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Tag: wealthy people

  • IRS has collected $160 million in back taxes by cracking down on millionaires | CNN Politics

    IRS has collected $160 million in back taxes by cracking down on millionaires | CNN Politics

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    Washington
    CNN
     — 

    The Internal Revenue Service has collected $160 million in back taxes this year by cracking down on millionaires who haven’t paid what they owe, the agency said Friday.

    The recent effort to target high-income individuals has been boosted by an increase in federal funding provided by Democrats last year through the Inflation Reduction Act. Republicans have criticized the amount of money the IRS is getting, and future funding is uncertain.

    In September, the IRS started seeking back taxes from about 1,600 taxpayers with income above $1 million and more than $250,000 in tax debt. So far, the IRS has closed 100 of those cases, collecting $122 million, it said Friday.

    Earlier this year, the IRS collected $38 million from more than 175 high-income earners. That brings the total to $160 million so far this year.

    “I think that the evidence that we’ve seen to date, in terms of the amount that we have recovered … points to this being a highly important effort for us,” IRS Commissioner Danny Werfel said on a call with reporters.

    In one successful case, an individual was ordered to pay more than $15 million in restitution last month for falsifying personal expenses as deductible business expenses, including the construction of a 51,000-square-foot mansion complete with an outdoor pool and pool house, as well as tennis, basketball and bocce courts, according to an IRS press release. The person also falsified expenses for luxury vehicles, artwork, country club memberships and homes for his children.

    Another individual pleaded guilty last week to filing false tax returns and skimming more than $670,000 from his business. The person spent $110,000 on personal expenses and $502,000 on gambling, the IRS said.

    The agency’s effort to ramp up enforcement aims to narrow what’s known as the “tax gap,” the difference between the amount owed and the amount actually collected on time by the IRS. The most recent estimate shows that $688 billion was not collected during tax year 2021.

    The IRS plans to bring a new focus to cracking down on large corporations that have not been paying the taxes they owe.

    The agency will target US subsidiaries of foreign companies that distribute goods in the US and do not pay what they owe in taxes on the profit they earn. It will start sending compliance notices next month to about 150 subsidiaries to “reiterate their US tax obligations and incentivize self-correction,” the announcement said.

    As new accountants come on board at the IRS in early 2024, they are expected to begin 60 audits of some of the largest corporate taxpayers. The targeted corporations will be selected by the IRS accountants using a combination of artificial intelligence and subject matter expertise that will better detect tax cheating. The use of technology is meant to help avoid burdening taxpayers with needless audits.

    The Inflation Reduction Act, which included a provision to deliver $80 billion to the IRS over 10 years, has allowed the agency to begin a complete overhaul of its operations. It’s working to hire new staff, update technology, improve taxpayer services and audit tax cheats.

    The new funds have already helped improve taxpayer services at the IRS. In the 2023 filing season, it answered 3 million more calls and cut phone wait times to three minutes from 28 minutes compared with the year before.

    The IRS is currently working on building its own free tax filing program, known as Direct File, that will launch as a limited pilot program next year.

    The IRS has also put a plan in motion to digitize all paper-filed tax returns by 2025. The move is expected to cut processing times in half and speed up refunds by four weeks.

    Republicans have raised questions about whether the $80 billion investment in the IRS would lead to increased audits for average Americans. Earlier this year, Republican lawmakers were able to reclaim $20 billion of the funding in a bipartisan deal to address the debt ceiling.

    The White House argued that the cut won’t fundamentally change what the IRS can do over the next few years. Biden administration officials have also repeatedly said that taxpayers earning less than $400,000 a year won’t face an increase in audits due to the new funding.

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  • How the ultra-wealthy infiltrated anti-capitalist Burning Man | CNN Business

    How the ultra-wealthy infiltrated anti-capitalist Burning Man | CNN Business

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    New York
    CNN
     — 

    Burning Man, the desert confab that descended into chaos over the weekend, isn’t quite the scrappy, free-spirited revelry that it once was.

    For many watching the disarray of Burning Man from afar, the rain and mud that left 70,000 people stranded quickly became a symbol of the festival’s departure from its roots.

    Or, more simply: how the billionaires ruined Burning Man.

    The festival began as a small gathering in 1986 on a San Francisco beach, and eventually grew into a gritty countercultural community of “Burners” who eschew commercialism within their makeshift city, erected annually in a desiccated lake bed known as the playa.

    There’s no money trading hands on the playa — that’s core to to the community’s “decommodification” ethos. But there is, increasingly, a lot of money on the playa.

    Going to Burning Man is, in some elite circles, akin to having climbed Everest or taken ayahuasca on a meditation retreat — a spiritually transformative experience, undertaken with a considerable safety net of privilege.

    Elon Musk, the world’s wealthiest person, has been a regular at Burning Man, telling Recode in 2014 that “if you haven’t been, you just don’t get it.” Mark Zuckerberg flew in for a day in 2012 to serve up grilled cheese sandwiches and even set up his own tent, according to his friend and Facebook co-founder Dustin Moskovitz. In 2018, shortly after she was indicted on federal fraud charges, Theranos founder Elizabeth Holmes retreated to the desert and burned an effigy for her failed startup, she told the New York Times.

    One of the 10 pillars of Burning Man is “radical self-reliance,” and in that spirit most revelers haul their own water and shelf-stable food in for the week, and “rely on their inner resources” for survival, according to the organization’s website.

    For the one-percenters in attendance, however, self-reliance can be outsourced.

    The ultra-wealthy have been known to fly in personal chefs for the week, and pay as much as $50,000 to camp in luxurious tents, as the New York Post reported in 2019. A Business Insider reporter, similarly, wrote about so-called fancy camps around the playa that came with chandeliers, party rooms and outdoor showers.

    “Burning Man is the perfect example of how many rich White people recreationally manufacture hardship because they are immune from it systematically,” wrote one user on X, formerly Twitter, this weekend.

    The infiltration of the jet set is the driving force behind the schadenfreude emanating from social media in response to video footage of Burners — some of whom paid $2,750 for a single ticket — tromping through ankle-deep mud, unable to drive out of the camp following unusually heavy rain.

    “It’s a tiny violin emoji for me,” wrote one TikTok user.

    While some festival-goers found the situation scary — a “Lord of the Flies” vibe, as one attendee described it — many seasoned Burners were taking the weather and road closures in stride, offering food and shelter to those who need it. While one person died at the festival, the death was “unrelated to the weather.”

    One attendee, Andrew Hyde, told CNN the rain and mud have taken the meaning of the event back to its roots.

    “You come out here to be in a harsh climate, and you prepare for that.”

    — Nouran Salahieh and Holly Yan contributed to this article.

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  • What judicial ethics rules say about Clarence Thomas’ lifestyle bankrolled by his friends | CNN Politics

    What judicial ethics rules say about Clarence Thomas’ lifestyle bankrolled by his friends | CNN Politics

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    CNN
     — 

    It’s undeniable that Justice Clarence Thomas’ friendships with billionaires willing to foot his bill on their vacations together have given the conservative jurist a lifestyle most Americans could only dream of.

    But determining whether Thomas violated ethics rules and laws by failing to disclose that hospitality is tricky.

    The law in question is the Ethics in Government Act, and how it should be applied to the extravagant travel that Thomas and other justices have been treated to has been a subject of debate.

    The debate centers on what counts as “personal hospitality” – i.e., accommodations and entertainment that judges are treated to personally by their friends – which does not have to be reported on annual financial disclosures under certain contexts.

    The Supreme Court’s critics note that, even if Thomas was not technically in violation of the rules, his pattern of accepting – and not reporting – lavish experiences such as skybox tickets to major sporting events and far-flung trips on mega-yachts shows that the high court cannot be trusted to police itself under the current standards. Some argue that more stringent ethical reforms – perhaps in the form of legislation – are needed.

    Further complicating the picture is that the regulations laying out when personal hospitality need not be reported have recently been tightened. Thomas’ defenders have pointed to those changes, announced earlier this year, to argue that the old regime did not require the justice to report the types of hospitality now under scrutiny. Thomas himself – in a rare statement released in April, when ProPublica published its first investigation into the extravagant travel perks he has received – noted that reworked ethical guidance and vowed to follow it going forward.

    But assessing whether the gifts and hospitality described in the latest ProPublica report – which puts the tally at 38 destination vacations, 26 private jet flights, eight helicopter trips and a dozen VIP tickets to sporting events – would require disclosure, either then or under the tightened rules, is a complicated question. It sometimes depends on details about how the high-end trips were financed that were not fully fleshed out by the report.

    “The question is: Who is absorbing the cost?” said Stephen Gillers, a New York University School of Law professor who has written extensively about legal ethics and rules.

    Thomas is not the only justice who has engaged in such jet-setting. When Justice Samuel Alito was the subject of a ProPublica report detailing a 2008 private flight he took to Alaska on a plane owned by a GOP megadonor, he argued in a preemptive essay published by Wall Street Journal’s opinion section that he was not required to disclose it under ethics rules in place at the time. Alito claimed that plane trip fit the definition of “facility” in the requirements’ exemptions for personal hospitality extended to judges “on property or facilities owned by (a) person”

    Ethics experts have pushed back on the idea that a private flight could be interpreted to fall under the term “facility.” The new guidance announced in March makes clear that going forward, private plane trips cannot be excluded from the reporting requirements because “substitutes for commercial transportation” are not part of the exemptions.

    ProPublica’s latest report, published Thursday, surfaces several helicopter trips that Thomas took apparently at the expense of his billionaire benefactors. Even under the new guidance, there could be some argument that certain helicopter trips may not require disclosure, according to Gillers, who gave the example of a helicopter ride over the Grand Canyon.

    Since such a ride would not be a replacement of a commercial flight, but instead a form of entertainment offered by a friend, disclosure could potentially be avoided. But another key question, under the new guidance, is whether the helicopter ride was being paid for personally by the friend of the judge.

    The new guidance states that accommodations offered to a judge that are not paid for out of the personal pocketbook of an individual – but through a third-party entity, which could include the friend’s company or another business – would require disclosure. If the person footing the cost is seeking a tax deduction for the expense of the accommodation or gift, that would also trigger a judge’s reporting requirement.

    Justice Roberts wrote ‘condescending’ letter to Senate when asked to testify about ethics

    That means if the helicopter rides described in the ProPublica report – which Thomas occasionally enjoyed in the mid-2000s because of his friendship with the late corporate titan Wayne Huizenga – were on a helicopter owned by Huizenga’s business, Thomas would have to disclose them under the new rules. Even if Huizenga owned the helicopter personally, if he put the cost of the rides toward a tax exemption, that would also mean Thomas’ helicopter jaunts would fall outside of the exemptions.

