Marcy Gordon

Bill would compel Big Tech to divulge user data value

WASHINGTON (AP) — As Congress bears down on big tech companies, two senators want to force giants like Google, Facebook and Amazon to tell users what data they’re collecting from them and how much it’s worth. The legislation floated June 24 by Sens. Mark Warner, D-Va., and Josh Hawley, R-Mo., goes to the heart of the tech giants’ lucrative business model: harvesting data from platform users and making it available to advertisers so they can pinpoint specific consumers to target. “When a big tech company says its product is free, consumers are the ones being sold,” Hawley said in a statement. “These ‘free’ products track everything we do so tech companies can sell our information to the highest bidder and use it to target us with creepy ads. Even worse, tech companies do their best to hide how much consumer data is worth and to whom it is sold.” The measure would require commercial services with more than 100 million active monthly users to disclose to their customers and financial regulators the types of data they collect. They also would have to provide their users with an assessment at frequent intervals of the data’s value to them. It comes as bipartisan support grows in Congress for a privacy law that could sharply rein in the ability of the biggest tech companies to collect and make money from users’ personal data. At the same time, a House panel has opened a bipartisan investigation of Silicon Valley’s market dominance. The Internet Association, the tech industry’s major trade group representing Facebook, Google and dozens of other tech companies including Netflix and Airbnb, said Monday that it supports a comprehensive data privacy law. “Data helps businesses, across all industries and of all sizes and business models, provide consumers with better products and services,” the group’s president and CEO Michael Beckerman said in a statement. “The internet industry supports a comprehensive, economy-wide federal privacy law that covers all companies … to give consumers the protections and rights they need to take full control of the data they provide to companies.” The group’s statement didn’t directly address the issue of mandating companies to put a value on users’ data. Unlike many industrialized nations, the U.S. has no overarching national law governing data collection and privacy. Instead, it has a patchwork of federal laws that protect specific types of data, such as consumer health and financial information, and the personal data generated by younger children. A national law would be the first of its kind in the U.S. and could allow people to see or prohibit the use of their data. Companies could be required to seek permission to provide the data to third parties. A law could shrink Big Tech’s crucial revenues from advertising. There’s no parallel legislation in the House for the new Senate bill, called the Dashboard Act, and its prospects are unclear. Warner, who amassed a fortune as a tech industry investor and executive before entering politics, and Hawley, a freshman and conservative who pursued investigations of Google and Facebook’s business practices as Missouri attorney general, have been especially active in the debate over big tech.

