Senators quiz insurers on climate-related underwriting

Link: https://www.businessinsurance.com/article/20210326/NEWS06/912340735/Senators-quiz-insurers-on-climate-related-underwriting

Additional link: https://static1.squarespace.com/static/5b7c9307f79392b49031d551/t/605cf32f9d526442eb0bca0c/1616704303928/Senators%27+Letter+-+Chubb.pdf

Excerpt:

Democratic lawmakers have called on U.S. insurers including American International Group Inc., Berkshire Hathaway, Chubb Ltd., Liberty Mutual Insurance Co., MetLife Inc. and Travelers Cos. Inc. to explain how their fossil fuel underwriting policies align with their commitments to sustainability.

In a letter dated March 24, Sen. Sheldon Whitehouse, D-Rhode Island, and Senators Jeffrey A. Merkley, D-Oregon, Elizabeth Warren, D-Massachusetts, and Chris Van Hollen, D-Maryland, request information on each insurer’s fossil fuel underwriting and investment policies.

“An increasing number of your competitors have stopped underwriting coal and other fossil fuel projects and/or restricted their investments in coal and certain dirty and environmentally damaging oil and gas projects such as tar sands,” the letter said.

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Author(s): Claire Wilkinson

Publication Date: 26 March 2021

Publication Site: Business Insurance

Warren’s Wealth Tax Enriches Foreign Billionaires

Link: https://www.wsj.com/articles/warrens-wealth-tax-enriches-foreign-billionaires-11615227317

Excerpt:

According to estimates conducted for Ms. Warren by University of California-Berkeley economists Emmanuel Saez and Gabriel Zucman, only about 100,000 families, or “less than 1 out of 1,000,” would pay the tax, which they estimate would raise “around $3 trillion over the ten-year budget window 2023-2032, of which $0.4 trillion would come from the billionaire 1% surtax.”

Yet Tax Foundation economists discovered a surprising consequence when we ran the proposal through our general equilibrium tax model last year. The model showed that despite being a massive tax, raising nearly $300 billion a year, the tax had only a modest impact on gross domestic product. How can that be?

The model predicted that wealthy U.S. citizens would sell their assets at fire-sale prices to pay the tax. Because the U.S. is an open economy, many of these assets would be bought by foreign investors at the discounted prices. Thus, while a wealth tax wouldn’t shrink the U.S. economy much, it would change who owns U.S. assets. What Jeff Bezos, Warren Buffett and Mark Zuckerberg sell, Jack Ma, Carlos Slim and the sultan of Brunei might buy — and they’d be exempt from the U.S. wealth tax.

Author(s): Scott A. Hodge

Publication Date: 8 March 2021

Publication Site: Wall Street Journal

Elizabeth Warren’s wealth tax won’t work. This will

Link: https://money.yahoo.com/elizabeth-warrens-wealth-tax-wont-work-this-will-200020382.html

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Biden also wants other big tax changes, such as a higher business tax rate and higher rates for households earning more than $400,000. But he might want to start with capital-gains and estate taxes because they’re easier to target at the wealthy. The top 1% of earners capture 69% of long-term capital gains, while the top 20% of earners earn 90% of the capital gains. That shareholder class has benefited most from fiscal and monetary stimulus that has propped up the stock market for the last 11 months and helped with a decade of generous gains. If anybody can afford it, they can.

As for the estate tax, only about 1,900 U.S. estates are subject to any federal tax, which is less than one-tenth of 1% of the Americans who die in a given year. The number of estates subject to this tax was three times higher in 2009, the last year the exemption threshold was $3.5 million. Since Biden wants to return to that ceiling, assume he’d triple the number of families having to pay some estate tax. It still remains a vanishingly small number. Plus, unlike the wealth tax, it has been the law before, and there’s no question of whether it would work.

Author(s): Rick Newman

Publication Date: 2 March 2021

Publication Site: Yahoo Finance

Elizabeth Warren Still Wants a Wealth Tax. It Still Won’t Work.

