Business Groups Push Back on Tax Increase in Biden Plan: Live Updates

Miami’s Signature Bridge under construction earlier this month. President Biden is expected to propose a  trillion package of infrastructure spending.
Credit…Joe Raedle/Getty Images

Business groups and large corporations reacted negatively on Wednesday to President Biden’s expected proposal to fund his $2 trillion package of infrastructure spending with a substantial increase in corporate taxes.

The scale of the infrastructure program — the details of which Mr. Biden is expected to unveil later on Wednesday — is so big that is that it would require 15 years of higher taxes on corporations to pay for eight years of spending. The plans include raising the corporate tax rate to 28 percent from 21 percent. The corporate tax rate had been cut from 35 percent under former President Donald J. Trump.

The Business Roundtable said it supported infrastructure investment, calling it “essential to economic growth” and important “to ensure a rapid economic recovery” — but rejected corporate tax increases as a way to pay for it.

“Business Roundtable strongly opposes corporate tax increases” to pay for infrastructure investment, the group’s chief executive, Joshua Bolten, said in a statement. Policymakers should avoid creating new barriers to job creation and economic growth, particularly during the recovery.”

The U.S. Chamber of Commerce echoed Business Roundtable’s view. “We strongly oppose the general tax increases proposed by the administration, which will slow the economic recovery and make the U.S. less competitive globally — the exact opposite of the goals of the infrastructure plan,” the chamber’s chief policy officer, Neil Bradley, said in a statement.

Automakers embraced Mr. Biden’s bet to increase the use of electric cars. The plan proposes spending $174 billion to encourage the manufacture and purchase of electric vehicles by granting tax credits and other incentives to companies that make electric vehicle batteries in the United States instead of China.

“Customers want connected and increasingly electric vehicles, and we need to work together to build the infrastructure to help this transformation,” Jim Farley, the chief executive of Ford Motor, said in a statement. “Ford supports the administration’s efforts to advance a broad infrastructure plan that prioritizes a more sustainable, connected and autonomous future — including an integrated charging network and supportive supply chain, built on a foundation of safe roads and bridges for our customers.”

“With vaccinations becoming more widespread and confidence in travel rising, we’re ready to help customers reclaim their lives,” the chief executive of Delta Air Lines said.
Credit…Chang W. Lee/The New York Times

Delta Air Lines said Wednesday that it would sell middle seats on flights starting May 1, more than a year after it decided to leave them empty to promote distancing. Other airlines had blocked middle seats early in the pandemic, but Delta held out the longest by several months and is the last of the four big U.S. airlines to get rid of the policy.

The company’s chief executive, Ed Bastian, said that a survey of those who flew Delta in 2019 found that nearly 65 percent expected to have received at least one dose of a coronavirus vaccine by May 1, which gave the airline “the assurance to offer customers the ability to choose any seat on our aircraft.”

Delta started blocking middle seat bookings in April 2020 and said that it continued the policy to give passengers peace of mind.

“During the past year, we transformed our service to ensure their health, safety, convenience and comfort during their travels,” Mr. Bastian said in a statement. “Now, with vaccinations becoming more widespread and confidence in travel rising, we’re ready to help customers reclaim their lives.”

Air travel has started to recover meaningfully in recent weeks, with ticket sales rising and as well over one million people per day have been screened at airport checkpoints since mid-March, according to the Transportation Security Administration. More than 1.5 million people were screened on Sunday, the busiest day at airports since the pandemic began. Air travel is still down about 40 percent from 2019.

The Centers for Disease Control and Prevention continues to recommend against travel, even for those who have been vaccinated. This week, its director, Dr. Rochelle Walensky, warned of “impending doom” from a potential fourth wave of the pandemic if Americans move too quickly to disregard the advice of public health officials.

Delta also said on Wednesday that it would give customers more time to use expiring travel credits. All new tickets purchased in 2021 and credits set to expire this year will now expire at the end of 2022.

Starting April 14, the airline plans to bring back soft drinks, cocktails and snacks on flights within the United States and to nearby international destinations. In June, it plans to start offering hot food in premium classes on some coast-to-coast flights. Delta also announced changes that will make it easier for members of its loyalty program to earn points this year.

