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The United States is losing $1 trillion in unpaid taxes every year, Charles Rettig, the Internal Revenue Service commissioner, estimated on Tuesday, arguing that the agency lacks the resources to catch tax cheats.
The so-called tax gap has surged in the last decade. The last official estimate from the I.R.S. was that an average of $441 billion per year went unpaid from 2011 to 2013. Most of the unpaid taxes are the result of evasion by the wealthy and large corporations, Mr. Rettig said.
“We do get outgunned,” he said during a Senate Finance Committee hearing on the coming tax season.
Senator Ron Wyden of Oregon, the Democratic chairman of the committee, called the $1 trillion tax gap a “jaw-dropping figure.”
“The fact is that nurses and firefighters have to pay with every paycheck and so many highfliers can get off,” Mr. Wyden said.
Mr. Rettig attributed the growing tax gap to the rise of the $2 trillion cryptocurrency sector, which remains lightly regulated and has been an avenue for tax avoidance. He also pointed to foreign-source income and the abuse of pass-through provisions in the tax code by companies.
The size of the I.R.S.’s enforcement division has declined sharply in recent years, Mr. Rettig said, with its ranks falling by 17,000 over the last decade.
The spending proposal that the Biden administration released last week asked for a 10.4 percent increase above current funding levels for the tax collection agency, to $13.2 billion. The additional money would go toward increasing oversight of tax returns of high-income individuals and companies and improving customer service at the I.R.S.
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From Michigan to Texas, the debate over voting legislation continues to consume the business community.
As Michigan’s State Senate prepares to hold hearings on a package of voting bills, the chief executives of30 of the state’s largest companies, including Ford Motor, General Motors and Quicken Loans, released a joint statement declaring their opposition to changes in the state’s election laws that would make voting more difficult.
“We are calling on Michigan lawmakers and state legislatures across the nation to ensure that any changes to voting laws result in protecting and enhancing the most precious element of democracy,” General Motors said in a separate statement posted on Twitter. “Anything less falls short of our inclusion and social justice goals.”
In Texas, where two omnibus bills that would introduce a raft of voting restrictions are working their way through the legislature, more big companies reiterated their opposition to restrictive new voting laws.
Hewlett Packard Enterprise, which is based in Houston, said in a statement: “We categorically oppose any legislation that unfairly seeks to restrict the right of our team members or any American to vote in fair, accessible and secure elections.”
The Black Economic Alliance is putting together a new statement opposing “discriminatory legislation.” It is expected to be unveiled in the next day, with American Airlines, which is based in Fort Worth among the companies preparing to sign, according to several people familiar with the situation. Other companies signing the statement include Google, Ford, BlackRock, Netflix and PayPal.
In the weeks since Georgia Republicans passed a law that includes provisions that would make it harder for some people to vote, the whole of corporate America has been drawn into the fight. Republicans in almost every state are working on similar legislation, and the focus is quickly moving to Texas, Arizona and Michigan.
While most companies strive to stay out of politics, the issue of voting rights has united many of the country’s largest corporations.
“There is something that is fundamentally unfair about restrictive voting laws,” said Eddie Fishman, the managing director at the investment firm D.E. Shaw, who signed the new statement. “It undermines confidence in this country, and that’s bad for its citizens and its companies.”
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In legal settlements that could reshape the children’s app market, Disney, Viacom and 10 advertising technology firms have agreed to remove certain advertising software from children’s apps to address accusations that they violated the privacy of millions of youngsters.
The agreements resolve three related class-action cases involving some of the largest ad-tech companies — including Twitter’s MoPub — and some of the most popular children’s apps — including “Subway Surfers,” an animated game from Denmark that users worldwide have installed more than 1.5 billion times, according to Sensor Tower, an app research firm.
The lawsuits accused the companies of placing tracking software in popular children’s gaming apps without parents’ knowledge or consent, in violation of state privacy and fair business practice laws. Such trackers can be used to profile children across apps and devices, target them with ads and push them to make in-app purchases, according to legal filings in the case.
Now, under the settlements approved on Monday by a judge in the U.S. District Court for the Northern District of California, the companies have agreed to remove or disable tracking software that could be used to target children with ads. Developers will still be able to show contextual ads based on an app’s content.
“This is going to be the biggest change to the children’s app market that we’ve seen that gets at the business models,” said Josh Golin, the executive director of Campaign for a Commercial-Free Childhood, a nonprofit in Boston. “On thousands of apps, children will no longer be targeted with the most insidious and manipulative forms of marketing.”
The companies in the class-action cases did not admit any wrongdoing.