    Thomas’ friendships with oil baron Paul “Tony” Novelly and real estate mogul Harlan Crow have led to the billionaires hosting him on their mega-yachts. Those trips have included ventures with Novelly in the Bahamas and island-hopping with Crow in Indonesia. Since Thomas presumably was sleeping on the yachts, he can argue they’re covered by the disclosure exception for accommodations personally offered by friends.

    “Thomas could say that, just as a weekend at a country home at the invitation of a friend is personal hospitality, a week on my friend’s yacht is also personal hospitality. It’s just that one is on the land and one is on the water,” Gillers said.

    Another area of scrutiny in the new ProPublica report is tickets to major sporting events – often for skybox seats – that Thomas received from his wealthy friends. Government ethics experts quoted in the story raised the disclosure requirement for gifts valued at more than $415 as potentially problematic for Thomas.

    However, according to Gabe Roth, who heads the organization Fix the Court, the ethics questions over the tickets hinge more on the entertainment exemption for judges when they are receiving personal hospitality.

    “You could make the argument that sporting tickets count as entertainment,” said Roth, whose group advocates for ethics reform and more transparency in the judiciary.

    Thomas is not the only justice who has failed to report sporting event tickets on their disclosures. Justice Elena Kagan attended a University of Wisconsin football game – sitting in the Chancellor’s Box – in 2017 that went unreported on her disclosure for that year, according to a Fix the Court review.

    Still, ProPublica points to the example of 60 lower court judges who reported sporting event tickets on their annual forms between 2003 and 2019.

    It is a particularly complicated endeavor to decipher Thomas’ reporting obligations for the access he reportedly got, via his friendship with Huizenga, to an exclusive Florida golf course. The report describes a “standing invitation” Thomas had to the members-only course, the Floridian, but ProPublica said it was not clear whether Thomas was granted a full-fledged membership or whether he was just able to visit the course as a guest of Huizenga.

    However, there are signs pointing toward disclosure for judges who do receive gifted golf club memberships. In his filing for 2008, Chief Justice John Roberts reported honorary memberships to two golf courses – valued in the thousands of dollars – that he was gifted, while even noting in the disclosure forms that he didn’t use the memberships.

    “If that’s John Roberts’ interpretation of the federal disclosure law, I am going to side with him on this,” Roth said.

    The latest investigation into Thomas’ conduct also hit on an issue that has emerged around several of the justices: whether their activity with certain charities and other organizations violates ethical standards limiting judges’ participation in fundraising.

    ProPublica, piggybacking off recent reporting by The New York Times, dug into Thomas’ involvement with the Horatio Alger Association, which offers scholarships and mentorships to students, and which connected Thomas to some of the billionaire benefactors highlighted in the report.

    Thomas, according to The Times and ProPublica, facilitated events for the organization that were hosted at the Supreme Court, with the latest investigation reporting that access to one such event cost $1,500 or more in contributions per person.

    Under a set of ethics rules for the judiciary that are separate from the financial disclosure requirements, judges are barred from allowing the “prestige” of their office to be used for the purpose of fundraising.

    “You can attend an event of an organization, a non-profit that serves as a fundraiser,” Gillers said. “But the justice or judge cannot be identified as an attraction for people to come and donate money.”

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  • The ultra-wealthy have dangerous pastimes. Who pays when they need saving? | CNN Business

    The ultra-wealthy have dangerous pastimes. Who pays when they need saving? | CNN Business

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    New York
    CNN
     — 

    Throughout history, humans have proved incapable of resisting the allure of the Earth’s extremes — its tallest mountains, deepest oceans, even the outer limits of its atmosphere.

    And as technology has evolved, a sprawling industry of extreme tourism has emerged to give people — mostly wealthy people — a chance to stare down death with a considerable safety net. For the right price, you can ascend or descend to the planet’s nooks and crannies, briefly occupying spaces that only a handful of people in history have ever been, or will ever be.

    Of course, even the best, most expensive safety net can fail.

    This week’s catastrophic implosion of the OceanGate submersible Titan killed all five of its passengers, many of whom paid a quarter of a million dollars for the opportunity to travel two miles below the water’s surface. Across the globe, on Mount Everest, where guided trips cost tens of thousands of dollars at minimum, 17 people have died or are missing in what is likely to be the deadliest season on the mountain in recorded history. This past spring, five people, including 56-year-old Czech billionaire Petr Kellner, died in a crash while heliskiing in Alaska.

    Submersible travel, high-altitude mountaineering and heliskiing share little in common apart from two facts: They are taken up primarily by the wealthy, and they have a very narrow margin for error. And when people need saving in some of the world’s most unforgiving places, those rescue costs can add up, fast.

    You might imagine that the prospect of an adventure with a higher-than-normal chance of killing you would be a turn-off. But for many well-heeled travelers, the risk is precisely the point.

    “Part of the appeal of Everest — and I think it’s the same for the Titanic, going into space, or whatever — is risk,” said Lukas Furtenbach, founder of mountaineering firm Furtenbach Adventures.

    “And I think as long as people die in these places, it’s part of the reason people want to go there,” said Furtenbach, whose company offers a $220,000 premium option to climb Mount Everest with unlimited oxygen and one-on-one guidance.

    After an especially deadly season, Furtenbach says, demand for the following season tends to spike.

    Permits for Everest increased significantly in the years after 1996, a season that ended the lives of 12 climbers and became the subject of international media attention, including the bestselling book “Into Thin Air” by Jon Krakauer.

    “Every catastrophic season — I would say an average of every three to five years — we can see a big increase of permits issued,” Furtenbach says.

    The summit of Mount Everest, seen in March 2023.

    “If climbing Everest would be 100% safe, I think this would be the end of the adventure.”

    Similarly, this week’s tragedy in the North Atlantic appears unlikely to curb demand for deep-sea visits to the Titanic. On the contrary, its global prominence may fuel interest.

    Philippe Brown, founder of luxury travel firm Brown and Hudson, said his firm still has a long waitlist for its Titanic tours, which it runs in partnership with OceanGate, the sub operator behind the Titan.

    “We sense no particular anxiety, no one has canceled anything so far, and inquiries for our services have increased,” Brown said. “We have seen a significant uptick in requests” for memberships, which cost between $12,000 and $120,000 a year.

    The search for the Titan brought international media attention, and with that, potential explorers got a reminder of the potential to see the Titanic firsthand. Brown said that travelers may become more interested now because they anticipate that the incident will prompt greater regulation and improved technology.

    “Sadly, sometimes tragedies are the catalysts to progress.”

    Ethical debates among adventurists and academics have raged for decades about how, and even whether, rescue missions should be carried out for wayward travelers.

    When the Titan went missing Sunday, it prompted a massive search operation led by the US Coast Guard with French and Canadian authorities. US officials haven’t commented publicly on the cost of the five-day mission, though experts estimate the figure is in the millions.

    “When things go awry for the traveler at places of so-called extreme tourism, then the financial cost of rescue and remedy often falls to the emergency services or the charities that are tasked with helping people,” said Philip Stone, director of the Institute for Dark Tourism Research at the University of Central Lancashire.

    In the case of significant rescue missions, such as the Titan sub incident, “which will run into millions of dollars,” taxpayers will ultimately pick up the bill, he said.

    “Governments are tasked with protecting lives, and despite the folly of some individuals diving to see the Titanic in an unregulated vessel, these lives are worth saving,” Stone added.

    In the United States, neither the Coast Guard nor the National Park Service charge the people for their rescue. But some states such as New Hampshire and Oregon will compel hikers who are rescued from state parks to foot the bill for their own rescue, in part to deter inexperienced tourists from venturing too far off the beaten path.

    Part of the reason for that, one retired Coast Guard member told Insider this week, is that in a life-or-death situation, worrying over the potential cost of rescue shouldn’t weigh on anyone’s decision to call for help.

    Should people be prevented from taking on such incredible risk if it raises the possibility of an expensive rescue? Victor Vescovo, a private equity investor and retired naval officer, doesn’t think so.

    “Just because it’s expensive, and it’s out of the reach of most people, doesn’t mean it’s in any way a negative thing,” said Vescovo, a prominent undersea explorer who has helped design and build submersibles. “And I think it’s very difficult to judge people on how they spend money that they may have worked their whole lives to accumulate to use as they see fit.”

    Not all deep-sea exploration is dangerous, nor is there anything inherently wrong with wealthy people splurging on high-risk adventures, he said.

    “No one talks about people spending thousands of dollars to go to amusement park destinations or other tourist locations,” Vescovo said. “This is just more extreme.”

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  • Elon Musk and Mark Zuckerberg say they’re ready for a cage fight | CNN Business

    Elon Musk and Mark Zuckerberg say they’re ready for a cage fight | CNN Business

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    London
    CNN
     — 

    Business rivalry seemingly isn’t enough for two of the tech industry’s most powerful billionaires. Now Elon Musk and Mark Zuckerberg say they want to settle their scores in a cage fight.

    Twitter owner and Tesla

    (TSLA)     CEO Musk recently tweeted that he would be “up for a cage fight” with Zuckerberg, the CEO of Meta. In an Instagram story Wednesday, Zuckerberg fired back by posting a screenshot of Musk’s tweet overlaid with the caption: “Send Me Location.”

    Musk then responded to a tweet about the fight by Alex Heath, editor of tech news website Verge, with “Vegas Octagon” — a reference to the Las Vegas arena that hosts the Ultimate Fighting Championship.

    “I have this great move that I call ‘The Walrus,’ where I just lie on top of my opponent & do nothing,” he added in a separate tweet.

    CNN has contacted Meta for comment. A spokesperson for the company told Verge: “The [Instagram] story speaks for itself.”

    It remains unclear whether Zuckerberg and Musk are serious or having a laugh.

    Quite who would win in a cage fight, however, remains to be seen. Musk is physically bigger than Zuckerberg, but the Meta chief practices jiu-jitsu, the Brazilian martial art, and won gold and silver in a tournament in May.

    Oddspedia, a sports betting platform, collated odds from several different bookmakers, including Bovada, Bet Online and Ladbrokes, and concluded that Zuckerberg has an 83% chance of winning the fight.

    Meanwhile, bookmaker Paddy Power is betting the match never happens, but that if it does, both men have an equal chance of winning.