Excerpt:

Warren is spending this week talking up her “Ultra-Millionaire Tax Act.” It’s essentially a refreshed version of the same idea she proposed during her failed bid for the Democratic presidential nomination. The current measure, like the old one, would tax the net worth of American households with more than $50 million in assets to the tune of 2 percent annually, with an additional 1 percent tax for households worth more than $1 billion. Warren favored the wealth tax in 2019 when the economy was generally doing pretty well. But now, she says, it’s needed “because of the changes in this country under the pandemic.”

….

Yellen is right, by the way, that Warren’s plan would have “implementation problems.” That’s a polite way of saying it wouldn’t work. The wealthy tend to have difficult-to-value assets, and forcing the IRS to value them every year in order to assess the tax would, in the words of one tax expert, be an “administrative nightmare.” 

Author(s): Peter Suderman

Publication Date: 2 March 2021

Publication Site: Reason

Don’t Tax Book Income

Link: https://www.forbes.com/sites/shivaramrajgopal/2021/02/17/dont-tax-book-income/?sh=13874daa2f1f

Excerpt:

There are rumors that the Biden administration is thinking of a 15% minimum tax on companies with book or accounting income (“GAAP” income) of $100 million or more. This proposal tends to bubble up on the national policy agenda off and on with unfailing regularity. For example, in April 2019 Senator Elizabeth Warren raised a similar proposal in the early days of her presidential campaign and the Joint Committee on Taxation, as far back as 2006  examined Treasury’s advocacy of such a tax.  Sadly, this was tried once and was a failure. In 1986, the corporate minimum tax was amended to include an adjustment for book-tax differences, being applied from 1987 to 1989 before it was not renewed.

There are many pitfalls associated with the idea of taxing book income. For starters, companies that meet the threshold will try and minimize GAAP income to pay lower taxes. One could argue that is desirable as we often suspect that companies today inflate GAAP income to look better to their shareholders. Tying tax rates to book income would imply that earnings management, or attempts to artificially inflate GAAP earnings, will now incur a real cash outflow cost in terms of higher taxes. However, the usefulness of GAAP earnings would be severely compromised and if distorted by tax related maneuvers, will give managers and speculators even more fuel to spin narratives to justify wild valuations. One can even imagine a world where stock return volatility driven by uninformative earnings numbers might drive away uninformed investors from equity markets.

Author(s): Shivaram Rajgopal

Publication Date: 17 February 2021

Publication Site: Forbes

Elizabeth Warren and the SEC Should Let the GameStop Lulz Go On

Excerpt:

Of course, if there’s one thing America’s national political class does not like or understand, it is lulz. Lulz are inherently chaotic and disorderly, and that tends to cause headaches for most anyone with a bureaucratic bent. But it also produces reactions like one we saw yesterday, in which Sen. Elizabeth Warren (D–Mass.) used the GameStop episode to call for intervention by the Securities and Exchange Commission (SEC). 

It’s not at all clear what the SEC could do to stop what is essentially a financial market flash mob, aside from ensure that no large institutional investors are secretly in on the WallStreetBets side of the trade. If that’s the case (and it may well be, though who knows), then the SEC will probably end up taking some sort of action based on existing rules designed to prohibit fraudulent pump-and-dump schemes, where stocks are artificially boosted and sold off. 

Author(s): Peter Suderman

Publication Date: 28 January 2021

Publication Site: Reason

‘Terrible Idea’ with ‘Dismal Track Record’: Top Economists Blast Elizabeth Warren’s Latest Proposal

Link: https://fee.org/articles/terrible-idea-with-dismal-track-record-top-economists-blast-elizabeth-warren-s-latest-proposal/

Excerpt:

In fact, wealth taxes have failed across the world where they’ve been tried.

“Warren’s proposal has a dismal track record in other countries that have attempted wealth taxation,” Senior Research Fellow at the American Institute for Economic Research and economic historian Phil Magness warned. “It simply encourages the wealthy to relocate abroad, taking their businesses with them.”

Economists say that’s why the global trend has not been passing wealth taxes, but repealing them. Edwards pointed out that in 1990, 12 European countries had wealth taxes. Now? Just three still do. 

“Even most of the leftist welfare states in Europe have repealed their wealth taxes because of the complex administration, the negative impacts on growth, and the encouragement of avoidance and evasion,” Cato’s Edwards concurred. 

Author(s): Brad Polumbo

Publication Date: 4 February 2021

Publication Site: Foundation for Economic Education