The settlements come as the Federal Trade Commission has been pursuing children’s privacy cases against individual developers and ad-tech firms. But children’s advocates said the class-action cases, which involved a much larger swath of the app and ad tech marketplace, could prompt industrywide changes for apps and ads aimed at young people.
Viacom, whose settlement covers one of its children’s apps, called “Llama Spit Spit,” Kiloo, a Danish company that codeveloped “Subway Surfers,” and Twitter declined to comment. Disney, whose settlement agreement covers its children’s apps in the United States, did not immediately response to emails seeking comment.
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Epic Games, the video game developer that produced the hit game Fortnite, said Tuesday that it had raised $1 billion in funding, valuing the company at $28.7 billion.
Sony, the creator of the PlayStation game console, invested $200 million, Epic said, and Appaloosa Management, Baillie Gifford and Fidelity Management were also among the investors.
Epic’s most recent funding round came last summer, when it raised $1.78 billion to value the company at $17.3 billion. Sony invested $250 million at the time.
Epic, based in Cary, N.C., was founded in 1991 by Tim Sweeney, the company’s chief executive. It found success with Unreal Engine, a platform other developers could use to create games, and with the Gears of War video game franchise in the mid-2000s. Tencent, the Chinese internet giant, owns a 40 percent stake in the company.
Epic’s breakthrough came in 2017, when it released Fortnite. The animated, battle royale-style title has become one of the most popular video games, and spawned a new generation of livestreaming. It made gamers who broadcast their play of Fortnite, like Tyler Blevins — known as Ninja — into wealthy celebrities.
Evan Van Zelfden, the managing director for Games One, an advisory firm, said Epic’s latest funding round was another indicator of the success the gaming industry had seen since the pandemic forced people indoors and glued them to their screens.
He speculated that the eventual next stage for Epic could be an initial public offering, a move that would “break the market.”
Epic’s funding round comes as the company prepares to take Apple to court next month in a dispute over the App Store commission that Apple collects from app developers, including on purchases made within Fortnite when users are playing on their iPhones.
Last August, Epic encouraged Fortnite players to pay the company directly rather than go through Apple or Google, prompting the two companies to boot Fortnite from their respective app stores. Epic responded with lawsuits.
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Britain’s economy began a tentative recovery in February even as the country was under a third national lockdown. And two months after Britain signed a post-Brexit trade deal with the European Union, exports to the bloc also rebounded as businesses slowly grappled with new rules.
Gross domestic product rose 0.4 percent in February, compared with a revised drop of 2.2 percent in January, the Office for National Statistics estimated on Tuesday.
Analysts at Barclays upgraded their economic forecasts after the upbeat official data. In the first quarter of this year, they expect the economy to contract 1.5 percent from the previous quarter, compared with a previous forecast of 2.4 percent contraction.
Still, the economy is nearly 8 percent smaller than it was before the pandemic and while businesses have wrestled with changing government restrictions they have also had to deal with the fallout of Brexit. Fisherman, pork exporters and clothing companies were among the industries quick to complain that trade barriers made their jobs near impossible.
At the end of last year, British businesses prepared for the country’s exit from the European Union’s single market and customs union on Jan. 1 by stockpiling imported goods and trying to get sales across the border before the new year. Then trade flows plummeted in January. Exporters struggled with the new paperwork and consumers faced customs fees. Exports to the bloc dropped more than 40 percent and imports were down by a third.
In February, exports started to recuperate, separate data showed. They rose by nearly 47 percent over the previous month. Imports, however, are far from recovering.
One problem that seemed to take businesses by surprise was the extra duties on goods traveling from distribution centers in Britain to customers in the Republic of Ireland. Earlier this year, Marks & Spencer stores in Ireland suffered from shortages, the flower delivery company Bloom & Wild had to stop sending to customers there and the delivery firm DPD stopped driving parcels to Ireland.
These problems are still being worked out and not all of them have quick solutions. JD Sports, a sports clothing retailer, said on Tuesday that it was building a new 65,000-square-foot warehouse near Dublin because shipping goods from Britain had become costly and a large warehouse in Belgium didn’t suffice.
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Americans pay $17 billion in overdraft fees every year. PNC Bank announced on Tuesday its plans to help customers reduce that burden, which often falls on those who can least afford it.
The bank is introducing measures that it said would cut customers’ overdraft fees about 60 percent, and its own annual revenue by $125 million to $150 million, the DealBook newsletter reports. It comes as PNC prepares to close its deal with BBVA, which would make it the country’s fifth-largest retail bank.