Deliveroo is now in 12 countries and has over 100,000 riders.
Credit…Toby Melville/Reuters

Deliveroo, the British food delivery service, dropped as much as 30 percent in its first minutes of trading on Wednesday, a gloomy public debut for the company that was promoted as a post-Brexit win for London’s financial markets.

The company had set its initial public offering price at 3.90 pounds a share, valuing Deliveroo at £7.6 billion or $10.4 billion. But it opened at £3.31, 15 percent lower, and kept falling. By early afternoon, shares had recovered slightly, trading at about £2.86, 27 percent lower.

The offering has been troubled by major investors planning to sit out the I.P.O. amid concerns about shareholder voting rights and Deliveroo rider pay. Deliveroo, trading under the ticker “ROO,” sold just under 385 million shares, raising £1.5 billion.

The business model of Deliveroo and other gig economy companies is increasingly under threat in Europe as legal challenges mount. Two weeks ago, Uber reclassified more than 70,000 drivers in Britain as workers who will receive a minimum wage, vacation pay and access to a pension plan, after a Supreme Court ruling. Analysts said the move could set a precedent for other companies and increase costs.

Deliveroo, which is based in London and was founded in 2013, is now in 12 countries and has more than 100,000 riders, recognizable on the streets by their teal jackets and food bags. Last year, Amazon became its biggest shareholder.

Demand for Deliveroo’s services could soon diminish, as pandemic restrictions in its largest market, Britain, begin to ease. In a few weeks, restaurants will reopen for outdoor dining. Last year, Deliveroo said, it lost £226.4 million even as its revenue jumped more than 50 percent to nearly £1.2 billion.

Last week, a joint investigation by the Independent Workers’ Union of Great Britain and the Bureau of Investigative Journalism was published based on invoices of hundreds of Deliveroo riders. It found that a third of the riders made less than £8.72 an hour, the national minimum wage for people over 25.

Deliveroo dismissed the report, calling the union a “fringe organization” that didn’t represent a significant number of Deliveroo riders. The company said that riders were paid for each delivery and earn “£13 per hour on average at our busiest times.”

On Monday, shares traded hands in a period called conditional dealing open to investors allocated shares in the initial offering. The stock is expected to be fully listed on the London Stock Exchange next Wednesday and can be traded without restrictions from then.

Last week, Ed Bastian, the chief executive of Delta, said he thought Georgia’s voting law had been improved, but on Wednesday he sounded a very different note.
Credit…Etienne Laurent/EPA, via Shutterstock

The chief executive of Delta, Ed Bastian, sent a letter on Wednesday to employees expressing regret for the company’s muted opposition to a restrictive voting law passed last week by the Georgia legislature.

“I need to make it crystal clear that the final bill is unacceptable and does not match Delta’s values,” he wrote in an internal memo that was reviewed by The New York Times.

Mr. Bastian’s position is a stark reversal from last week. As Republican lawmakers in Georgia rushed to pass the new law, Delta, along with other big companies headquartered in Atlanta, came under pressure from activists to publicly and directly oppose the effort. Activists called for boycotts, and protested at the Delta terminal at the Atlanta airport.

Instead, Delta chose to offer general statements in support of voting rights, and work behind the scenes to try and remove some of the most onerous provisions as the new law came together. After the law was passed on Thursday, Mr. Bastian said he believed it had been improved and included several useful changes that make voting more secure.

But on Wednesday, after dozens of prominent Black executives called on corporate America to become more engaged in the issue, Mr. Bastian reversed course.

“After having time to now fully understand all that is in the bill, coupled with discussions with leaders and employees in the Black community, it’s evident that the bill includes provisions that will make it harder for many underrepresented voters, particularly Black voters, to exercise their constitutional right to elect their representatives,” he said. “That is wrong.”

Mr. Bastian went further, saying that the entire premise of the new law — and dozens of similar bills being advanced in other states around the country — was based on false pretenses.