New tax break rules for ‘opportunity zone’ investors

WASHINGTON (AP) — The Trump administration is proposing rules for investors in a new program that it says could have a big impact on economically depressed areas around the country. About 8,700 so-called “opportunity zones” have been set up in all 50 states to lure investors and developers with tax breaks. The rules from the Treasury Department, issued Oct. 19, lay out the period of time that individuals or companies must hold on to their investments in the zones to avoid paying taxes on resulting profits. Administration officials say the goal of the program, established by the new tax law enacted last December, is to create businesses and jobs in low-income areas and lift residents out of poverty. Treasury Secretary Steven Mnuchin predicts that $100 billion in private capital will be invested in the new zones. “This incentive will foster economic revitalization and promote sustainable economic growth,” Mnuchin said in a statement. But some critics say the new rules and the way the program is set up will benefit real estate developers and Wall Street funds, and will pull investment toward more well-off areas that need it least. “The real estate industry is completely excited and mobilized about this, and now is getting paid through massive tax cuts,” said Timothy Weaver, a professor at the State University of New York in Albany who has studied similar development programs. He said the program “doesn’t have much of an effect other than giving tax breaks to people who are going to invest anyway.” Under the rules, the investments are open to individuals, corporations, partnerships and real estate investment trusts. Any kind of business or real estate development is qualified so long as it isn’t deemed by regulators to contribute to vice — a liquor store or massage parlor, for example. Participants can take their profits from unrelated investments and plow them into an opportunity zone fund, avoiding paying taxes on those gains until the end of 2026. Depending on how many years they hold the investment, they can reduce their eventual tax bill by up to 15 percent. Investments within the zones held for 10 years or more are entirely free of capital gains taxes. A new rule sets up a 70-30 split for determining if certain businesses are eligible for the tax break. Provided that at least 70 percent of a business’s “tangible” property sits within a zone, it is considered eligible even if the rest is outside the zone. An example would be individual locations of a restaurant chain, some inside and some outside. With 30 percent of the properties allowed outside the zones, many of the new jobs could come in already booming areas, Weaver suggested. Conventional economic development programs generally require all of a business’s property to be within the affected area, he said. Brett Theodos, principal research associate at the Urban Institute, estimates that only about 10 to 15 percent of the zones will attract investment, and that around 10 percent could get 90 percent of the money invested. The 8,761 census tracts — in every state, the District of Columbia and five U.S. territories — now officially beckoning to investors as opportunity zones encompass some 35 million people. Based on Census data, the zones have an average poverty rate of about 32 percent, compared with the national average of 17 percent. Alaska selected 25 opportunity zones this past April including arears in Anchorage, Fairbanks and both major military bases. Governors in the states and territories put forward their choices for areas to become special development zones. Every choice — 100 percent of the areas proposed — was blessed by the Treasury Department after a four-month review. The choices “indicate only minimal targeting of the program toward disadvantaged communities with lesser access to capital,” Theodos wrote in a research paper. “Low- and moderate-income residents will need to be able to afford to remain in their communities as the areas upgrade and not be displaced, if they are to benefit from the gains opportunity zones bring.” Census tracts were eligible to become opportunity zones if their residents meet average low-income requirements. Some tracts with higher average incomes were allowed if they’re located next to the low-income tracts. Those better-off areas, with more infrastructure and amenities, could be more attractive to investors. The mix will work out well, as Maurice Jones, the president of Local Initiatives Support Corp., a community development organization, sees it. “From our perspective, the governors did a really fine job in picking places that are in distress,” Jones said in an interview. The program has drawn bipartisan support. Even Democratic lawmakers, who fiercely opposed the tax legislation and unanimously withheld their votes for it, do like the opportunity zones program nestled within it. Supporters see the estimated $9.4 billion in lost revenue from the program’s tax breaks as a small price — for U.S. taxpayers indirectly — to pay.