Eight percent of account holders generate three-quarters of overdraft fees, according to the Consumer Financial Protection Bureau. Lawmakers have worried that banks obfuscate these fees as they become a reliable source of revenue. The fees are expected to come under scrutiny by the Biden administration, particularly if Rohit Chopra, a consumer advocate, is confirmed take over the C.F.P.B.
“Overdraft is an expensive fee they charge only on those people who run out of money that goes straight to short-term profits,” said Aaron Klein, a senior fellow at the Brookings Institution.
PNC is hoping to change that with a new feature in its app. “We weren’t doing the best we could do by our clients,” PNC’s chief executive, William Demchak, said in an interview. In the PNC app’s new “low cash mode,” when an account goes negative, the customer has at least 24 hours to fix it, including by reviewing pending payments and deciding which to prioritize.
For the largest banks to adopt a similar approach is a matter of technology — and desire. On a scale of which banks earn the most from the fees, overdraft fees generate $35.61 per account for JPMorgan Chase on the high end and $4.90 per account for Citi on the low end, according to Mr. Klein. PNC fell in the middle, with $14.96 per account.
PNC already assumed a short-term revenue drop into projections as part of its deal with BBVA, but over the long term, it expects the move will help it gain market share. “We’re in a consolidated industry where we want to be one of the consolidators,” Mr. Demchak said. “In the short run, if it costs us 100 million bucks or something — so what?”
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Tech workers at The New York Times announced on Tuesday that they had formed a union and would ask the company to recognize it.
The group, a majority of which signed cards in support of the effort, of more than 650 employees includes software engineers, designers, data analysts and product managers. It will be represented by the NewsGuild of New York. NewsGuild membership already includes more than 1,300 newsroom workers and business staff members at The Times, as well as workers at other media outlets.
As part of the Times Tech Guild, the tech workers would be in a separate bargaining unit from other Times employees represented by the NewsGuild.
In recent years, The Times has ramped up its hiring of tech workers as part of its strategy to reach 10 million paid digital subscribers by 2025. In 2020, digital-only subscriptions neared seven million and became the company’s largest revenue stream.
Kathy Zhang, a senior analytics manager and a member of the organizing committee, said in an interview that The Times felt like “an emerging company” in some ways, although it is a 170-year-old institution.
“There’s a lot of stuff we’re trying out,” she said. “There’s a lot of starting and stopping of different projects. It’s been really exciting, but it’s also been pretty exhausting.”
The tech workers were concerned about pay equity, health care costs, job security and career advancement, Ms. Zhang added. The union also hoped to improve diversity and inclusion in the department.
The New York Times Company can decide to voluntarily recognize the union, as it did with a union at Wirecutter, a product recommendation site owned by the company, in 2019. If it chooses not to, the union can file with the National Labor Relations Board for an election, in which the union will need a simple majority of votes to win recognition.
A spokeswoman for The New York Times Company said in a statement that the company had received the request for voluntary recognition from the union on Tuesday morning,
and that because voluntary recognition was a significant decision the company wanted to “make sure all voices are heard.”
“At The New York Times, we have a long history of positive and productive relationships with unions, and we respect the right of all employees to decide whether or not joining a union is right for them,” the spokeswoman said. “We will take time to review this request and discuss it soon with representatives of the NewsGuild.”
The organizing of The Times’s tech workers came months after more than 400 Google engineers and other workers formed a union, a rarity in Silicon Valley. An organizing drive at an Amazon warehouse in Alabama was voted down last week.
Media companies have had a surge in such efforts. Workers at publications like BuzzFeed News, Vice, The New Yorker, Slate and Vox Media have all formed unions in recent years.
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Grab — a ride-hailing company, bank and food delivery business all rolled into one — is set to make its debut in the largest offering by a Southeast Asian company on a U.S. stock exchange.
The company, which is based in Singapore, announced a deal on Tuesday with Altimeter Growth, a company listed for the sole purpose of buying a business. These special purpose acquisition vehicles, or SPACs, have snapped up companies over the past year at a rapid-fire pace. But this deal, which values Grab at roughly $39.6 billion, is expected to the largest such deal to date. Grab shares will trade on the Nasdaq stock exchange
The deal also includes an investment of more than $4 billion from a group that includes BlackRock, T. Rowe Price Associates and Temasek. Altimeter Capital Management, the investment firm backing the vehicle acquiring Grab, has agreed to hold certain shares in the company for at least three years.
Grab offers a “super app” that allows users to order food, pay bills and hail a car. It’s a model already popular in China, where WeChat offers a range of services, but is growing in Southeast Asia, particularly as the region builds its digital businesses. The pandemic helped propel the trend forward, with Southeast Asian consumers spending more than $10 billion online last year.