“The entire rationale for this bill was based on a lie: that there was widespread voter fraud in Georgia in the 2020 elections,” Mr. Bastian said. “This is simply not true. Unfortunately, that excuse is being used in states across the nation that are attempting to pass similar legislation to restrict voting rights.”

Also on Wednesday, Larry Fink, the chief executive of BlackRock, issued a statement on LinkedIn saying the company was concerned about the wave of new restrictive voting laws. “BlackRock is concerned about efforts that could limit access to the ballot for anyone,” Mr. Fink said. “Voting should be easy and accessible for ALL eligible voters.”

Kenneth Chenault, left, a former chief executive of American Express, and Kenneth Frazier, the chief executive of Merck, organized a letter signed by 72 Black business leaders.
Credit…Left, Justin Sullivan/Getty Images; right, Spencer Platt/Getty Images

Seventy-two Black executives signed a letter calling on companies to fight a wave of voting-rights bills similar to the one that was passed in Georgia being advanced by Republicans in at least 43 states.

The effort was led by Kenneth Chenault, a former chief executive of American Express, and Kenneth Frazier, the chief executive of Merck, Andrew Ross Sorkin and David Gelles report for The New York Times.

The signers included Roger Ferguson Jr., the chief executive of TIAA; Mellody Hobson and John Rogers Jr., the co-chief executives of Ariel Investments; Robert F. Smith, the chief executive of Vista Equity Partners; and Raymond McGuire, a former Citigroup executive who is running for mayor of New York. The group of leaders, with support from the Black Economic Alliance, bought a full-page ad in the Wednesday print edition of The New York Times.

“The Georgia legislature was the first one,” Mr. Frazier said. “If corporate America doesn’t stand up, we’ll get these laws passed in many places in this country.”

Last year, the Human Rights Campaign began persuading companies to sign on to a pledge that states their “clear opposition to harmful legislation aimed at restricting the access of L.G.B.T.Q. people in society.” Dozens of major companies, including AT&T, Facebook, Nike and Pfizer, signed on.

To Mr. Chenault, the contrast between the business community’s response to that issue and to voting restrictions that disproportionately harm Black voters was telling.

“You had 60 major companies — Amazon, Google, American Airlines — that signed on to the statement that states a very clear opposition to harmful legislation aimed at restricting the access of L.G.B.T.Q. people in society,” he said. “So, you know, it is bizarre that we don’t have companies standing up to this.”

“This is not new,” Mr. Chenault added. “When it comes to race, there’s differential treatment. That’s the reality.”

A Huawei store in Beijing. The United States has placed strict controls on Huawei’s ability to buy and make computer chips.
Credit…Greg Baker/Agence France-Presse — Getty Images

The Chinese tech behemoth Huawei reported sharply slower growth in sales last year, which the company blamed on American sanctions that have both hobbled its ability to produce smartphones and left those handsets unable to run popular Google apps and services, limiting their appeal to many buyers.

Huawei said on Wednesday that global revenue was around $137 billion in 2020, 3.8 percent higher than the year before. The company’s sales growth in 2019 was 19.1 percent.

Over the past two years, Washington has placed strict controls on Huawei’s ability to buy and make computer chips and other essential components. United States officials have expressed concern that the Chinese government could use Huawei or its products for espionage and sabotage. The company has denied that it is a security threat.

In recent months, Huawei has continued to release new handset models. But sales have suffered, including in its home market. Worldwide, shipments of Huawei phones fell by 22 percent between 2019 and 2020, according to the research firm Canalys, making the company the world’s third largest smartphone vendor last year. In 2019, it was No. 2, behind Samsung.

Huawei remained top dog last year in telecom network equipment, according to the consultancy Dell’Oro Group, even as Britain and other governments blocked Huawei from building their nations’ 5G infrastructure.

Announcing the company’s financial results on Wednesday, Ken Hu, one of its deputy chairmen, said that despite the challenges, Huawei was not changing the broad direction of its business. Another Huawei executive recently revealed on social media that the company was offering an artificial intelligence product for pig farms, which some people took as a sign that Huawei was diversifying to survive.