Trump eager to sign bill rolling back Dodd-Frank regulations

WASHINGTON (AP) — President Donald Trump indicated May 23 that he’s eager to sign a bill that would dismantle a chunk of the rules framework for banks, installed to prevent recurrence of the 2008 financial crisis that brought millions of lots jobs and foreclosed homes. The House voted 258-159 on May 22 to approve legislation rolling back the Dodd-Frank law, notching a legislative win for Trump, who made gutting the landmark law a campaign promise. The Republican-led legislation, pushed by Wall Street banks as well as regional banks and smaller institutions, garnered 33 votes from House Democrats. Similarly, the bill splintered Democrats into two camps when the Senate voted 67-31 to approve it in March. “Big legislation will be signed by me shortly,” Trump tweeted May 23. “Big changes to DODD FRANK.” The bill raises the threshold at which banks are deemed so big and plugged into the financial grid that if one were to fail it would cause major havoc. Those banks are subject to stricter capital and planning requirements. Backers of the legislation are intent on loosening the restraints on them, asserting that would boost lending and the economy. The legislation is aimed at especially helping small and medium-sized banks, including community banks and credit unions. But critics argue that the likelihood of future taxpayer bailouts will be greater once it becomes law. They point to increases in banks’ lending and profits since Dodd-Frank’s enactment in 2010 as debunking the assertion that excessive regulation of the banking industry is stifling growth. The Dodd-Frank act, named after its co-authors, Democratic Sen. Christopher Dodd of Connecticut and Democratic Rep. Barney Frank of Massachusetts, boosted government oversight of banks. U.S. banks’ net income climbed to $56 billion in the January-March quarter, a 27.5 percent increase from a year earlier, as profits were revved up by the corporate tax cuts enacted late last year, the Federal Deposit Insurance Corp. reported Tuesday. The bill makes a fivefold increase, to $250 billion, in the level of assets at which banks are deemed to pose a potential threat if they fail. The change would ease regulations and oversight on more than two dozen financial institutions, including BB&T Corp., SunTrust Banks, Fifth Third Bancorp and American Express. Eventually, the exempted banks will no longer have to undergo an annual stress test conducted by the Federal Reserve. The test assesses whether a bank has a big enough capital buffer to survive an economic shock and keep on lending. The banks also will be excused from submitting plans called “living wills” that spell out how a bank would sell off assets or be liquidated in the event of failure so it wouldn’t create chaos in the financial system. Rep. Jeb Hensarling, the Texas Republican who heads the House Financial Services Committee, said Main Street banks “have been suffering for years under the weight” of the Dodd-Frank regulations. “Help is on the way,” Hensarling declared. “Today is an important day in the history of economic opportunity in America.” Republican lawmakers, with Hensarling at the forefront, have been chafing at Dodd-Frank’s restrictions in the eight years since its enactment by President Barack Obama and Democrats in Congress, and finally prevailed with Tuesday’s vote. The win on the banking bill adds to Trump’s marquee business-friendly legislative achievement, the sweeping tax bill enacted late last year that deeply cut taxes for corporations and wealthy individuals and offered more modest reductions for most ordinary Americans. Supporters of the bill say Dodd-Frank was too blunt an instrument in response to the financial crisis, hurting smaller lenders that played no role in the debacle. They provide more than half of small business loans and over 80 percent of agricultural loans. The legislation also exempts certain banks and credit unions from requirements to report some mortgage loan data. The exempted data includes the age of a loan applicant, credit score, total loan costs and interest rate. Critics say that would make it easier for banks to discriminate against minorities seeking home mortgages and go undetected. In response to the Equifax breach that exposed personal information for more than 145 million Americans, the bill requires free credit freezes for all consumers affected by data breaches. Currently most states allow the credit reporting companies to charge consumers a fee for freezing their credit. Backers of the legislation note that the Federal Reserve still will have the authority to apply tougher standards for banks with $100 billion to $250 billion in assets.