Grab acquired Uber’s Southeast Asia operations in 2018 and a digital banking license as part of a consortium in 2020. It has attracted investors including Booking Holdings, Hyundai, Microsoft, SoftBank and Toyota.
The company is going public as deal-making is flourishing in Southeast Asia. Bain, the consulting firm, said in 2018 it expected that the region would have had at least 10 unicorns, or start-ups valued at $1 billion or more, by 2024. One of those, the e-commerce company Sea, went public in the United States in 2017. Shares of the company have risen more than 400 percent over the past year, giving it a market capitalization of $125 billion.
“It gives us immense pride to represent Southeast Asia in the global public markets,” Grab’s chief executive, Anthony Tan, said in a statement. “This is a milestone in our journey to open up access for everyone to benefit from the digital economy.”
Consumer prices rose in March at their fastest pace in nearly nine years, an increase that may fuel inflation fears but that likely overstates the extent of the acceleration.
The Consumer Price Index, a closely watched inflation measure, rose 0.6 percent in March from February, the Labor Department said Tuesday. That was up from February’s 0.4 percent increase, and a bit faster than economists’ expectations.
Prices at the pump drove the increase: Gasoline prices rose 9.1 percent in March.
Core inflation, which ignores volatile food and energy prices, rose 0.3 percent, up from 0.1 percent in February.
Prices were up 2.6 percent from a year ago. But that measure — usually closely watched by economists — was skewed by the comparison to March 2020, when prices fell as consumers pulled back spending in the face of the pandemic.
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Inflation rose substantially above 2 percent in March.
+2.5%
+2.0
+1.5
PERCENT CHANGE
IN CONSUMER
PRICE INDEX
FROM A YEAR AGO
+1.0
+0.5
RECESSION
2019
2020
2021
However, some of the jump can be explained
through what’s known as base effects — prices fell
significantly last spring, so the increase now from the
year prior is larger, even if prices are not rising as
dramatically.
265
2021 Consumer price index
2020
255
Jan
April
July
Oct.
Inflation rose substantially above 2 percent in March.
RECESSION
+2.5%
PERCENT CHANGE IN CONSUMER
PRICE INDEX FROM A YEAR AGO
+2.0
+1.5
+1.0
+0.5
2019
2020
2021
However, some of the jump can be explained through what’s known as base effects —
prices fell significantly last spring, so the increase now from the year prior is larger, even
if prices are not rising as dramatically.
265
2021 Consumer price index
260
2020
255
Jan
Feb.
March
April
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Inflation rose substantially above 2 percent in March.
RECESSION
+2.5%
+2.0
+1.5
PERCENT CHANGE IN
CONSUMER PRICE INDEX
FROM A YEAR AGO
+1.0
+0.5
2019
2020
2021
However, some of the jump can be explained through what’s known as base effects — prices fell significantly last spring, so the increase now from the year prior is larger, even if prices are not rising as dramatically.
265
2021 Consumer price index
260
2020
255
Jan
Feb.
March
April
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Economists surveyed by Bloomberg expected an increase of 0.5 percent in overall C.P.I. from February, and 2.5 percent from March 2020.
Inflation data matters because it gives an up-to-date snapshot of how much it costs Americans to buy the goods and services they regularly consume. And because the Federal Reserve is charged in part with keeping increases in prices contained, the data can influence its decisions — and those affect financial markets.
Consumer inflation is measured by statisticians who take a bundle of goods and services Americans buy — everything from fresh fruit to rent — and aggregate it into a price index. The inflation rate that is reported each month shows how much that index changed.
Why the annual rate may overstate the situation.
For a quarter century, most measures of inflation have held at low levels. The C.P.I. moves around a bit because of volatile food and fuel prices, but a “core” index that strips out those factors has mostly increased at a year-over-year rate of less than 2 percent.
But the data reported for March reflects a drop in prices last year, as the country went into lockdown and airlines slashed ticket costs, clothing stores discounted sweaters, and hotels saw occupancy plunge.
That means inflation measures are lapping low readings, and as that low base falls out, it will cause the year-over-year percent changes to jump — a little bit in March, and then a lot in April.
To be sure, climbing prices could last for a while as businesses reopen, consumers spend down big pandemic savings and producers scramble to keep up with demand. Economists and Federal Reserve officials do not expect those increases to persist for more than a few months, but if they did, it would matter to consumers and investors alike.
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Credit Suisse said on Tuesday that it would be able to pay back additional money to investors in funds whose troubles were among a series of disasters that have battered the Swiss bank’s reputation and finances.
