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Daily Archives: November 5th, 2021


POLITICS

These Billionaires Received Taxpayer-Funded Stimulus Checks During the Pandemic

Ira Rennert, worth $3.7 billion according to Forbes, did not appear to need the cash infusion.

Paul Kiel, Jesse Eisinger and Jeff Ernsthausen

11/04/2021 06:12pm EDT

In March 2020, as the first wave of coronavirus infections all but shut down the U.S. economy, Congress responded with rare speed, passing a $2.2 trillion relief package called the CARES Act. The centerpiece of the law was an emergency payment to over 150 million American households that needed help.

Congress used a simple filter to determine who was eligible for assistance: The full $1,200 was limited to single taxpayers who’d reported $75,000 a year or less in income on their previous tax return. Married couples got $2,400 if they had reported less than $150,000 in income. Money was sent automatically to those who qualified.

Ira Rennert, worth $3.7 billion according to Forbes, did not appear to need the cash infusion offered by the CARES Act. After all, his 62,000-square-foot Hamptons home is one of the largest in the country, so he was unlikely to get cabin fever during lockdown, let alone have trouble buying food. Nevertheless, Rennert, who made his fortune as a corporate raider in the ’80s and ’90s, got a $2,400 check from the government.

George Soros, the prominent hedge fund manager and philanthropist who’s worth $8.6 billion, didn’t need the CARES cash, either. Neither did his son, Robert, himself worth hundreds of millions. But they, too, both got checks. (Both returned the checks, according to their representatives.)

ProPublica, using its trove of IRS records, identified at least 18 billionaires who received stimulus payments, which were funded by U.S. taxpayers, in the spring of 2020. Hundreds of other ultrawealthy taxpayers also got checks.

The wealthy taxpayers who received the stimulus checks got them because they came in under the government’s income threshold. In fact, they reported way less taxable income than that — even hundreds of millions less — after they used business write-offs to wipe out their gains.

ProPublica found 270 taxpayers who collectively disclosed $5.7 billion in income, according to their previous tax return, but who were able to deploy deductions at such a massive scale that they qualified for stimulus checks. All listed negative net incomes on tax returns.

Consider two stimulus recipients with similarly huge incomes in 2018. Timothy Headington is an oil mogul, real estate developer and executive producer of such films as “Argo” and “World War Z,” and he’s worth $1.4 billion. He had $62 million in income in 2018, but after $342 million in write-offs, his final result was negative $280 million. The same was true of Rennert, whose $64 million in income that year was erased by $355 million in deductions, for a final total of negative $291 million.

Figures like these reveal a basic truth about the U.S. income tax system. Most people earn the overwhelming majority of their income via wages and take deductions where they can. But the income of the ultrawealthy as revealed on their taxes tells, at best, a partial story. As ProPublica reported earlier this year, the wealthiest taxpayers often have great flexibility in when and how they take taxable income, allowing them to pay a minuscule portion of their wealth growth in taxes. For the ultrawealthy, wages are to be avoided, carrying as they do the burden of not only income tax but also of payroll taxes.

Wages rarely made up a significant portion of income for the 270 wealthy stimulus check recipients identified by ProPublica. In total, only $82 million, or 1.4%, of the $5.7 billion in income taken in by the group came in the form of wages.

The ultrawealthy have other tax advantages. Many can tap a particularly generous vein of deductions: businesses they own. These can wipe out all of their income, even for years to come, unlike other deductions, like those for charitable giving. Certain industries, like real estate or oil and gas, are a well-known source of tax benefits that can generate paper losses even for a successful business.

The amount of stimulus aid that went to ultrawealthy taxpayers was a negligible piece of the trillions spent via the CARES Act. But the fact that billionaires were able to qualify shows that when legislators rely on income tax returns to determine eligibility for aid, there can be surprising results. Asked what he thought about billionaires receiving stimulus checks, Senate Finance Committee chair Ron Wyden, D-Ore., responded, “The tax code is simply not equipped to tax billionaires fairly, or even ensure they pay anything at all.”

ProPublica reached out to every stimulus-check recipient mentioned in this article. Rennert and Headington did not respond to requests for comment. A spokesman for George Soros, who has advocated for higher taxes for the wealthy, said, “George returned his stimulus check. He certainly didn’t request one!” Robert Soros did the same, a spokesperson said. (The Soros-funded Open Society Foundations have donated to ProPublica.)

Billionaires often reap sizable tax deductions from owning sports teams, as a ProPublica story this year detailed. A number of sports team owners were among the recipients of stimulus payments. Terrence Pegula, who is worth $5.7 billion and owns both the NFL’s Buffalo Bills and the NHL’s Buffalo Sabres, was one. Also getting a check was Glen Taylor, worth $2.8 billion, who earlier this year struck a deal to sell Minnesota’s NBA and WNBA teams for $1.5 billion. Pegula and Taylor did not respond to requests for comment.