    “If this fight does actually go ahead, with a bit of luck, they’ll both knock some sense into each other,” a spokesperson for the Irish company said in a statement.

    The two — who in the past jostled for a high spot on the Bloomberg Billionaires Index before Musk became the world’s richest man — have clashed before.

    In 2017, they engaged in a very public feud over the future of artificial intelligence.

    Musk had repeatedly warned about the dangers of AI, describing it as a potentially existential threat to the human race. Zuckerberg, on the other hand, took a much more optimistic view.

    During a Facebook Live broadcast at the time he dismissed “naysayers” who sketched out “doomsday scenarios” as being “pretty irresponsible.”

    Musk shot back shortly afterward, tweeting: “I’ve talked to Mark about this. His understanding of the subject is pretty limited.”

    Musk knocked Zuckerberg from the number three spot on the Bloomberg Billionaires Index in 2020, before becoming the richest person in the world soon after that.

    He was briefly ousted from the top spot in December by Bernard Arnault, the chairman of French luxury goods giant LVMH

    (LVMHF)    , before reclaiming his title in May. Zuckerberg is now in the 10th position.

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  • Big banks are bidding for troubled First Republic as FDIC deadline looms | CNN Business

    Big banks are bidding for troubled First Republic as FDIC deadline looms | CNN Business

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    New York
    CNN
     — 

    Federal regulators are holding an auction for ailing regional bank First Republic, a person familiar with the matter tells CNN.

    Final bids are due for First Republic Bank at 4 p.m. ET on Sunday, the source said.

    The Federal Deposit Insurance Corporation, the independent government agency that insures deposits for bank customers, is running the auction.

    Neither First Republic nor the FDIC were immediately available for comment.

    Shares of First Republic

    (FRC)     plunged from $122.50 on March 1 to around $3 a share as of Friday on expectations that the FDIC would step in by end of day and take control of the San Francisco-based bank, its deposits and assets. But that never happened.

    The FDIC had already done so with two other similar sized banks just last month — Silicon Valley Bank and Signature Bank — when runs on those banks by their customers left the lenders unable to cover customers’ demands for withdrawals.

    The Wall Street Journal previously reported that JPMorgan Chase and PNC Financial are among the big banks bidding on First Republic in a potential deal that would follow an FDIC seizure of the troubled regional bank.

    PNC declined to comment. JPMorgan did not respond to requests for comment.

    “We are engaged in discussions with multiple parties about our strategic options while continuing to serve our clients,” First Republic said in a statement Friday night.

    If there is a buyer for First Republic, the FDIC would likely be stuck with some money-losing assets, as was the case after it found buyers for the viable portions of SVB and Signature after it took control of those banks.

    A kind of shotgun marriage, arranged by regulators who didn’t want a significant bank to end up in the hands of the FDIC before it was sold, occurred several times during the financial crisis of 2008 that sparked the Great Recession. Notably, JPMorgan bought Bear Stearns for a fraction of its earlier value in March of 2008, and then in September bought savings and loan Washington Mutual, soon after Bank of America bought Merrill Lynch.

    The failure of Washington Mutual in 2008 was the nation’s largest bank failure ever. First Republic, which is bigger than either SVB or Signature Bank, would be the second largest.

    Soon after collapses of SVB and Signature in March, First Republic received a $30 billion lifeline in the form of deposits from a collection of the nation’s largest banks, including JPMorgan Chase

    (JPM)    , Bank of America

    (BAC)    , Wells Fargo

    (WFC)    , Citigroup

    (C)     and Truist

    (TFC)    , which came together after Treasury Secretary Janet Yellen intervened.

    The banks agreed to take the risk and work together to keep First Republic flush with the cash in the hopes it would provide confidence in the nation’s suddenly battered banking system. The banks and federal regulators all wanted to reduce the chance that customers of other banks would suddenly start withdrawing their cash.

    But while the cash allowed First Republic to make it through the last six weeks, its quarterly financial report Monday evening, with the disclosure of massive withdrawals by the end of March, spurred new concerns about its long-term viability.

    The financial report showed depositors had withdrawn about 41% of their money from the bank during the first quarter. Most of the withdrawals were from accounts with more than $250,000 in them, meaning those excess funds were not insured by the FDIC.

    Uninsured deposits at the bank fell by $100 billion during the course of the first quarter, a period during which total net deposits fell by $102 billion, not including the infusion of deposits from other banks.

    The uninsured deposits stood at 68% of its total deposits as of December 31, but only 27% of its non-bank deposits as of March 31.

    In its earnings statement, the bank said insured deposits declined moderately during the quarter and have remained stable from the end of last month through April 21.

    Banks never have all the cash on hand to cover all deposits. They instead take in deposits and use the cash to make loans or investments, such as purchasing US Treasuries. So when customers lose confidence in a bank and rush to withdrawal their money, what is known as a “run on the bank,” it can cause even an otherwise profitable bank to fail.

    First Republic’s latest earnings report showed it was still profitable in the first quarter — its net income was $269 million, down 33% from a year earlier. But it was the news on the loss of deposits that worried investors and, eventually, regulators.

    While some of those who had more than $250,000 in their First Republic accounts were likely wealthy individuals, most were likely businesses that often need that much cash just to cover daily operating costs. A company with 100 employees can easily need more than $250,000 just to cover a biweekly payroll.

    First Republic’s annual report said that as of December 31, 63% of its total deposits were from business clients, with the rest from consumers.

    First Republic started operations in 1985 with a single San Francisco branch. It is known for catering to wealthy clients in coastal states.

    It has 82 branches listed on its website, spread across eight states, in high-income communities such as Beverly Hills, Brentwood, Santa Monica and Napa Valley, California; in addition to San Francisco, Los Angeles and Silicon Valley. Outside of California, branches are in other high-income communities such as Palm Beach, Florida; Greenwich, Connecticut; Bellevue, Washington; and Jackson, Wyoming.

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  • Opinion: Why millionaires like us want to pay more in taxes | CNN

    Opinion: Why millionaires like us want to pay more in taxes | CNN

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    Editor’s Note: Abigail Disney is an Emmy-winning documentary filmmaker, activist, and member of the Patriotic Millionaires. Her latest film, “The American Dream and Other Fairy Tales,” co-directed with Kathleen Hughes, made its world premiere at the 2022 Sundance Film Festival. Morris Pearl is the chair of Patriotic Millionaires, and former managing director of BlackRock. The opinions expressed in this commentary are their own. View more opinion on CNN.



    CNN
     — 

    Tuesday is Tax Day in America, one of the most stressful days of the year, when many taxpayers will finally end their procrastination, file their federal returns, and hope for a refund from the IRS. But for many of the nation’s wealthiest, it’s just another Tuesday.

    Morris Pearl

    Tax Day isn’t just a filing deadline — it’s also an annual reminder that the ultra-rich exist in an entirely separate world when it comes to taxes. For us, the loopholes are bigger and the rates are sometimes lower. Meanwhile, the rich keep getting richer, with the wealth of billionaires in particular growing by more than $1.5 trillion over the last few years.

    This status quo is unfair, but even more importantly, it’s unsustainable. Such high levels of inequality are pushing our economy and our democracy to their breaking points. That’s why we should examine how we can set our country up for long-term stability and prosperity. And we should start by ensuring that the ultra-rich pay more of what they owe the country that made their success possible.

    There are three changes to the tax code that would help us do just that:

    Right now, the US tax system values money over sweat. If you work hard for your money instead of earning it passively, you’re essentially penalized for it. People who earn a salary pay significantly higher tax rates on their income than wealthy investors who passively earn capital gains income.

    Inheriting money is an even better deal. Thanks to former president Donald Trump’s 2017 tax law, the first $12.92 million (or $25.84 million for a married couple) is completely exempt from any estate tax, and the stepped-up basis loophole allows wealthy families to permanently erase millions in capital gains taxes by resetting the market value of those assets to their value at the time of the original owner’s death. With this, it becomes relatively simple for the rich to inherit tens, even hundreds of millions of dollars, and pay almost nothing in taxes. Someone working for that money, on the other hand, would pay over a third of it in federal income taxes.

    Why do we have a tax code that says working people should be taxed more than wealthy investors and those who got rich just by virtue of being born into the right family? At the end of the day, money is money, whether you worked for it or whether you inherited it. As an heiress and an investor, we should not be paying lower tax rates than people who earn their money from working.

    It’s time for the tax code to treat all income equally by taxing all capital gains over $1 million at the same rates as ordinary income, and replacing our loophole-ridden estate tax with a simpler inheritance tax that treats inherited wealth as income.

    We can’t just focus on income, however, because many of the richest Americans earn basically no taxable income of any kind in a typical year. Capital gains are only taxed when assets are sold, so instead of selling them, the ultra-rich use their assets as collateral to borrow vast sums of money at extremely low interest rates to live on, and then declare little or even negative “income” on their tax forms. This “Buy, Borrow, Die” strategy is a major reason billionaires paid a lower effective tax rate over recent years than working-class families.

    By rethinking what is taxable, we can get access to the trillions of dollars of billionaire wealth that is untouchable under our current tax structure. That’s why President Biden has proposed the Billionaire Minimum Income Tax, which would tax the unrealized capital gains of the wealthiest households and why others have proposed wealth taxes on billionaires.

    Finally, one of the most straightforward changes needed is to simply tax the extremely rich more than the merely rich. Our income tax caps out at a top rate of 37% for any income over $578,125 (or $693,750 for married couples). No matter how much more someone makes, they’ll never pay more than 37% in federal income taxes.

    While someone earning $600,000 is certainly making enough to live a very comfortable life, they’re in a different world than someone making $600 million a year. In order to reflect the real differences between the rich and the ultra-rich, we need to return to the top rates we had through the most prosperous decades of the 20th century and add significantly more tax brackets. They should reach up to 90% for people making more than $100 million a year.

    These three changes certainly won’t fix all our country’s problems on their own, but they would go a long way in stopping the steady flow of our country’s wealth toward a smaller and smaller group of people, a change that would make both our democracy and our economy more stable. The tax code can be a powerful tool for both social and economic change. We just need to use it more effectively.

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  • Quit Your Bucket List

    Quit Your Bucket List

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    Years ago, just after I finished my psychiatry residency, a beloved supervisor called to say she had some bad news. At a routine checkup, she had glanced at her chest X-ray up on the viewing box while waiting for her doctor to come into the room. She was a trauma surgeon before becoming a psychiatrist and had spent years reading chest X-rays, so she knew that the coin-size lesion she saw in her lung was almost certainly cancer, given her long history of smoking.