Senate passes bill easing Dodd-Frank rules for banks

WASHINGTON (AP) — The Senate passed bipartisan legislation March 14 designed to ease bank rules that were enacted to prevent a relapse of the 2008 financial crisis that caused millions of Americans to lose their jobs and homes. The Senate voted 67-31 for a bill from Republican Senator Mike Crapo of Idaho that would dial back portions of the law known as Dodd-Frank. The legislation would increase the threshold at which banks are considered so big and plugged into the financial grid that if one were to fail it would cause major havoc. Those banks are subject to stricter capital and planning requirements. Lawmakers are intent on loosening the restraints on them in hopes that it will boost lending and the economy. President Donald Trump signaled that he’ll sign the bill once it gets through Congress. Dismantling Dodd-Frank was one of his campaign pledges. “The bill provides much-needed relief from the Dodd-Frank Act for thousands of community banks and credit unions, and will spur lending and economic growth without creating risks to the financial system,” the White House said in a statement after the vote. Republicans unanimously supported the bill, while Democrats splintered into two camps. One included several senators from rural states who worked out the compromise with Crapo. The other, led by Sens. Elizabeth Warren of Massachusetts and Sherrod Brown of Ohio, said the bill catered too much to the banks that contributed to the financial crisis and would increase the likelihood of future taxpayer bailouts. “Big banks and their lobbyists are about to score a touchdown at the expense of hardworking families across the country,” Brown said shortly before the vote. The bill makes a fivefold increase, to $250 billion, in the level of assets at which banks are deemed to pose a potential threat if they failed. The change would ease regulations and oversight on more than two dozen financial companies, including BB&T Corp., SunTrust Banks, Fifth Third Bancorp and American Express. Eventually, the exempted banks would no longer have to undergo an annual stress test conducted by the Federal Reserve. The test assesses whether a bank has enough of a capital buffer to survive an economic shock and continue lending. The banks also would be excused from submitting plans called “living wills” that spell out how a bank would sell off assets or be liquidated in the event of failure so that it wouldn’t create chaos in the financial system. Crapo, chairman of the Senate Committee on Banking, Housing and Urban Affairs, emphasized that the Federal Reserve would still have the authority to apply tougher standards for banks with between $100 billion and $250 billion in assets. “This bill, Mr. President, is a bill designed to protect community banks and credit unions, and that’s why we have such bipartisan support for it.” Senate Majority Leader Mitch McConnell, R-Ky., said Dodd-Frank proved to be “too blunt” an instrument. He said it hurt smaller lenders who provide more than 50 percent of small business loans and more than 80 percent of agricultural loans. “Regulations meant for Wall Street are crushing Main Street,” McConnell said. Sen. Tom Carper, D-Del., said that while he had helped write some provisions of the Dodd-Frank legislation, he knew at the time it would have to be tweaked in the years ahead. He said the new bill is not designed to be an overhaul. “If the banking bill before us today becomes law, 90 percent of Dodd-Frank would remain unchanged,” Carper said. In arguing against the bill, Brown noted that the Congressional Budget Office found that it would slightly increase the probability of a big bank failure, which would add to the deficit. Other features of the bill would exempt certain banks and credit unions from requirements to report some mortgage loan data. That exempted data includes the age of a loan applicant, credit score, total loan costs and interest rate. Warren, an outspoken opponent of the change, said the bill would make it easier for banks to discriminate against minorities seeking home mortgages and go undetected. In response to the Equifax breach that exposed personal information for more than 145 million Americans, the bill would require free credit freezes for all consumers affected by data breaches. Currently most states allow the credit reporting companies to charge consumers a fee for freezing their credit. The House has already passed a more expansive rollback of Dodd-Frank. Now, lawmakers will try to work out a compromise that both chambers can support. That may be difficult as negotiators try to appease GOP lawmakers without losing the support of the core group of Democratic senators who backed Crapo’s legislation. In all, 16 Democrats and one independent senator voted with Republicans on the bill, a rarity for major legislation. “Many people are worried about the gridlock in Congress,” Crapo said. “This bill shows that we can work together and can do big things that make a big difference in the lives of people across this country.”

