” budget plan that cynically claims it would “promote economic growth “—but would actually snuff out the recovery and cut lifelines for working families—it keeps coming back to the table.

Erskine Bowles and Alan Simpson released another tired plan today that would cut Social Security COLAs to pay for lower tax rates for corporations and the wealthiest Americans, among other things.

AFL-CIO President Richard Trumka released the following statement:

Once again, Bowles and Simpson have produced a plan that tells working people to “drop dead.” In December 2010, Bowles and Simpson put forward a budget blueprint that proposed to cut tax rates for corporations and the richest Americans and eliminate taxes on overseas corporate profits, and then pay for these lower tax rates by cutting Social Security benefits, shifting Medicare costs to individuals, taxing health benefits and cutting federal employees’ pay, benefits and jobs. The updated budget blueprint Bowles and Simpson put forward today cuts tax rates for the richest Americans and corporations and pays for these lower tax rates by cutting Social Security COLAs, taxing health benefits and cutting federal employees’ health and retirement benefits. For working people and the future of our nation, it is dead on arrival.

In recent actions and a call-in day to Congress, working families have urged their representatives and senators to:

  • Protect Social Security, Medicare and Medicaid from benefit cuts.
  • Repeal the “sequester” and close loopholes for Wall Street and the wealthiest 2% of Americans instead.

This post was originally posted on AFL-CIO on Feb. 19, 2013. Reprinted with Permission.

About the Author: Jackie Tortora is the blog editor and social media manager at the AFL-CIO.


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Corporate Profits Hit Record High While Worker Wages Hit Record Low

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A constant conservative charge against President Obama is that he is inherently anti-business. However, businesses keep defying the storyline by making larger and larger profits, rebounding nicely out of the Great Recession.

In the third quarter of this year, “corporate earnings were $1.75 trillion, up 18.6% from a year ago.” Corporations are currently making more as a percentage of the economy than they ever have since such records were kept. But at the same time, wages as a percentage of the economy are at an all-time low, as this chart shows. (The red line is corporate profits; the blue line is private sector wages.):

 

Corporations made a record $824 billion in profits last year as well, while the stock market has had one of its best performances since 1900 while Obama has been in office.

Meanwhile, workers are getting the short end of the stick. As CNN Money explained, “a separate government reading shows that total wages have now fallen to a record low of 43.5% of GDP. Until 1975, wages almost always accounted for at least half of GDP, and had been as high as 49% as recently as early 2001.”

This post was originally posted on Think Progress on December 3, 2012. Reprinted with Permission.

About the Author: Pat Garofalo is the Economic Policy Editor for ThinkProgress.org at the Center for American Progress Action Fund. Pat’s work has also appeared in The Nation, U.S. News & World Report, The Guardian, the Washington Examiner, and In These Times. He has been a guest on MSNBC and Al-Jazeera television, as well as many radio shows. Pat graduated from Brandeis University, where he was the editor-in-chief of The Brandeis Hoot, Brandeis’ community newspaper, and worked for the International Center for Ethics, Justice, and Public Life.


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