Mr. Hu took note of the news reports about Huawei’s pig-farming product but said it was “not true” that the company was making any major shifts. “Huawei’s business direction is still focused on technology infrastructure,” he said.

Apple led the  million funding round in UnitedMasters, which allows musicians keep ownership of their master recordings.
Credit…Kathy Willens/Associated Press

Apple is investing in UnitedMasters, a music distribution company that lets musicians bypass traditional record labels.

Artists who distribute through UnitedMasters keep ownership of their master recordings and pay either a yearly fee or 10 percent of their royalties.

Apple led the $50 million funding round, announced on Wednesday, which values UnitedMasters at $350 million, the DealBook newsletter reports. Existing investors, including Alphabet and Andreessen Horowitz, also participated in the funding.

Musicians are increasingly taking ownership of their work. Taylor Swift, most famously, and Anita Baker, most recently, have publicized their fights with labels over their master recordings. Artists once needed the heft of major publishing labels — which typically demand ownership of master recordings — to build a fan base. But with social media, labels no longer play as significant a gatekeeping role. UnitedMasters has partnerships with the N.B.A., ESPN, TikTok and Twitch, deals that reflect the new ways that people discover music.

“Technology, no doubt, has transformed music for consumers,” said Steve Stoute, the former major label executive who founded UnitedMasters. “Now it’s time for technology to change the economics for the artists.” The deal with UnitedMasters is about “empowering creators,” Eddy Cue, Apple’s head of internet software and services, said.

As streaming services, including Apple’s, compete for subscribers, they are cutting more favorable deals with the artists who attract users to platforms. Spotify announced an initiative called “Loud and Clear” this week to detail how it pays musicians following public pressure.

An H&M store in Beijing. The retailer’s chief executive, Helena Helmersson, said H&M had a “long-term commitment” to China.
Credit…Kevin Frayer/Getty Images

More than a week after the Swedish retailer H&M came under fire in China for a months-old statement expressing concern over reports of Uyghur forced labor in the region of Xinjiang, a major source of cotton, the company published a statement saying it hoped to regain the trust of customers in China.

In recent days, H&M and other Western clothing brands including Nike and Burberry that expressed concerns over reports coming out of Xinjiang have faced an outcry on Chinese social media, including calls for a boycott endorsed by President Xi Jinping’s government. The brands’ local celebrity partners have terminated their contracts, Chinese landlords have shuttered stores and their products have been removed from major e-commerce platforms.

Caught between calls for patriotism among Chinese consumers and campaigns for conscientious sourcing of cotton in the West, some other companies, including Inditex, the owner of the fast-fashion giant Zara, quietly removed statements on forced labor from their websites.

On Wednesday, H&M, the world’s second-largest fashion retailer by sales after Inditex, published a response to the controversy as part of its first quarter 2021 earnings report.

Not that it said much. There were no explicit references to cotton, Xinjiang or forced labor. However, the statement said that H&M wanted to be “a responsible buyer, in China and elsewhere” and was “actively working on next steps with regards to material sourcing.”

“We are dedicated to regaining the trust and confidence of our customers, colleagues, and business partners in China,” it said.

During the earnings conference call, the chief executive, Helena Helmersson, noted the company’s “long-term commitment to the country” and how Chinese suppliers, which were “at the forefront of innovation and technology,” would continue to “play an important role in further developing the entire industry.”

“We are working together with our colleagues in China to do everything we can to manage the current challenges and find a way forward, ” she said.

Executives on the call did not comment on the impact of the controversy on sales, except to state that around 20 stores in China were currently closed.

H&M’s earnings report, which covered a period before the recent outcry in China, reflected diminished profit for a retailer still dealing with pandemic lockdowns. Net sales in the three months through February fell 21 percent compared with the same quarter a year ago, with more than 1,800 stores temporarily closed.

Stocks on Wall Street rose as investors waited for President Biden to lay out plans for a $2 trillion package of infrastructure spending on Wednesday, which he is expected to propose funding with an increase in corporate taxes.

The S&P 500 index opened with a gain of about 0.3 percent, while the Nasdaq composite climbed about 0.7 percent. Bonds fell with the yield on 10-year Treasury notes at 1.72 percent. On Tuesday, the 10-year yield climbed as high 1.77 percent, a level not seen since January 2020.