Some taxpayers had enough in deductions to wipe out even hundreds of millions in income. Robert Dart is a scion of the Dart family, which owns Dart Container Corp., the maker of the iconic red Solo cup. In 2018, he reported income exceeding $300 million, but deductions left him with a final result of negative $39 million.

Dart and his brother renounced their U.S. citizenship decades ago to take advantage of a then-existing tax break available for expatriates. Dart filed his U.S. tax return from an address in the Cayman Islands, but got a stimulus payment just the same. (The IRS declined to comment.)

In response to questions, the general counsel for Dart Container wrote, “Mr. Dart believes that people in his position should not have received COVID stimulus funds. Mr. Dart did not request any COVID stimulus funds. Instead, those funds were directly deposited into his account by the U.S. Treasury without his consent as Congress determined that taxpayers with resident alien status were eligible for such payments. Mr. Dart has returned the COVID stimulus funds he received to the U.S. Treasury pursuant to instructions provided by the IRS.”

Some of the ultrawealthy have received government benefits on more than one occasion. Take Joseph DiMenna, a partner in Zweig-DiMenna, a pioneering hedge fund. An art collector and polo aficionado, he owns a club that holds charity polo matches for anti-poverty causes. In 2017, he received a special payout from his fund of $1.1 billion. But in 2018, without such a massive payout, business deductions swung his income back to where it had been in the years before his big payday: less than $0. That entitled him to a stimulus check. In both 2015 and 2016, DiMenna’s negative income also entitled him to $2,000 in refundable child tax credits, meant to support middle-class families with child care expenses. DiMenna did not respond to a request seeking comment.

Others among the superrich also received stimulus payments the last time Congress offered them when millions of Americans were struggling. The 2009 American Recovery and Reinvestment Act offered a $400 tax credit for individuals and $800 for married couples. It was called “Making Work Pay.”

Forrest Preston, the founder of Life Care Centers of America, one of the largest long-term care companies in the U.S., is worth $1.2 billion. In 2009, he got his $400 boost. The next year, he posted an income of $112 million. By 2018, however, his income had gone negative again, entitling him to a $1,200 payment in 2020.

The same year he received his stimulus check, Preston’s company successfully lobbied to win a tax break for the nursing home industry. Preston did not respond to a request for comment.

Taylor, the Minnesota Timberwolves owner, is another two-time stimulus recipient, in 2009 and again in 2020. So was Woodley Hunt, the senior chairman of Hunt Companies, a family-owned firm that is one of the country’s largest owners of multifamily properties. Hunt did not respond to a request seeking comment.

For former Lehman Brothers CEO Richard Fuld, a big salary was a key part of the $400 million he earned in the five years before the firm’s historic collapse in 2008. But in recent years, he’s been running a company called Matrix Investment Partners that he set up to invest his own money. The tax losses generated by that company were one reason he got a stimulus check. Reached by phone and asked whether he wanted to comment, Fuld said, “I’m not interested. Thank you.”

Another CARES Act beneficiary was Erik Prince, who, before deductions, had $5.3 million in income in 2018. Prince founded Blackwater, a private military company that received hundreds of millions in government contracts. He has denounced excess government spending, saying we are being “bled dry by debt.” Prince didn’t respond to a request for comment.

A proposal in the Democrats’ (once $3.5 trillion, now under $2 trillion) Build Back Better legislation, currently the subject of fevered negotiations, would curb the ability of wealthy taxpayers to report negative income. It would do so by restricting the ability to use business losses to wipe out other types of income, like capital gains or dividends. Instead, business deductions would only offset business income.

The idea, which builds on a provision of the 2017 Trump tax bill, is one of the few tax provisions to have survived the recent negotiations — at least, for now. First proposed by House Democrats in September, it was then projected to produce $167 billion in revenue over the next 10 years. The provision was also included in a version of the legislation released on Oct. 28.

Not included in last week’s draft was a provision that would have directly affected the ability of billionaires to manipulate their incomes. A number of the billionaires who received stimulus checks were able to report negative incomes to the IRS despite getting richer. A “billionaire income tax” proposed by Wyden, would tax increases in wealth. Under the current system, gains are taxed only when they are “realized,” such as when someone sells stock.

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Misinformation is wasting your time | Mission Control Blog

NPR Illinois | 91.9 UIS | By Randy Eccles

Published November 4, 2021 at 1:02 PM CDT

Misinformation has cost us all a lot of time and is increasingly costing us more.

