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Business leaders warn $7B in proposed tax hikes could wreck NY

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Socking New York’s businesses and wealthy residents with $7 billion in new taxes will likely trigger the worst exodus since the Big Apple flirted with bankruptcy in the 1970s, a huge group of major employers and small business owners warned Tuesday.

In a letter to Gov. Andrew Cuomo and the state’s legislative leaders, the 250 job creators also said a plan to impose the largest tax hikes in state history “will jeopardize New York’s recovery from the economic crisis inflicted by COVID-19.”

“For better or worse, the pandemic has demonstrated that our workforce is more mobile than we ever imagined,” they wrote.

“Our businesses are committed to maintaining a strong presence in New York, but currently only about 10 percent of our colleagues are in the office and prospects for the future of a dense urban workplace are uncertain.”

The executives and entrepreneurs — who together employ about 1.5 million New Yorkers — said many workers “have resettled their families in other locations, generally with far lower taxes than New York, and the proposed tax increases will make it harder to get them to return.”

“This is not about companies threatening to leave the state; this is simply about our people voting with their feet,” they wrote.

“Ultimately, these new taxes may trigger a major loss of economic activity and revenues as companies are pressured to relocate operations to where the talent wants to live and work.”

The employers also pointed to history for a dire and dramatic illustration of the potential consequences.

Morgan Stanley CEO and chairman James Gorman speaks during the Institute of International Finance (IIF) annual membership meeting in Washington DC on Oct. 18, 2019.
Morgan Stanley CEO and Chairman James Gorman seen in October 2019.
Bloomberg via Getty Images

“This is what happened to New York during the 1970s, when we lost half our Fortune 500 companies, and it took thirty years to recover,” they wrote.

The letter noted that President Biden’s recently enacted $1.9 trillion American Rescue Plan — “for which most of us advocated” — will provide New York with enough cash to “eliminate the need for new state and local taxes this year.”

It also said that “significant corporate and individual tax increases will make it far more difficult to restart the economic engine and reassemble the deep and diverse talent pool that makes New York the greatest city in the world.”

“We are not alone in this view; among others, the nonpartisan Citizens Budget Commission has said these tax increases are ‘both unnecessary and economically risky,’ thanks to federal aid and higher than expected tax receipts in 2020,” it added.

The high-powered CEOs who signed the letter include Albert Bourla of COVID-19 vaccine maker Pfizer, Jamie Dimon of JP Morgan Chase, Jeff Blau of the Related Companies, Robert Bakish of ViacomCBS and John Catsimatidis of the Red Apple Group.

BlackRock Inc. CEO Larry Fink speaks at the Handelsblatt Banking Summit in Frankfurt, Germany on Sept. 4, 2019.
BlackRock Inc. CEO Larry Fink speaks at an event in September 2019.
Bloomberg via Getty Images

Real-estate moguls Douglas Durst and Richard LeFrak, Robin Hayes of JetBlue Airways, Sandeep Mathrani of WeWork, Howard Lutnick of Cantor Fitzgerald, Debbie Pearlman of Revlon, Stephen Schwarzman of Blackstone, Rob Speyer of Tishman Speyer, James Tisch of the Loews Corp. and Robert Thomson of News Corp., which owns The Post, were also among the signatories.  

The letter was organized by the pro-business group Partnership for New York City, whose CEO, Kathryn Wylde, said, “The New York state budget for this year should be focused on how to best invest the federal funds coming our way in 2021.”

“They should hold off on new spending and taxes until we have time to develop a plan for educating and training New Yorkers for the jobs of the future, and to determine where those jobs are going to come from,” Wylde said.

“They are legislating a budget without a plan, and that is a terrible mistake.”

On Monday, Cuomo said that federal relief, coupled with better than expected tax revenues, meant the state budget due April 1 can be balanced without the need to cut spending or raise taxes.

JP Morgan Chase CEO and chairman Jamie Dimon is among those who signed a letter warning about the effects of $7 billion in new taxes for New York’s wealthy.
JP Morgan Chase CEO and Chairman Jamie Dimon is among those who signed a letter warning about the effects of $7 billion in new taxes for New York’s wealthy.
The Washington Post via Getty Images

“We agree that our attention must be on getting New York’s economy growing again with a focus on putting out the welcome mat for the New Yorkers who left during the pandemic,” Cuomo budget spokesman Freeman Klopott said Tuesday.

But the Democratic-led state Senate and Assembly have proposed massive spending on education, health care, COVID-19 relief, unemployment insurance for illegal immigrants and other social and cultural programs.

“We are asking those who have a little more to do a little more, so that we’re not looking at the same inequities year after year, day after day, the same austerity — and not really giving the kind of future that we want every New York to have,” Senate Majority Leader Andrea Stewart-Cousins (D-Yonkers) said during a virtual press briefing Tuesday.

“So, I will continue to have conversations with the business community, and we continue to be in partnership and sometimes we agree, sometimes we don’t. But I think that we are all trying to get to the same end — a recovery that lifts everyone in an equitable way.”