GOP begins advancing tax bill with insurance mandate repeal

WASHINGTON (AP) — Republicans began pushing a broad tax cut for businesses and many individuals through the Senate Finance Committee on Nov. 15, a measure complicated by a late addition — repeal of the Affordable Care Act requirement that Americans get insurance coverage. Erasing the Affordable Care Act’s individual mandate provided Republicans with more money that they used to make some tax breaks for people modestly more generous. But it raised questions about whether it might prompt some moderate GOP senators to back away from the measure. The nonpartisan Congressional Budget Office has projected that dismantling the requirement would mean 4 million additional uninsured people by 2019 and 13 million more uninsured by 2027. Worries about leaving more people without coverage were among the reasons GOP attempts to outright repeal much of President Barack Obama’s law crashed in the Senate this summer. Republicans controlling the Senate 52-48 can afford to lose only two votes and still push the measure through the chamber, because all Democrats seem likely to oppose the package. In another money-saving move, Hatch changed his bill late Nov. 14 to abruptly end the personal tax reductions after 2025. Under Senate rules, if legislation bill drives up federal budget deficits after 10 years it cannot be shielded from bill-killing filibusters by Democrats. It takes 60 votes to end a filibuster, numbers Republicans don’t have. The corporate tax cuts would be permanent. They include dropping the corporate tax rate from 35 percent to 20 percent. “Keeping the individual mandate tax in place means retaining the status quo, which isn’t working all too well,” said Senate Finance panel chairman Orrin Hatch, R-Utah. “Zeroing it out means we have a chance to provide greater tax relief to middle-class families, through both reduced penalties and lower overall rates.” The Finance Committee was hoping to approve the measure by week’s end. Republicans were planning the House would approve a similar tax bill on Nov. 16, though that version left the health law’s coverage requirement intact. White House legislative director Marc Short said President Donald Trump spoke Nov. 15 to Senate Majority Leader Mitch McConnell, R-Ky., and House Speaker Paul Ryan, R-Wis., about the tax legislation. Trump plans to talk to House Republicans about their measure at the Capitol on Nov. 16 to rally support before the House vote. Short said Republicans feel they have momentum but added, “We’re always concerned. The reality is we don’t have a large margin in the Senate.” Eliminating the mandate provides Republicans with $318 billion in 10-year savings, due to fewer people who’d be expected to get government-subsidized health coverage. It imposes a tax penalty on people who don’t have insurance at work and don’t buy an individual policy. Democrats pounced on the GOP changes. “My colleagues on the other side have now shown their hand. The corporate handouts are permanent, the family breaks are not,” said Oregon Sen. Ron Wyden, top Democrat on the Finance Committee. “To pay for these handouts to multinational corporations, millions of Americans are going to lose their health care, millions will see their premiums skyrocket, and millions will get hit with a tax hike.” Hatch’s revised version of the tax bill would double the child tax credit to $2,000 from the current $1,000. The credit would rise to $1,600 under the House bill. Also, Hatch’s revision makes slight reductions in individual tax rates for three moderate income brackets, numbers three, four and five of a total seven. The rates are now 10, 12, 22, 24, 32, 35 and 39.5 percent. The House bill shrinks the current seven brackets to four: 12, 25, 35 and 39.6 percent. The surprise renewal of the effort to eliminate the health care law’s mandate came a day after President Donald Trump renewed pressure on Republican lawmakers to include the repeal in their sweeping legislation to revamp the tax system. It carries high political stakes for Trump, who lacks a major legislative achievement after nearly 10 months in office. Promoted as needed relief for the middle class, the House and Senate tax overhaul bills would deeply cut corporate rates, double the standard deduction used by most Americans and limit or repeal completely the federal deduction for state and local property, income and sales taxes. Republican leaders deem passage of the first major tax overhaul in 30 years as imperative for the GOP to preserve its majorities in next year’s elections. Beyond Trump’s prodding, the repeal move was dictated by the Republicans’ need to find revenue sources for the massive tax-cut bill, which calls for steep reductions in the corporate tax rate and elimination of some popular tax breaks. To win over moderate Senate Republicans to the tax legislation, the Senate may take up at the same time a bipartisan compromise to shore up health care subsidies, Sen. John Thune, R-S.D., indicated Nov. 14. Thune is a member of the Finance panel. Associated Press writers Kevin Freking, Andrew Taylor, Ricardo Alonso-Zaldivar, Catherine Lucey and Alan Fram contributed to this report.