The bank said it would pay an additional $1.7 billion to investors in funds linked to Greensill Capital, which collapsed last month. The latest payment means that investors will get back close to half of their money, with the prospect for more payments as Credit Suisse liquidates the funds.
Credit Suisse’s asset management unit oversaw $10 billion in funds put together by Greensill based on financing it provided to companies, many of which had low credit ratings or were not rated at all.
“There is potential for recovery in these cases although clearly there is a considerable degree of uncertainty as to the amounts that ultimately will be distributed to investors,” Credit Suisse said in a statement.
The more money that Credit Suisse can salvage from the funds, the better its chances of repairing its reputation and its ability to attract new customers. The bank has been in crisis following a series of debacles, including its disclosure last week that it will lose almost $5 billion because of money it lent to Archegos Capital Management, which crumbled this month after a high-risk stock market play went sour.
Including the $1.7 billion payment announced Tuesday, Credit Suisse has paid $4.8 billion to investors in the Greensill funds. The bank said it would take legal action to recover more money and “is engaging directly with potentially delinquent obligors and other creditors.” Some losses may be covered by insurance.
“We remain acutely aware of the uncertainty that the wind-down process creates for those of our clients who are invested in the funds,” Credit Suisse said. “We are doing everything that we can to provide them with clarity, to work through issues as they arise and, ultimately, to return cash to them.”
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China has ordered 34 of its most prominent internet companies to ensure their compliance with antimonopoly rules within the next month and to submit to official inspections thereafter — with “severe punishment” promised for any illegal practices that are uncovered.
The demand, which China’s market regulator announced on Tuesday, represents the government’s latest cracking of the whip in its campaign to tighten supervision over giant internet platforms.
For years, Beijing gave internet companies wide berth to grow rich and innovate. But in China, as in the West, concerns have been growing about the ways the companies use their clout to edge out rivals, their use and abuse of algorithms and big data and their acquisitions of smaller peers. In recent months, China has begun using both regulatory enforcement actions and public shaming to keep tech companies in check.
The country’s market regulator imposed a record $2.8 billion antitrust fine on Alibaba, the e-commerce titan, on Saturday. And on Monday, Alibaba’s fintech sister company, Ant Group, unveiled a revamp of its business in response to government demands.
Officials from China’s market watchdog, internet regulator and tax authority met with the companies on Tuesday, according to the government’s statement. At the meeting, the officials “affirmed the positive role of the platform economy” but also told the companies to “give full play to the cautionary example of the Alibaba case.”
The nearly three dozen companies included almost all of the top names in the Chinese internet industry, from established titans like Alibaba, Tencent and Baidu to newer powerhouses such as TikTok’s parent, ByteDance; the food delivery giant Meituan; the e-commerce site Pinduoduo; and the video platform Kuaishou.
At Tuesday’s meeting, the companies were told to strengthen their “sense of responsibility” and to “put the nation’s interests first,” the regulator’s statement said.
Stock trading on Wall Street rose on Tuesday, even as investors worried about a new setback in the fight to control the coronavirus.
The S&P 500 climbed 0.3 percent, recovering from an early dip that came in response to federal health agencies recommending an immediate pause to the use of the Johnson Johnson’s single-dose coronavirus vaccine.
The Food and Drug Administration and the Centers for Disease Control and Prevention said on Tuesday that six women who received the vaccine had developed rare blood clots. “We are recommending a pause in the use of this vaccine out of an abundance of caution,” the agencies said.
Shares of Johnson & Johnson fell about 1.3 percent, weighing on the Dow Jones industrial average, which was down 0.2 percent.
Investors seemed to read the latest consumer price inflation report as less worrisome than they might have expected. Investors have been focused on rising prices lately, worried that fast economic growth might fuel a jump that prompts the Federal Reserve to raise interest rates or otherwise remove its support for the economy.
Consumer prices did increase in March at their fastest pace in nearly nine years, and a rate slightly higher than economists had expected. But the increase wasn’t enough to spook investors. Government bond yields, which have jumped sharply this year over concerns about inflation, dipped after the report.
The Stoxx Europe 600 rose 0.1 percent.
Oil prices rose. Futures of West Texas Intermediate, the U.S. crude benchmark, climbed to just above $60 a barrel.
Boeing booked 40 more orders than it lost in March, the second consecutive month of positive sales after more than a year of losses and a sign that it is recovering from the 737 Max crisis. Still, Boeing’s backlog grew by only 3 orders after accounting for contracts unlikely to be filled, and it recently asked airlines to stop flying some Max jets to inspect them for a potential electrical problem.