    We had dinner soon after. She was still more than two years away from the end of her life and felt physically fine—vital, even. That’s why I was so surprised when she said she had no desire to spend whatever time she had left on exotic travel or other new adventures. She wanted her husband, her friends, her family, dinner parties, and the great outdoors. “Just more Long Island sunsets. I don’t need Bali,” she told me.

    At the end of life, you might expect people to feel regret for all the things they wanted to do and never made time for. But I have yet to know a patient or friend who, facing the blunt fact of their own mortality, had anything close to a bucket list. This squares with some recent research that shows that people tend to prefer familiar experiences more when they are reminded that their days are limited. The people I know even regretted the novelty they’d chased along the way, whether it was recreational-drug use or dating exciting people who they knew weren’t relationship material.

    Deathbed pronouncements can have limited applications for the rest of life, but this pattern suggests that novelty is perhaps overrated. Chasing the high of new sensations simply isn’t appealing for many people, and can sometimes even be bad for our health. I suspect that’s because, too often, the pursuit of novelty requires sacrificing the things we already know we love.

    It’s a common misconception that people who don’t have a taste for the newest, sexiest experience are dull, incurious, and unimaginative. A 2002 study found that people will switch away from their favorite, habitual choices when they know others are watching in order to avoid being judged as narrow-minded. And yet, Warren Buffett notoriously eats breakfast at the same fast-food restaurant every day and sticks to a strict work schedule. Taylor Swift’s music can be redundant and predictable. Barack Obama is famous for his strict morning exercise regime and daily reading time.

    Even when they’re not facing death, many people just don’t seem to like novelty that much. In 2017, a poll by a British soup company found that 77 percent of U.K. workers had consumed the exact same lunch every day for nine months and that one in six people had done so for at least two years. You might think it’s just a matter of convenience or economic exigency (the study didn’t say), but I’m not so sure; wealthy people I know partake in similar behavior, even if they do it at a fancy restaurant. Consider, too, that when people lose a pet, many run out and get a replacement of the same breed with a similar temperament. They repeatedly date people with the same quirks and problems. They return to a favorite vacation spot. They listen to the same musical artists and styles time and again.

    Read: The people who eat the same meal every day

    Research shows that humans have an intrinsic preference for things and people they are familiar with, something called the mere exposure effect. Several studies have shown that people who listen to unfamiliar songs repeatedly grow fonder of the songs they hear most  by the end of the experiment, even if they did not initially like them very much. You don’t even have to be aware that you’re growing used to something for the effect to work.

    This tendency toward repetition may seem natural, even lazy, but it runs counter to much of our history. We, along with other animals, evolved to be exquisitely sensitive to novel experiences. Way back in the Paleolithic era, there was a clear survival advantage to being attuned to new situations, which could lead someone to a potential mate or a piece of mastodon, or reveal a deadly threat. Nowadays, though, with every conceivable reward—food, sex, drugs, emotional validation, you name it—either a click, tap, or ChatGPT query away, conventional novelty-seeking has lost much of its adaptive advantage.

    As Arthur Brooks has written in The Atlantic, novelty can be fun and exciting. New and unexpected experiences activate the brain’s reward pathway more powerfully than familiar ones, leading to greater dopamine release and a more intense sense of pleasure. But on its own, excitement won’t bring about enduring happiness. Human beings habituate rapidly to what is new. To achieve a lifetime of stimulation, you would have to embark on an endless search for the unfamiliar, which would inevitably lead to disappointment. Worse, the unfettered pursuit of novelty can lead to harm through excessive thrill-seeking—including antisocial behavior such as reckless driving—particularly when the novelty seeker has poor impulse control and a disregard for others.

    Read: Don’t approach life like a picky eater

    There’s a better way. Research shows that when novelty-seeking is paired with persistence, people are far more likely to be happy, probably because they are able to achieve something meaningful. You might, for example, take a variety of courses in college or try different summer internships if you’re not yet sure what interests you. When one really clicks, you should explore it in depth; it might even become a lifelong passion. This principle relates to less consequential pleasures, too: If you’re checking out a new neighborhood joint, consider ordering different things during your first few visits, then picking your favorite and sticking with it.

    Novelty-seeking is most valuable when you use it as a tool to discover the things and people you love—and once you find them, go deep and long with those experiences and relationships. The siren call that tells you there might be a new and better version of what you already have is likely an illusion, driven by your brain’s relentless reward pathway. When in doubt, pick a beloved activity over an unfamiliar one.

    This golden rule of novelty may help explain why some people at the end of their life regret having spent so much time exploring new things, even if they once brought fleeting pleasure. Age, too, might partly explain this feeling, because older people tend to be less open to new experiences. But that’s probably not the whole story. My colleagues who treat children and adolescents have mentioned that, in the face of life-threatening diagnoses, even young people prefer the familiar. They do so not only because the familiar is known and safe, but because it is more meaningful to them. After all, things become familiar to us because we choose them repeatedly—and we do that because they are deeply rewarding.

    Read: Make a to-don’t list

    Imagine, just for a moment, that your death is near. What might you miss out on if you put your bucket list on hold? Sure, you won’t make it to Bali or Antarctica. But maybe instead you could fit in one last baseball game with your kids, one last swim in the ocean, one last movie with your beloved, one last Long Island sunset. If you prioritize the activities and people you already love, you won’t reach the end of your life wishing you’d made more time for them.

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    Richard A. Friedman

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  • One of China’s richest women takes over for her father at real estate developer Country Garden | CNN Business

    One of China’s richest women takes over for her father at real estate developer Country Garden | CNN Business

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    Hong Kong
    CNN
     — 

    One of China’s richest women has fully taken over Country Garden, a top real estate developer, after her father resigned, which added to a string of prominent entrepreneurs retreating from their posts during a historic downturn in the property market.

    Yang Huiyan succeeded her father Yang Guoqiang as chairman of the company that he founded, according to a Wednesday filing to the Hong Kong stock exchange, which said the appointment took effect the same day.

    Yang, 68, also known as Yeung Kwok Keung in Cantonese, had tendered his resignation from the position of chairman “due to age,” the statement said.

    The elder Yang was a farmer and construction worker before he founded Country Garden in 1992. In little more than a decade, he grew the firm into one of the largest real estate developers in the country.

    The company boasted a record-setting $1.7 billion IPO in Hong Kong in 2007. Last year, Country Garden was China’s No 1 developer by sales, which reached $67 billion.

    The younger Yang has served as a co-chairman of the company since 2018 and jointly managed the day-to-day operations with her father.

    Yang Huiyan, center, attends an alumni event in the city of Foshan in Guangdong province in June 2016.

    Yang, 41, had a net worth of $9.2 billion as of Thursday, according to the Bloomberg Billionaires Index. That placed her as China’s second richest woman, behind only Wu Yajun, the 59-year-old founder of Longfor Properties, who has a fortune of $9.7 billion.

    Yang Huiyan’s wealth comes mainly from her majority stake in Country Garden, which was largely transferred to her by her father in 2005, two years before the company’s IPO.

    Yang’s father resigned at a time when China’s property market is mired in a historic downturn.

    The real estate sector has been lurching from one crisis to another since 2020, when Beijing started cracking down on excessive borrowing by developers to rein in their high debt. A debt crisis hit the industry after Evergrande, the second largest property developer in China, suffered a severe cash crunch and defaulted on its debt in late 2021.

    Since then, a number of cash-strapped developers have sought protection from creditors.

    Country Garden’s stock price has lost more than half of its value in the past year.

    An aerial view of a residential project developed by Country Garden in Zhenjiang city in eastern China's Jiangsu province in October 2021.

    Home sales have plummeted alongside buyer confidence. Sentiment cooled even further last year after thousands of home buyers refused to continue paying mortgages on unfinished properties. The crash in the real estate market has dealt a blow to the finances of local governments, which rely heavily on land sales revenue.

    Authorities have shifted policy to rescue the industry, including easing restrictions on borrowing for developers and rolling out loans. But the recovery seems to be slow.

    Yang Guoqiang’s resignation is the latest in a string of departures by prominent property entrepreneurs.

    In November, Zhang Lei, founder and chairman of Modern Land, resigned from his positions at the company. Modern Land is a major developer based in Beijing building energy-saving homes throughout the country.

    In October, Wu Yajun, founder and chairwoman of Longfor Properties, stepped down due to health and age reasons, the company said.

    In September, Pan Shiyi and his wife Zhang Xin quit their roles as chairman and CEO of Soho China, a Beijing-based developer.

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  • Elon Musk is the richest person in the world again | CNN Business

    Elon Musk is the richest person in the world again | CNN Business

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    CNN
     — 

    Elon Musk has reclaimed the title of the richest person in the world, per Bloomberg’s tally.

    The Tesla CEO was unseated from the top spot by Bernard Arnault, CEO of French luxury brand LVMH

    (LVMHF)    , in December of last year, making Musk No. 2 on the list for more than two months. As of Monday, however, Bloomberg reports that a rally in Tesla stock has lifted Musk back to the top of its real-time Billionaires Index.

    Musk’s net worth was some $187.1 billion as of Monday after markets closed, according to Bloomberg, just topping the $185.3 billion fortune of Arnault.

    While Tesla

    (TSLA)     stock declined steeply last year amid Musk’s problem-plagued acquisition of Twitter and a broader market downturn in tech, shares for the electric vehicle maker have since surged in 2023.

    Musk might hold the current title of the richest person in the world, but he also holds a record for the biggest fortune ever lost by anyone in history. Late last year, Musk became the first person ever to lose $200 billion in wealth — after his net worth slid from some $340 billion in Nov. 2021 to $137 billion in Dec. 2022.

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  • Elon Musk donated $1.9 billion of Tesla stock to charity last year | CNN Business

    Elon Musk donated $1.9 billion of Tesla stock to charity last year | CNN Business

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    New York
    CNN
     — 

    Tesla CEO Elon Musk gave 11.5 million shares of his stake in the electric automaker to an undisclosed charity last year, shares worth about $1.9 billion at the time they were donated.

    The donation would make him the second largest charitable donor in 2022, according to a ranking of the Chronicle of Philanthropy, which was compiled before Musk’s filing. The Chronicle’s ranking lists Bill Gates as No. 1 with $5.1 billion in donations, followed by Michael Bloomberg at $1.7 billion.

    Musk’s net worth at the end of 2022 stood at $137 billion, according to Forbes’ real time billionaire tracker, so the $1.9 billion represented about 1.4% of his net worth at that time.