Two major issues, COVID-19 and climate change are being exacerbated by leaders and supporters who don’t have the facts to base their choices. In the case of climate change, this has led to continued failure to put in place transformative corrective measures. The current weather patterns, floods, and droughts aren’t cyclical. Trends show the changes are off the cyclical charts and in many cases more severe than scientists previously predicted. We’ve been transformative, but in the wrong direction. Human generated carbon levels were discussed over 15 years ago by Al Gore in An Inconvenient Truth. Positive actions have been taken, like raising Corporate Average Fuel Economy standards, but frequently are weakened or diluted. Where one administration takes a hard-ish stand, the next reverses it. This can’t be done without political support of the voter. We have lost significant time when we could have been making progress. Some reports now have us running out of time. Others, say it’s already too late and we can only make defensive adjustments now.

How does this happen? Misinformation. At the most fundamental level, you and I are wasting valuable time because we are misinformed. Who has time to read every scientific report? To save time we depend on experts and journalists to impart the most important and urgent information to us. Misinformation isn’t old. Merriam-Webster sites the word’s first use in 1605. The handbills, postal messages, and word of mouth of the Hamiltonian era have evolved into social media’s immediate delivery to millions of readers. In the past, the news cycle provided some time for editing or digestion. Until cable news began its 24/7 broadcasting, you had a national evening newscast that had 23.5 hours to assess what changed since the last broadcast. Newspapers’ daily deadline would provide a day of deliberation before we received updates. Now; the infinite scroll, unfiltered sharing, and the device buzzing for our attention in our pockets and purses leaves little time for consideration.

Misinformation defeats us when we so casually share it. How do you make sure you have credible information? It takes some time, but is minimal compared to the lost opportunity costs burgeoning misinformation produces.

  1. Limit social media – We’re discovering that social media companies in their pursuit of business success have been cavalier about the effects of their media. I recently took my first break since 2007 of a popular sharing app. I haven’t missed it. I do miss following a few people on it, but I reach out to them directly now. I have less anxiety as I’m exposed to fewer doomsday headlines that drive traffic. Instead of using social media as a newspaper replacement, I pick a couple credible news sites to review stories from. Their scrolls aren’t infinite and I have also recovered time.
  2. Find reliable sources – Credible news sources make mistakes occasionally. When they do, they tell you and make corrections. Too much of the data we get these days are from unchecked sources. Who is the author? What else have they written? What is their background? Is this source striving to be a credible news provider or is it an opinion site using emotion to drive pageviews? I found two charts that helped me to understand whether an information source was biased, The Media Bias Chart from Ad Fontes Media and the All Sides Media Bias Chart. Neither are perfect but I find them a good tool to use in evaluating sources. In addition to the centrist, reliable sources, I like to include a couple of highly credible sources from the right and the left ends of the chart.
  3. Own what you share – I imagine I’ll go back to a social media platform to share stories again. In the past, I’ve caught myself almost forwarding a story about a death that seemed current but was from 3 year earlier. When you do decide to share information, in addition to the source’s credibility, make sure you check its date and whether there have been any updates. Your likes and your shares are your personal brand.
  4. Confirmation bias – one of the benefits of social media has been more posts on things I enjoy like kayaking or animation. In the realm of participating in our democracy, this ends up feeding us what we want to hear and in some cases what gets us angry enough to engage. It seems to be getting harder to find well thought-out ideas that don’t immediately get assigned to left or right. In fiction, the willful suspension of disbelief is required to enjoy a book where the character has super powers or where there is an alternate history. In our current climate of ideas, we need to suspend our positions and consider things that do not align with them. If the author is thoughtful and using facts, not misinformation, we may find a shorter route to solving some of the issues that face us.

Misinformation is definitely costing us money, but also an even more valuable resource – time. We are not coming together to solve issues in our society. When issues emerge or re-emerge as encapsulated by Black Lives Matter, they are taken seriously at the beginning, until partisan elements use misinformation and disinformation to freeze action.

It’s been a long two years of pandemic. The U.S. leads the world in COVID deaths. The past and current administrations did amazing work with the pharmaceutical industry to get vaccines to market quickly. Unfortunately, misinformation has led many to question becoming vaccinated. Dr. Ngozi Ezike said in the recent Community Health Roundtable that Illinois is near a 70% vaccination rate. The quicker the world reaches that rate the sooner pandemic measures will end and our economy can operate without restraint. Ezike went on to say many places, like countries in Africa, are below a 2% vaccination rate. COVID is likely to go on a lot longer as misinformation about the effectiveness of the vaccine and the need to get it to other countries confuses people’s resolve.

Although I’ve been vaccinated and received a booster, I am anxiously waiting for a children’s version of the vaccine to be approved so my 11-year-old can be a tweenager and be able to feel confident getting out in public.

Please use NPR Illinois or the credible media of your choice to inform your decisions and learn more how COVID and misinformation is impacting us at the next Community Health Roundtable, November 19, noon to 1 PM

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