Prospects of a strong economic recovery in the United States, supported by large amounts of fiscal spending and the vaccine rollout, have pushed bond yields higher. Economic growth and higher inflation have made bonds less appealing as investors adjust their expectations for how much longer the Federal Reserve will need to keep its easy-money policies.

  • European stock indexes were mixed. The Stoxx Europe 600 index rose slightly, while the FTSE 100 index in Britain dropped about 0.3 percent.

  • H&M shares fell 3 percent in Stockholm after the clothing retailer reported a drop in sales in its quarterly earnings and said it was “dedicated to regaining the trust and confidence” of its Chinese customers and partners. Recently, H&M and other brands have been caught up in calls for a boycott in China after they expressed concerns about forced labor in the region of Xinjiang, a major source of cotton. H&M’s shares have dropped 10 percent in the past two weeks.

  • Deliveroo shares dropped 25 percent below their I.P.O. price on their first morning of trading in London. The food delivery company’s public debut has been marred by concerns about low pay for its riders and lack of profits, and major investors sat out the offering.

  • Apple rose 1 percent after Huawei, the Chinese tech company, said sales of its smartphones and other products were hit by American sanctions. Last year, its global revenue rose 3.8 percent compared with a 16 percent increase in 2019.

The Ever Given cargo ship was stuck in the Suez Canal nearly a week.
Credit…Agence France-Presse — Getty Images

The traffic jam at the Suez Canal will soon ease, but behemoth container ships like the one that blocked that crucial passageway for almost a week aren’t going anywhere.

Global supply chains were already under pressure when the Ever Given, a ship longer than the Empire State Building and capable of carrying 20,000 containers, wedged itself between the banks of the Suez Canal last week. It was freed on Monday, but left behind “disruptions and backlogs in global shipping that could take weeks, possibly months, to unravel,” according to A.P. Moller-Maersk, the world’s largest shipping company.

The crisis was short, but it was also years in the making, reports Niraj Chokshi for The New York Times.

For decades, shipping lines have been making bigger and bigger vessels, driven by an expanding global appetite for electronics, clothes, toys and other goods. The growth in ship size, which sped up in recent years, often made economic sense: Bigger vessels are generally cheaper to build and operate on a per-container basis. But the largest ships can come with their own set of problems, not only for the canals and ports that have to handle them, but for the companies that build them.

“They did what they thought was most efficient for themselves — make the ships big — and they didn’t pay much attention at all to the rest of the world,” said Marc Levinson, an economist and author of “Outside the Box,” a history of globalization. “But it turns out that these really big ships are not as efficient as the shipping lines had imagined.”

Despite the risks they pose, however, massive vessels still dominate global shipping. According to Alphaliner, a data firm, the global fleet of container ships includes 133 of the largest ship type — those that can carry 18,000 to 24,000 containers. Another 53 are on order.

A.P. Moller-Maersk said it was premature to blame Ever Given’s size for what happened in the Suez. Ultra-large ships “have existed for many years and have sailed through the Suez Canal without issues,” Palle Brodsgaard Laursen, the company’s chief technical officer, said in a statement on Tuesday.

  • Some of the most vulnerable Americans still haven’t received their stimulus checks, but millions of them who receive federal benefits should get their payments next week, according to the Internal Revenue Service. People who receive benefits from Social Security, Supplemental Security Income, the Railroad Retirement Board and Veterans Affairs — but do not file tax returns because they don’t meet the income thresholds — were among those who faced delays. But most of them, with the exception of those receiving benefits from Veterans Affairs, could have their payments arrive by direct deposit on April 7.

  • About a million student loan borrowers who were left out of earlier relief efforts are getting a reprieve — but only if they defaulted on their loans. The Education Department said on Tuesday that it would temporarily stop collecting on defaulted loans that were made through the Family Federal Education Loans program and were privately held. The change, however, still leaves millions of other borrowers in that program responsible for payments while the bulk of the country’s student loan borrowers have had theirs paused.

Source link

Scroll to Top