    Musk’s 2022 donations are down from the estimated value of his donations reported for 2021, when he reported that he had given 5 million Tesla

    (TSLA)     shares, then worth an estimated $5.7 billion, at the end of that year. A three-for-one stock split in Tesla

    (TSLA)     shares in August of last year means the number of shares he donated in 2021 was also 30% greater than his 2022 donations, on a split-adjusted basis.

    Musk’s donations in 2021 also were to an undisclosed charity. They came at a time that he had been challenged by David Beasley, the UN food program director, to donate $6 billion to battle global hunger. Beasley had said a donation of that size could feed more than 40 million people across 43 countries that are “on the brink of famine.” Musk responded on Twitter at that time if the World Food Program “can describe on this Twitter thread exactly how $6B will solve world hunger, I will sell Tesla stock right now and do it.”

    Musk’s 2021 donation of Tesla shares came soon after that exchange, but there was never any confirmation as to where the shares went to.

    The most recent donation of shares represented 1.6% of Musk’s stake in the company at the end of last year when considering both shares he held outright and the vested options he holds to purchase additional shares.

    Since the end of the year he had another 25.3 million options vest when the company achieved certain financial goals, a grant the company had already said was probable to take place. So Musk made the donation knowing that he would soon receive options to buy twice a many shares at a nominal price.

    Musk did sell a far larger portion of his Tesla stake in the last 18 months than he has donated. First he sold $16.4 billion worth of Tesla stock in 2021, with most going to to pay a large income tax bill he faced for exercising options in 2021 before they expired. Then in 2022 he sold $22.9 billion worth of Tesla shares as he raised cash for his purchase of Twitter.

    Tesla shares had their worst year on record in 2022, losing 65% of their value. The drop in share price knocked him out of position as the world’s richest person. But after a rough start to this year, they’ve rebounded nicely in 2023, rising 70% year-to-date. Given Tuesday’s closing price, the 11.5 million shares that Musk donated last year are worth $2.4 billion.

    Musk is now the second richest person on the planet, behind Bernard Arnault, the chairman of French luxury goods giant LVMH, according to an estimate by Forbes’ real time billionaire tracker, with a net worth of about $196.5 billion.

    The typical US household has a net worth of about $121,700, according to the most recent estimate from the Federal Reserve. So the $2.4 billion current value of Musk’s donations last year, compared to his current net worth, is the equivalent of that typical family donating $1,500, or just less than $30 a week.

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  • Adani will ask Big 4 accounting firm for a ‘general audit,’ says TotalEnergies | CNN Business

    Adani will ask Big 4 accounting firm for a ‘general audit,’ says TotalEnergies | CNN Business

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    London
    CNN
     — 

    One of Gautam Adani’s biggest international partners, TotalEnergies

    (TOT)    , said Friday that his Indian conglomerate is preparing to appoint a global accounting firm to conduct a “general audit” of its business.

    In a statement detailing what it described as its “limited” exposure of $3 billion to Adani Group businesses, the French company said it “welcomes the announcement by Adani to mandate one of the ‘big four’ accounting firms to carry out a general audit.”

    Investors have been fleeing Adani’s companies since a US short seller, Hindenburg Research, accused the group of fraud and stock market manipulation last month. Adani has denied the allegations but shares in Adani Enterprises, his flagship firm, have lost more than 60% since they surfaced last week. In total, Adani Group companies have lost $110 billion in market value.

    One of the world’s biggest energy companies, TotalEnergies is exposed to Adani via investments in four joint ventures in India.

    Adani Group declined to comment on whether it was planning to appoint one of the Big 4 accounting firms as auditor. CNN contacted the four auditors — Deloitte, EY, KPMG and PwC — but none of them responded immediately to a request for comment.

    Adani Enterprises used a small Indian firm called Shah Dhandharia & Co to audit its 2021-2022 accounts, according to its annual report. A document on Adani Enterprises’ website dated January 13, 2023, also names Shah Dhandharia as “statutory auditors” and provides the firm’s website address.

    The address now appears invalid. In its report, Hindenburg Research said historical archives of the firm’s website showed that it had only four partners and 11 employees.

    Trading in five listed Adani firms was halted Friday after they fell to daily limits set by the Indian stock exchange. They include Adani Total Gas and Adani Green Energy, ventures in which TotalEnergies has invested.

    In its statement, the French energy giant said it had made investments in Adani’s entities “in full compliance” with Indian laws and with its own internal governance processes. The due diligence had been completed to its “satisfaction” and was “consistent with best practices,” it added.

    The confident tone stands in stark contrast to the devastating allegations made by Hindenburg Research in its January 24 report. The Adani Group has denounced it as “baseless” and “malicious,” but analysts say the group hasn’t convincingly answered the questions raised by the report.

    Adani is seen as a close ally of India’s prime minister, Narendra Modi, and is one of the world’s richest people. Last week, he had a net worth of $120 billion, making him the fourth-richest person globally. His net worth has now fallen to a little more than $61 billion and claims the 21st spot on Bloomberg’s Billionaires Index.

    — Diksha Madhok in New Delhi and Anna Cooban in London contributed to this article.

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  • Gautam Adani fails to calm investors over market mayhem that wiped out billions | CNN Business

    Gautam Adani fails to calm investors over market mayhem that wiped out billions | CNN Business

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    New Delhi
    CNN
     — 

    Indian billionaire Gautam Adani tried to reassure investors on Thursday after he abruptly abandoned his flagship firm’s $2.5 billion share sale.

    “For me, the interest of my investors is paramount and everything is secondary,” the 60-year-old businessman said in a recorded video address. “Once the market stabilizes, we will review our capital market strategy.”

    This was the first time the tycoon has spoken about the stock market mayhem that has wiped billions off his logistics and energy business empire.

    A week-long meltdown in the value of Adani Group shares started when an American short seller accused the conglomerate of fraud. The group, which has seven listed companies, has lost more than $90 billion in market value in the week since Hindenburg Research published its report.

    Foreign banks have started to closely scrutinize the conglomerate. According to Bloomberg, Credit Suisse has stopped accepting bonds of Adani firms as collateral for margin loans to its private banking clients. The Swiss lender declined to comment on a CNN request for confirmation.

    Despite the turmoil, the group’s flagship company, Adani Enterprises, managed to issue new shares worth $2.5 billion on Tuesday. The capital raising exercise was touted as India’s biggest ever public offering by a listed company. After a tepid start, the offer was fully subscribed.

    A day later, though, Adani abandoned the deal. The shares have been trading considerably below the offer price since last week, meaning that investors in the capital raise were looking at immediate losses.

    “Hence to insulate the investors from potential losses we have withdrawn,” Adani said in the video. “This decision will not have any impact on our existing operations and future plans. We will continue to focus on timely execution and delivery of projects.”

    Adani added that his group’s fundamentals were “strong” and that it had an “impeccable track record of fulfilling our debt obligations.”

    In an investigation published on January 24, Hindenburg Research accused the Adani Group of “brazen stock manipulation and accounting fraud scheme over the course of decades.”

    The research firm also questioned the “sky-high valuations” of Adani firms and said their “substantial debt” put the entire group “on a precarious financial footing.”

    While the Adani Group had immediately denounced the report as “baseless” and “malicious,” the video address marked the first time the founder spoke about the crisis.

    But it wasn’t enough calm the markets. Shares in Adani Enterprises were down almost 9% in Mumbai, while shares in his other companies plunged 5% to 10%.

    Indian market regulators have not yet commented on the events of the past week. But, Reuters reported Wednesday that the Securities and Exchange Board of India (SEBI) was examining the stock price falls and also looking into any possible irregularities in Tuesday’s share sale, citing a source with direct knowledge of the matter.

    The scrapping of the share sale on Wednesday was a huge setback for one of India’s most prominent industrialists. Just a week ago, Adani’s sprawling group was worth over $200 billion, making him Asia’s richest man by a wide margin. At one point last year, he even overtook Jeff Bezos to become the second richest person in the world.

    On Wednesday, Adani lost his perch as Asia’s richest man, according to the Bloomberg Billionaire’s Index. He had a net worth of $72.1 billion, according to the index, behind Mukesh Ambani, who has a fortune of $81 billion.

    CNN’s Mark Thompson contributed to this report.

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  • Fact check: Biden makes false and misleading claims in economic speech | CNN Politics

    Fact check: Biden makes false and misleading claims in economic speech | CNN Politics

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    Washington
    CNN
     — 

    President Joe Biden delivered a Thursday speech to hail economic progress during his administration and to attack congressional Republicans for their proposals on the economy and the social safety net.

    Some of Biden’s claims in the speech were false, misleading or lacking critical context, though others were correct. Here’s a breakdown of the 14 claims CNN fact-checked.

    Touting the bipartisan infrastructure law he signed in 2021, Biden said, “Last year, we funded 700,000 major construction projects – 700,000 all across America. From highways to airports to bridges to tunnels to broadband.”

    Facts First: Biden’s “700,000” figure is wildly inaccurate; it adds an extra two zeros to the correct figure Biden used in a speech last week and the White House has also used before: 7,000 projects. The White House acknowledged his misstatement later on Thursday by correcting the official transcript to say 7,000 rather than 700,000.

    Biden said, “Well, here’s the deal: I put a – we put a cap, and it’s now in effect – now in effect, as of January 1 – of $2,000 a year on prescription drug costs for seniors.”

    Facts First: Biden’s claims that this cap is now in effect and that it came into effect on January 1 are false. The $2,000 annual cap contained in the Inflation Reduction Act that Biden signed last year – on Medicare Part D enrollees’ out-of-pocket spending on covered prescription drugs – takes effect in 2025. The maximum may be higher than $2,000 in subsequent years, since it is tied to Medicare Part D’s per capita costs.

    Asked for comment, a White House official noted that other Inflation Reduction Act health care provisions that will save Americans money did indeed come into effect on January 1, 2023.

    – CNN’s Tami Luhby contributed to this item.

    Criticizing former President Donald Trump over his handling of the Covid-19 pandemic, Biden said, “Back then, only 3.5 million people had been – even had their first vaccination, because the other guy and the other team didn’t think it mattered a whole lot.”

    Facts First: Biden is free to criticize Trump’s vaccine rollout, but his “only 3.5 million” figure is misleading at best. As of the day Trump left office in January 2021, about 19 million people had received a first shot of a Covid-19 vaccine, according to figures published by the Centers for Disease Control and Prevention. The “3.5 million” figure Biden cited is, in reality, the number of people at the time who had received two shots to complete their primary vaccination series.