Tax reform takes aim at deductions

WASHINGTON (AP) — President Donald Trump and congressional Republicans have pledged to overhaul the nation’s complex tax code. To slash taxes, they say they’ll curb a web of expensive deductions and credits to allow more revenue to flow to the government. Problem is, they’re likely to run into a wall of resistance from people and groups drawn together by a singular warning: Don’t touch my deduction. Major cherished tax breaks — from deductions for mortgage interest and charitable donations to incentives for 401(k) contributions — have deep-pocketed supporters and lobbyists who are sure to fight to preserve those benefits. They add up to hundreds of billions of dollars in lost potential revenue that could otherwise go to rebuilding roads and bridges or social programs or even to help finance broader tax cuts for people and companies. “On every single item, there’s a group out there ready to battle,” says Thomas Cooke, a professor and tax expert at Georgetown University. This makes the outlook thorny for a tax rewrite effort this fall, a Trump priority that Republicans consider a political imperative looking ahead to next year’s midterm elections. The collapse of GOP health care legislation raises the stakes for taxes, with Trump’s team offering an ambitious timetable. “We’re on track to get this done by the end of the year,” Treasury Secretary Steve Mnuchin said Aug. 31 in an interview with CNBC. The president and the GOP agree on the broad goals: Simplifying the tax code, lowering the rate for corporations from the current 15-35 percent range, and bringing relief for the middle class. But details have to be filled in. “We’ve already agreed on the outlines and now we’re refining the micro-details,” Speaker Paul Ryan, R-Wis., said Thursday during a visit to a knife-manufacturer in suburban Milwaukee. Among the seemingly unassailable benefits, the most cherished may well be the deduction of interest paid on mortgages. Touted as a pillar in the promotion of homeownership, the benefit cost the government an estimated $77 billion in the budget year that ended last Sept. 30, according to Congress’ Joint Committee on Taxation. The benefit allows homeowners to deduct interest on up to $1 million in mortgage debt on a primary (and a secondary) residence. It is fiercely defended by the National Association of Realtors, which spent $64.8 million on lobbying on various issues last year including the mortgage deduction, according to the Center for Responsive Politics. Roughly 28 million Americans deduct mortgage interest from their income taxes, with the biggest concentrations in the high housing-cost states of California, New York, New Jersey, Virginia and Maryland, according to the Tax Policy Center, a joint venture of the Urban Institute and the Brookings Institution. House Republicans say they’ve got a more efficient way to encourage home buying. Under their plan, the standard deduction would be increased from the current $12,600 for married couples filing jointly, for example, to $24,000. They argue that a majority of homeowners would no longer choose to itemize deductions and claim the mortgage-interest benefit. They’d be better off using the bigger standard deduction. Another possibility is halving the mortgage deduction to $500,000. That would surely set up a pitched battle. Other highly popular benefits: • Employees’ earnings from defined-contribution retirement plans such as 401(k)s are not taxed until retirement; pay-ins by both employers and employees also receive tax-preferred status. That cost $82.7 billion in the most recent budget year. Among the ideas circulating among some Republicans is reversing that by taxing investment earnings upfront, not upon retirement; or reducing the limits on pre-tax contributions. With about 55 million U.S. workers holding some $5 trillion in their 401(k) accounts, the plans have become a touchstone of retirement security for the middle class. A coalition of groups representing employers, consumers and the financial industry recently expressed concern to the powerful chairman of the Senate Finance Committee. With lawmakers looking for revenue sources to offset prospective tax cuts, “Any changes to the retirement system made solely for short-term budgetary gains, and not for policy reasons, could hurt Americans’ long-term retirement security,” the Save Our Savings coalition said in a letter to Sen. Orrin Hatch, R-Utah. • Deductions for donations to charitable, religious and other nonprofit organizations. Estimated cost: $41.5 billion. Americans are generous, House Republicans note, and charitable giving should be encouraged with a tax incentive. But only 25 percent of taxpayers benefit from the deduction because the rest don’t itemize. The solution is to make the charitable deduction more efficient by simplifying taxpayers’ compliance and record-keeping, the Republican plan says. Under the plan, all itemized deductions would be eliminated except for two: mortgage interest and charitable donations. • Tax-free employer-paid health insurance premiums and other medical expenses, including long-term care insurance, clocking in at $143.8 billion. Employees aren’t taxed on the benefits, while employers can deduct them as a business expense. • Tax credit for children under age 17, $55 billion. An individual can claim a $1,000 credit for each qualifying child. The credit starts phasing out for single filers earning over $75,000 a year and for joint filers earning over $110,000. Some lawmakers have proposed increasing the credit to $2,500, by combining the exemption for dependents and the child care credit. Organizations including the Child Poverty Action Group and the National Association for the Education of Young Children have stressed the importance of using tax policy to help children and families. They express concern that such benefits for children could get caught up in the Republicans’ drive to eliminate “special interest” loopholes in the tax overhaul. ^ Associated Press writer Ivan Moreno in Milwaukee contributed to this report.
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