    Someone could perhaps try to argue that completing a primary series is what Biden meant by “had their first vaccination” – but he used a different term, “fully vaccinated,” to refer to the roughly 230 million people in that very same group today. His contrasting language made it sound like there are 230 million people with at least two shots today versus 3.5 million people with just one shot when he took office. That isn’t true.

    Biden said Republicans want to cut taxes for billionaires, “who pay virtually only 3% of their income now – 3%, they pay.”

    Facts First: Biden’s “3%” claim is incorrect. For the second time in less than a week, Biden inaccurately described a 2021 finding from economists in his administration that the wealthiest 400 billionaire families paid an average of 8.2% of their income in federal individual income taxes between 2010 and 2018; after CNN inquired about Biden’s “3%” claim on Thursday, the White House published a corrected official transcript that uses “8%” instead. Also, it’s important to note that even that 8% number is contested, since it is an alternative calculation that includes unrealized capital gains that are not treated as taxable income under federal law.

    “Biden’s numbers are way too low,” said Howard Gleckman, senior fellow at the Urban-Brookings Tax Policy Center at the Urban Institute think tank, though Gleckman also said we don’t know precisely what tax rates billionaires do pay. Gleckman wrote in an email: “In 2019, Berkeley economists Emmanuel Saez and Gabe Zucman estimated the top 400 households paid an average effective tax rate of about 23 percent in 2018. They got a lot of attention at the time because that rate was lower than the average rate of 24 percent for the bottom half of the income distribution. But it still was way more than 2 or 3, or even 8 percent.”

    Biden has cited the 8% statistic in various other speeches, but unlike the administration economists who came up with it, he tends not to explain that it doesn’t describe tax rates in a conventional way. And regardless, he said “3%” in this speech and “2%” in a speech last week.

    Biden cited a 2021 report from the Institute on Taxation and Economic Policy think tank that found that 55 of the country’s largest corporations had made $40 billion in profit in their previous fiscal year but not paid any federal corporate income taxes. Before touting the 15% alternative corporate minimum tax he signed into law in last year’s Inflation Reduction Act, Biden said, “The days are over when corporations are paying zero in federal taxes.”

    Facts First: Biden exaggerated. The new minimum tax will reduce the number of companies that don’t pay any federal taxes, but it’s not true that the days of companies paying zero are “over.” That’s because the minimum tax, on the “book income” companies report to investors, only applies to companies with at least $1 billion in average annual income. According to the Institute on Taxation and Economic Policy, only 14 of the companies on its 2021 list of 55 non-payers reported having US pre-tax income of at least $1 billion.

    In other words, there will clearly still be some large and profitable corporations paying no federal income tax even after the minimum tax takes effect this year. The exact number is not yet known.

    Matthew Gardner, a senior fellow at the Institute on Taxation and Economic Policy, told CNN in the fall that the new tax is “an important step forward from the status quo” and that it will raise substantial revenue, but he also said: “I wouldn’t want to assert that the minimum tax will end the phenomenon of zero-tax profitable corporations. A more accurate phrasing would be to say that the minimum tax will *help* ensure that *the most profitable* corporations pay at least some federal income tax.”

    There are lots of nuances to the tax; you can read more specifics here. Asked for comment on Thursday, a White House official told CNN: “The Inflation Reduction Act ensures the wealthiest corporations pay a 15% minimum tax, precisely the corporations the President focused on during the campaign and in office. The President’s full Made in America tax plan would ensure all corporations pay a 15% minimum tax, and the President has called on Congress to pass that plan.”

    Noting the big increase in the federal debt under Trump, Biden said that his administration has taken a “different path” and boasted: “As a result, the last two years – my administration – we cut the deficit by $1.7 trillion, the largest reduction in debt in American history.”

    Facts First: Biden’s boast leaves out important context. It is true that the federal deficit fell by a total of $1.7 trillion under Biden in the 2021 and 2022 fiscal years, including a record $1.4 trillion drop in 2022 – but it is highly questionable how much credit Biden deserves for this reduction. Biden did not mention that the primary reason the deficit fell so substantially was that it had skyrocketed to a record high under Trump in 2020 because of bipartisan emergency pandemic relief spending, then fell as expected as the spending expired as planned. Independent analysts say Biden’s own actions, including his laws and executive orders, have had the overall effect of adding to current and projected future deficits, not reducing those deficits.

    Dan White, senior director of economic research at Moody’s Analytics – an economics firm whose assessments Biden has repeatedly cited during his presidency – told CNN’s Matt Egan in October: “On net, the policies of the administration have increased the deficit, not reduced it.” The Committee for a Responsible Federal Budget, an advocacy group, wrote in September that Biden’s actions will add more than $4.8 trillion to deficits from 2021 through 2031, or $2.5 trillion if you don’t count the American Rescue Plan pandemic relief bill of 2021.

    National Economic Council director Brian Deese wrote on the White House website last week that the American Rescue Plan pandemic relief bill “facilitated a strong economic recovery and enabled the responsible wind-down of emergency spending programs,” thereby reducing the deficit; David Kelly, chief global strategist at J.P. Morgan Funds, told Egan in October that the Biden administration does deserve credit for the recovery that has pushed the deficit downward. And Deese correctly noted that Biden’s signature legislation, last year’s Inflation Reduction Act, is expected to bring down deficits by more than $200 billion over the next decade.

    Still, the deficit-reducing impact of that one bill is expected to be swamped by the deficit-increasing impact of various additional bills and policies Biden has approved.

    Biden said, “Wages are up, and they’re growing faster than inflation. Over the past six months, inflation has gone down every month and, God willing, will continue to do that.”

    Facts First: Biden’s claim that wages are up and growing faster than inflation is true if you start the calculation seven months ago; “real” wages, which take inflation into account, started rising in mid-2022 as inflation slowed. (Biden is right that inflation has declined, on an annual basis, every month for the last six months.) However, real wages are lower today than they were both a full year ago and at the beginning of Biden’s presidency in January 2021. That’s because inflation was so high in 2021 and the beginning of 2022.

    There are various ways to measure real wages. Real average hourly earnings declined 1.7% between December 2021 and December 2022, while real average weekly earnings (which factors in the number of hours people worked) declined 3.1% over that period.

    Biden said he was disappointed that the first bill passed by the new Republican majority in the House of Representatives “added $114 billion to the deficit.”

    Facts First: Biden is correct about how the bill would affect the deficit if it became law. He accurately cited an estimate from the government’s nonpartisan Congressional Budget Office.

    The bill would eliminate more than $71 billion of the $80 billion in additional funding for the Internal Revenue Service (IRS) that Biden signed into law in the Inflation Reduction Act. The Congressional Budget Office found that taking away this funding – some of which the Biden administration said will go toward increased audits of high-income individuals and large corporations – would result in a loss of nearly $186 billion in government revenue between 2023 and 2032, for a net increase to the deficit of about $114 billion.

    The Republican bill has no chance of becoming law under Biden, who has vowed to veto it in the highly unlikely event it got through the Democratic-controlled Senate.

    Biden said that “MAGA Republicans” in the House “want to impose a 30 percent national sales tax on everything from food, clothing, school supplies, housing, cars – a whole deal.” He said they want to do that because “they want to eliminate the income tax system.”

    Facts First: This is a fair description of the Republicans’ “FairTax” bill. The bill would eliminate federal income taxes, plus the payroll tax, capital gains tax and estate tax, and replace it with a national sales tax. The bill describes a rate of 23% on the “gross payments” on a product or service, but when the tax rate is described in the way consumers are used to sales taxes being described, it’s actually right around 30%, as a pro-FairTax website acknowledges.

    It is not clear how much support the bill currently has among the House Republican caucus. Notably, House Speaker Kevin McCarthy told CNN’s Manu Raju this week that he opposes the bill – though, while seeking right-wing votes for his bid for speaker in early January, he promised its supporters that it would be considered in committee. Biden wryly said in his speech, “The Republican speaker says he’s not so sure he’s for it.”

    Biden claimed the unemployment rate “is the lowest it’s been in 50 years.”

    Facts First: This is true. The unemployment rate was just below 3.5% in December, the lowest figure since 1969.

    The headline monthly rate, which is rounded to a single decimal place, was reported as 3.5% in December and also reported as 3.5% in three months of President Donald Trump’s tenure, in late 2019 and in early 2020. But if you look at more precise figures, December was indeed the lowest since 1969 – 3.47% – just below the figures for February 2020, January 2020 and September 2019.

    Biden said that the unemployment rates for Black and Hispanic Americans are “near record lows” and that the unemployment rate for people with disabilities is “the lowest ever recorded” and the “lowest ever in history.”

    Facts First: Biden’s claims are accurate, though it’s worth noting that the unemployment rate for people with disabilities has only been released by the government since 2008.

    The Black or African American unemployment rate was 5.7% in December, not far from the record low of 5.3% that was set in August 2019. (This data series goes back to 1972.) The rate was 9.2% in January 2021, the month Biden became president. The Hispanic or Latino unemployment rate was 4.1% in December, just above the record low of 4.0% that was set in September 2019. (This data series goes back to 1973.) The rate was 8.5% in January 2021.

    The unemployment rate for people with disabilities was 5.0% in December, the lowest since the beginning of the data series in 2008. The rate was 12.0% in January 2021.

    Biden said that fewer families are facing foreclosure than before the pandemic.

    Facts First: Biden is correct. According to a report published by the Federal Reserve Bank of New York, about 28,500 people had new foreclosure notations on their credit reports in the third quarter of 2022, the most recent quarter for which data is available; that was down from about 71,420 people with new foreclosure notations in the fourth quarter of 2019 and 74,860 people in the first quarter of 2020.

    Foreclosures plummeted in the second quarter of 2020 because of government moratoriums put in place because of the Covid-19 pandemic. Foreclosures spiked in 2022, relative to 2020-2021 levels, after the expiry of these moratoriums, but they remained very low by historical standards.

    Biden said, “More American families have health insurance today than any time in American history.”

    Facts First: Biden’s claim is accurate. An analysis provided to CNN by the Kaiser Family Foundation, which studies US health care, found that about 295 million US residents had health insurance in 2021, the highest on record – and Jennifer Tolbert, the foundation’s director for state health reform, told CNN this week that “I expect the number of people with insurance continued to increase in 2022.”

    Tolbert noted that the number of insured residents generally rises over time because of population growth, but she added that “it is not a given” that there will be an increase in the number of insured residents every year – the number declined slightly under Trump from 2018 to 2019, for example – and that “policy changes as well as economic factors also affect these numbers.”

    As CNN’s Tami Luhby has reported, sign-ups on the federal insurance exchange created by the Affordable Care Act, also known as Obamacare, have spiked nearly 50% under Biden. Biden’s 2021 American Rescue Plan pandemic relief law and then the 2022 Inflation Reduction Act temporarily boosted federal premium subsidies for exchange enrollees, and the Biden administration has also taken various other steps to get people to sign up on the exchanges. In addition, enrollment in Medicaid health insurance has increased significantly during the Covid-19 pandemic, in part because of a bipartisan 2020 law that temporarily prevented people from being disenrolled from the program.

    The percentage of residents without health insurance fell to an all-time low of 8.0% in the first quarter of 2022, according to an analysis published last summer by the federal government’s Department of Health and Human Services. That meant there were 26.4 million people without health insurance, down from 48.3 million in 2010, the year Obamacare was signed into law.

    Biden said, “And over the last two years, more than 10 million people have applied to start a small business. That’s more than any two years in all of recorded American history.”

    Facts First: This is true. There were about 5.4 million business applications in 2021, the highest since 2005 (the first year for which the federal government released this data for a full year), and about 5.1 million business applications in 2022. Not every application turns into a real business, but the number of “high-propensity” business applications – those deemed to have a high likelihood of turning into a business with a payroll – also hit a record in 2021 and saw its second-highest total in 2022.

    Trump’s last full year in office, 2020, also set a then-record for total and high-propensity applications. There are various reasons for the pandemic-era boom in entrepreneurship, which began after millions of Americans lost their jobs in early 2020. Among them: some newly unemployed workers seized the moment to start their own enterprises; Americans had extra money from stimulus bills signed by Trump and Biden; interest rates were particularly low until a series of rate hikes that began in the spring of 2022.

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  • Asia’s richest man Gautam Adani is addicted to ChatGPT | CNN Business

    Asia’s richest man Gautam Adani is addicted to ChatGPT | CNN Business

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    New Delhi
    CNN
     — 

    Asia’s richest man Gautam Adani says he is addicted to ChatGPT, the powerful new AI tool that interacts with users in an eerily convincing and conversational way.

    In a LinkedIn post last week, the 60-year-old India tycoon said that the release of ChatGPT was a “transformational moment in the democratization of AI given its astounding capabilities as well as comical failures.”

    The billionaire admitted to “some addiction” to ChatGPT since he has started using it.

    The tool, which artificial intelligence research company OpenAI made available to the general public late last year, has sparked conversations about how “generative AI” services — which can turn prompts into original essays, stories, songs and images after training on massive online datasets — could radically transform how we live and work.

    Some claim it will put artists, tutors, coders, and writers out of a job. Others are more optimistic, postulating that it will allow employees to tackle to-do lists with greater efficiency.

    “But there can be no doubt that generative AI will have massive ramifications,” Adani wrote in his post, adding that generative AI holds the “same potential and danger” as silicon chips.

    “Nearly five decades ago, the pioneering of chip design and large-scale chip production put the US ahead of rest of the world and led to the rise of many partner countries and tech behemoths like Intel, Qualcomm, TSMC, etc,” Adani, who has businesses in sectors ranging from ports to power stations, wrote.

    “It also paved the way for precision and guided weapons used in modern warfare with more chips mounted than ever before,” he added. The race in the field of generative AI will quickly get as “complex and as entangled as the ongoing silicon chip war,” he said.

    Chipmaking has emerged recently as a new flashpoint in US-China tensions, with Washington blocking sales of advanced computer chips and chip-making equipment to Chinese companies. Some Chinese investments in European chipmaking have also been blocked.

    The Indian infrastructure magnate believes that China has an edge over the United States in the AI race because Chinese researchers published twice as many academic papers on the subject as their American counterparts in 2021, he wrote in the post published on Friday after attending the World Economic Forum in Davos.

    Back home, Adani is also considering taking five new businesses to the stock market in the next five years, according to his conglomerate’s chief financial officer Jugeshinder Singh.

    Speaking to reporters on Saturday in the western Indian city of Ahmedabad — where the Adani empire is headquartered — Singh said the group’s metals and mining, energy, data center, airports, and roads businesses will likely be spun off between 2025 to 2028.

    Adani Enterprises, the conglomerate’s flagship company, functions as an incubator for Adani’s businesses. Once they have matured, they are often given their independence via a stock market listing. Many of Adani companies have become leading players in their respective sectors.

    Later this month, Adani Enterprises is also raising 200 billion rupees ($2.5 billion) by issuing new shares. It would be India’s biggest ever follow-on public share offering.

    A college dropout and a self-made industrialist, Adani is worth over $120 billion, making him the world’s third richest man, ahead of Jeff Bezos and Bill Gates.

    Shares of Adani’s seven listed companies — in sectors ranging from ports to power stations — have seen turbocharged growth in the last few years. But some analysts fear that this growth comes at a huge risk as Adani’s $206 billion juggernaut has been fueled by a $30 billion borrowing binge, making his business one of the most indebted in the country.

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  • This Chinese billionaire has lost over 90% of his fortune | CNN Business

    This Chinese billionaire has lost over 90% of his fortune | CNN Business

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    CNN
     — 

    The past few years have not been great for the super-rich in China, particularly those who built their fortune in the country’s once red-hot property market.

    The net worth of Hui Ka Yan, chairman of real estate developer China Evergrande, has plunged nearly 93%, according to the Bloomberg Billionaires Index. Once the second-richest person in Asia, Hui’s wealth has fallen from $42 billion at its peak in 2017 to about $3 billion, Bloomberg said.

    Evergrande is China’s most indebted developer with $300 billion in liabilities, and has been at the heart of the country’s real estate troubles since 2021. Hui, also known as Xu Jiayin in Mandarin, used his personal wealth to prop up his embattled company, selling his houses and private jets.

    But that was far from enough and Evergrande defaulted on its US dollar bonds in December 2021 after scrambling for months to raise cash to repay creditors, suppliers and investors. Last year, the firm failed to deliver its preliminary debt restructuring plan, leading to further concerns about its future.

    Evergrande is massive: It has about 200,000 employees, raked in more than $110 billion in sales in 2020 and owns more than 1,300 developments in more than 280 cities.

    Analysts have long been concerned that a collapse of Evergrande could trigger wider risks for China’s property market, hurting homeowners and the broader financial system. Real estate and related industries account for as much as 30% of GDP.

    But Hui isn’t the only one who has seen massive wealth destruction lately. Elon Musk, the CEO of Tesla, SpaceX and Twitter, has become the first person ever to lose $200 billion in wealth, according to Bloomberg last month.

    The bulk of Musk’s wealth is tied up in Tesla, which saw its stock plunge 65% in 2022.

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  • The Federal Reserve is testing how climate change could hurt big banks | CNN Business

    The Federal Reserve is testing how climate change could hurt big banks | CNN Business

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    A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.


    New York
    CNN
     — 

    The largest six banks in the United States have been given until July to show the Federal Reserve what effects disastrous climate change scenarios could have on their bottom lines.

    Noting the risks could be “material,” the Fed said the banks will have to show how their finances fare under a number of climate stress tests, including heat waves, wildfires, floods and droughts, according to details of a new Fed pilot program released on Tuesday.

    “The pilot exercise includes physical risk scenarios with different levels of severity affecting residential and commercial real estate portfolios in the Northeastern United States and directs each bank to consider the impact of additional physical risk shocks for their real estate portfolios in another region of the country,” wrote the Fed.

    The Federal Reserve first announced the pilot program in September, noting that Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo would participate.

    Climate activists said that the project was long overdue (Federal Reserve Chair Jerome Powell has been questioned about it multiple times over the last year), and that other central banks are far ahead of the Fed on climate risk assessments. The Bank of England ran a similar exercise in 2021.

    They also said the proposal lacked any real teeth. In its announcement the Federal Reserve stressed that the exercise “is exploratory in nature and does not have capital consequences.” It also said that it would not publish individual banks’ results.

    San Francisco Federal Reserve President Mary Daly told CNN in October Thursday that this was a learning and exploratory exercise for the Federal Reserve. It would be “incredibly premature to jump to the conclusion that any new policies or programs would come out of it,” she said.

    The other side: Critics of the pilot program have argued that the Federal Reserve was overstepping its boundaries and that they might soon begin to enforce financial penalties.

    “The Fed’s new ‘pilot’ program is the first step toward pressuring banks into limiting loans to and investments in traditional energy companies and other disfavored carbon-emitting sectors,” wrote former Republican Senator Pat Toomey, then a ranking member of the Senate Banking Committee. “The real purpose of this program is to ultimately produce new regulatory requirements.”

    Powell said last week that the central bank would not become a “climate policymaker.”

    “Today, some analysts ask whether incorporating into bank supervision the perceived risks associated with climate change is appropriate, wise, and consistent with our existing mandates,” Powell said last Tuesday. “In my view, the Fed does have narrow, but important, responsibilities regarding climate-related financial risks. These responsibilities are tightly linked to our responsibilities for bank supervision. The public reasonably expects supervisors to require that banks understand, and appropriately manage, their material risks, including the financial risks of climate change.”

    The discovery, movement and use of oil has played an outsized role in shaping geopolitics over the past century and a half. But over the next 50 years, global interaction and wealth are more likely to be influenced by microchips, Intel CEO Pat Gelsinger told CNN Tuesday.

    “Where the technology supply chains are, and where semiconductors are built, is more important for the next five decades,” Gelsinger said in an interview with CNN’s Julia Chatterley at the World Economic Forum in Davos, Switzerland.

    Intel (INTC) is betting those predictions prove true. The company announced in 2021 it would invest $20 billion to build two new US chipmaking facilities, as well as up to $90 billion in new European factories, aimed at reasserting its position as the leader of the semiconductor industry, reports my colleague Clare Duffy.

    Gelsinger said the company’s investment in new manufacturing facilities in the United States, Europe and elsewhere is important not only for the company’s future, but for the “globalization of the most critical resource to the future of the world.”

    “We need this geographically balanced, resilient supply chain,” he said.

    The announcements also came amid concerns about the concentration of manufacturing for chips, in Asia, particularly China and Taiwan, during the Covid-19 pandemic and as geopolitical tensions grew. Issues in the chip supply chain in recent years have caused shortages and shipping delays of everything from desktop computers and iPhones to cars.

    “If we’ve learned one thing from the Covid crisis and this multi-year journey that we’ve been on it’s we need resilience in our supply chains,” Gelsinger said, adding that Intel’s manufacturing investments are aimed at “leveling that playing field so that good investment decisions can be made.”

    The years following the peak of the Covid pandemic have not been good for wealth equality.

    The world’s wealthiest residents have been getting far richer, far faster than everyone else over the past two years, reports my colleague Tami Luhby.

    The fortune of the 1% soared by $26 trillion during that period, while the bottom 99% only saw their net worth rise by $16 trillion, according to Oxfam’s annual inequality report released Sunday.

    And the wealth accumulation of the super-rich accelerated during the pandemic. Looking over the past decade, they netted just half of all the new wealth created, compared to two-thirds during the last few years.

    Meanwhile, many of the less fortunate are struggling. Some 1.7 billion workers live in countries where inflation is outpacing wages. And poverty reduction likely stalled last year after the number of global poor skyrocketed in 2020.

    “While ordinary people are making daily sacrifices on essentials like food, the super-rich have outdone even their wildest dreams,” said Gabriela Bucher, executive director of Oxfam International.

    “Just two years in, this decade is shaping up to be the best yet for billionaires — a roaring ’20s boom for the world’s richest,” she said.

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  • The top 1% captured nearly twice as much new wealth as the rest of the world over last two years | CNN Business

    The top 1% captured nearly twice as much new wealth as the rest of the world over last two years | CNN Business

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    New York
    CNN
     — 

    The world’s wealthiest residents have been getting far richer, far faster than everyone else over the past two years.

    The top 1% have captured nearly twice as much new wealth as the rest of the world during that period, according to Oxfam’s annual inequality report, released Sunday. Their fortune soared by $26 trillion, while the bottom 99% only saw their net worth rise by $16 trillion.

    And the wealth accumulation of the super-rich accelerated during the pandemic. Looking over the past decade, they netted just half of all the new wealth created, compared to two-thirds during the last few years.

    The report, which draws on data compiled by Forbes, is timed to coincide with the kickoff of the annual World Economic Forum meeting in Davos, Switzerland, an elite gathering of some of the wealthiest people and world leaders.

    Meanwhile, many of the less fortunate are struggling. Some 1.7 billion workers live in countries where inflation is outpacing wages. And poverty reduction likely stalled last year after the number of global poor skyrocketed in 2020.

    “While ordinary people are making daily sacrifices on essentials like food, the super-rich have outdone even their wildest dreams,” said Gabriela Bucher, executive director of Oxfam International. “Just two years in, this decade is shaping up to be the best yet for billionaires — a roaring ’20s boom for the world’s richest.”

    Though their riches have slipped somewhat over the past year, global billionaires are still far wealthier than they were at the start of the pandemic.

    Their net worth totals $11.9 trillion, according to Oxfam. While that’s down nearly $2 trillion from late 2021, it’s still well above the $8.6 trillion billionaires had in March 2020.

    The wealthy are benefiting from three trends, said Nabil Ahmed, Oxfam America’s director of economic justice.

    At the start of the pandemic, global governments, particularly wealthier countries, poured trillions of dollars into their economies to prevent a collapse. That prompted stocks and other assets to soar in value.

    “So much of that fresh cash ended up with the ultra-wealthy, who were able to ride this stock market surge, this asset boom,” Ahmed said. “And the guardrails of fair taxation weren’t in place.”

    Also, many corporations have done well in recent years. Some 95 food and energy companies have more than doubled their profits in 2022, Oxfam said, as inflation sent prices soaring. Much of this money was paid out to shareholders.

    In addition, the longer term trends of the unwinding of workers’ rights and greater market concentration is heightening inequality.

    By contrast, global poverty increased greatly early in the pandemic. Though some progress in poverty reduction has been made since then, it is expected to have stalled in 2022, in part because of the war in Ukraine, which exacerbated high food and energy prices, according to World Bank data cited by Oxfam.

    It’s the first time that extreme wealth and extreme poverty have increased simultaneously in 25 years, said Oxfam.

    To counter this growing inequality, Oxfam is calling on governments to raise taxes on their wealthiest residents.

    It proposes introducing one-time wealth tax and windfall taxes to end profiteering off global crises, as well as permanently increasing taxes on the richest 1% of residents to at least 60% of their income from labor and capital.

    Oxfam believes the rates on the top 1% should be high enough to significantly reduce their numbers and wealth. The funds should then be redistributed.

    “We do face an extreme crisis of wealth concentration,” Ahmed said. “And it’s important before all, I think, to recognize that it’s not inevitable. A strategic precondition to reining in extreme inequality is taxing the ultra-wealthy.”

    The group, however, faces an uphill battle. Some 11 countries cut taxes on the rich during the pandemic. And efforts to hike levies on the wealthy fell apart in the US Congress in 2021, even though Democrats controlled both chambers and the White House.

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  • Wealthy Russian businessman arrested in London on suspicion of multiple offenses, including money laundering | CNN

    Wealthy Russian businessman arrested in London on suspicion of multiple offenses, including money laundering | CNN

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    CNN
     — 

    A wealthy Russian businessman has been arrested as part of a “major operation” on suspicion of multiple offenses, the United Kingdom’s National Crime Agency said in a statement Saturday.

    The 58-year-old man was arrested Thursday at his “multi-million-pound residence in London by officers from the NCA’s Combatting Kleptocracy Cell” on suspicion of committing offenses including money laundering, conspiracy to defraud the Home Office – the UK government department for immigration and passports – and conspiracy to commit perjury, the agency said.

    A 35-year-old man, employed at the premises, was also arrested “nearby” on suspicion of money laundering and obstruction of an officer “after he was seen leaving the address with a bag found to contain thousands of pounds in cash,” according to the statement.

    A third man, aged 39, who the agency said is the former boyfriend of the businessman’s current partner, was arrested at his home in Pimlico, London, for offenses including money laundering and conspiracy to defraud, according to the statement.

    A person close to the investigation has given CNN more detail on two of the men arrested, saying the 39-year-old man was a national of Russia, Israel, and the UK and the 35-year-old man was a Polish national. The source told CNN the bank notes the 35-year-old was carrying have not yet been counted but were suspected to be in the tens of thousands and in British currency.

    The three individuals have been interviewed by authorities and have been released on bail, according to the statement.

    The Russian Embassy in London has sent a note to British authorities regarding the detention of a Russian citizen, according to a statement from the embassy made available to Russian state news agency RIA Novosti.

    “The Russian Embassy in London has asked the British authorities for clarification in connection with the information from the National Crime Agency about the alleged detention of a Russian citizen in London,” reads the note, according to RIA Novosti.

    “The NCA’s Combatting Kleptocracy Cell, only established this year, is having significant success investigating potential criminal activity by oligarchs, the professional service providers that support and enable them and those linked to the Russian regime,” said the agency’s director general Graeme Biggar.

    “We will continue to use all the powers and tactics available to us to disrupt this threat,” he added.

    More than 50 officers were involved in the operation at the businessman’s London property, the statement said. “A number of digital devices and a significant quantity of cash was recovered following extensive searches by NCA investigators,” according to the statement.

    So far, the agency says it has secured nearly 100 disruptions “against Putin-linked elites and their enablers” and has taken direct action against “a significant number of elites who impact directly on the UK.”

    The agency is also targeting “less conventional routes used to disguise movements of significant wealth, such as high value asset sales via auction houses,” according to the statement.

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  • Donald Trump faces billionaires in retreat and tabloid trolling a day after campaign announcement | CNN Politics

    Donald Trump faces billionaires in retreat and tabloid trolling a day after campaign announcement | CNN Politics

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    CNN
     — 

    A day after Donald Trump announced his third bid for the presidency, he faced public defections from billionaire backers and vicious trolling from a once-friendly New York tabloid – underscoring his early challenges in mounting a political comeback nearly two years after the end of his divisive presidency.

    Stephen Schwarzman, the CEO of the private equity firm Blackstone and a one-time Trump ally, announced Wednesday that he would not support Trump’s bid for the Republican nomination, saying it’s time “for the Republican party to turn to a new generation of leaders.”

    A spokesman for another billionaire supporter – cosmetic heir Ronald Lauder – confirmed to CNN on Wednesday that Lauder would not back Trump’s bid to become only the second US president elected to two nonconsecutive terms.

    And in another sign that the once-supportive conservative media empire controlled by Rupert Murdoch has moved on from Trump, the New York Post on Wednesday topped its story of his campaign announcement with a brutal headline, “Been there, Don That.” (By contrast, a front-page Post headline last week heralded Florida Gov. Ron DeSantis as “DeFuture,” after the Republican cruised to a second term.)

    The pullback by some donors shows that some of the party’s elite figures are open to alternatives two years out from the next presidential election. Trump, who has relied on a small-donor base to fuel his political ambitions, remains a formidable fundraising force. In an unprecedented move, he never stopped fundraising after leaving the White House, and his array of political committees has amassed more than $100 million in cash reserves.

    Trump is the first major Republican candidate to announce his candidacy. Over the weekend, DeSantis – a potential rival for the nomination – is slated to address one of the Republican Party’s most influential donor groups when he delivers a speech at the Republican Jewish Coalition’s annual gala dinner. Former US ambassador to the United Nations Nikki Haley, another Republican viewed as a possible presidential contender, also is slated to speak at the Saturday night event in Las Vegas.

    Trump remains a “big factor” in Republican politics and has earned accolades from coalition members for his staunch support of Israel, said Matthew Brooks, RJC’s executive director.

    But “people are window-shopping right now,” Brooks added. “There are people who are asking if we need a new direction and a new face.”

    Brooks said Trump was invited to the RJC gathering but had a scheduling conflict.

    CNN has reached out to Trump aides for comment.

    Schwarzman’s retreat from Trump is particularly significant because he’s one of the biggest donors in Republican politics and contributed $3 million in 2020 to a super PAC supporting Trump’s unsuccessful reelection campaign.

    In the midterms alone, Schwarzman donated more than $35 million to Republican candidates and groups active in federal elections, according to OpenSecrets, a nonprofit group that tracks political money.

    “America does better when its leaders are rooted in today and tomorrow, not today and yesterday,” Schwarzman said in his statement, first reported by Axios. Schwarzman said he would support one of the GOP’s “new generation of leaders” but did not say whom he is considering backing.

    Another Republican megadonor, Citadel’s Ken Griffin, recently indicated he would back DeSantis in 2024, should the Florida governor seek the GOP nomination.

    Lauder, a long-time Trump friend and financial supporter of Republican candidates and causes, has not indicated who would win his support.

    This story has been updated with additional developments.

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