Jane Fraser, CEO for Latin American at Citigroup Inc., speaks during an interview at the company's headquarters in Sao Paulo, Brazil on Dec. 3, 2018.
Jane Fraser, CEO for Latin American at Citigroup Inc., speaks during an interview at the company’s headquarters in Sao Paulo on Dec. 3, 2018.
Bloomberg via Getty Images



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Tesla more than doubles Q1 sales, delivers 185,000 vehicles

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Tesla says it delivered nearly 185,000 electric vehicles in the first quarter despite a shortage of computer chips that has hit the global auto industry.

The number was more than double the deliveries for the same period last year. And it beat Wall Street estimates of 168,000 for January through March. The company says in a statement that the Model Y small SUV in China has been well received.

Tesla lists no production figures for its older models, the S sedan and X SUV, during the quarter, but it delivered just over 2,000 of them. It says new equipment has been installed at the Fremont, California, factory and production of new versions is in the early stages.

The strong sales are a sign that demand for the company’s relatively expensive vehicles remains strong despite the pandemic. Analysts polled by data provider FactSet estimate that the average selling price of a Tesla is $49,100.

Shares of Tesla are down more than 9 percent so far this year as some of the shine wore off electric vehicle and tech stocks, which had experienced a big runup last year. The stock closed Thursday down just under 1 percent at $661.75. Markets are closed for the Good Friday holiday.

Tesla Model 3s (seen here) and its Model Y accounted for nearly all of Tesla's first-quarter sales.
Tesla Model 3s (seen here) and its Model Y accounted for nearly all of Tesla’s first-quarter sales.
Xinhua News Agency via Getty Images

Tesla sold just under 500,000 vehicles last year, barely missing a target set by CEO Elon Musk. The company hasn’t given much guidance for this year’s sales figures.

Wedbush analyst Dan Ives called the first-quarter numbers a “jaw dropper,” and a huge home run in the eyes of bullish investors. “We believe China and Europe were particularly robust this quarter as the trajectory now puts Musk & Co. to exceed 850k for the year which is well ahead of whisper expectations,” he wrote Friday.

The Model 3 small car and the Model Y accounted for nearly all of the Palo Alto, California, company’s first-quarter sales. Tesla said it sold 182,780 of both models combined.

Ives wrote that analysts expected more than 12,000 sales of Models S and X, with the miss driven by the chip shortage.

The strong sales came even though the company shut down much of its Fremont production for several weeks in late February and early March. It did not say why, but it’s likely that the company ran short of computer chips.

President Joe Biden’s announcement this week of $174 billion in spending on electric vehicle incentives and charging stations, and rising global demand for electric vehicles should shift sentiment toward Tesla stock, Ives wrote.

“It’s been a brutal sell-off for Tesla and EVs, but we believe that will now be in the rearview mirror,” he wrote.



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55 firms paid no federal income tax last year, report finds

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Dozens of America’s biggest companies paid no federal income taxes last year thanks to a range of tax breaks — including some brand-new ones, a new report says.

The 55 corporations avoided a total of $8.5 billion in taxes on more than $40 billion in pre-tax profits in their most recent fiscal year, according to the Friday report from the Institute on Taxation and Economic Policy.

In fact, 52 of those firms — including household names such as Nike, FedEx and Dish Network — ended up pocketing federal tax rebates worth a collective $3.5 billion, the left-leaning think tank’s analysis found.

And 26 of them haven’t paid a penny in federal income tax in the three years since the Tax Cuts and Jobs Act reform bill was signed into law in 2017, the report says. That group includes shipping giant FedEx and power company Duke Energy, which reported nearly $15 billion in pre-tax income for those three years, according to the findings.

Nike sneakers
Nike is among dozens of major corporations reported to be paying little to no federal income taxes.
Getty Images

“Duke Energy fully complies with federal and state tax laws as part of our efforts to make investments that will benefit our customers and communities,” company spokesperson Catherine Butler said, adding that Duke paid more than $2 billion in annual state and local taxes in 2020.

Major companies have used loopholes in federal tax law to help their bottom line for decades, the think tank’s researchers note. But they got a fresh boon from the CARES Act, the $2.2 trillion stimulus bill that aimed to help businesses weather the COVID-19 pandemic.

Big firms were able to take advantage of a provision in the bill to use losses they racked up in 2018 or 2019 to offset profits from previous years, which slashed some of their 2020 tax bills to less than zero, according to the report. That measure accounted for at least $500 million of the 55 giants’ tax breaks, the report says.

FedEx stood by the CARES Act tax breaks, saying the law helped it and other companies “navigate a rapidly changing economy and marketplace while continuing to invest in capital, hire team members, and fund employee pension plans.”

FedEx truck
FedEx is said to be among major firms pocketing federal tax rebates while avoiding federal income taxes.
Alamy Stock Photo

But many companies also used more established methods for giving themselves tax discounts.

Those include write-offs for paying executives in stock, which were used by more than a dozen companies, while at least half a dozen took federal research and experimentation credits, the report says.

The list included some companies hit hard by the pandemic, including crafts retailer Michaels, as well as companies that thrived despite the lockdowns, like Salesforce.com, the cloud computing company that announced record 2020 earnings in February.

Salesforce logo
Salesforce is reported to be among thriving firms able to take advantage of numerous write-offs.
Getty Images

By reining in tax breaks like those, “or by re-introducing some form of a ‘minimum tax’ requiring profitable companies to pay at least some tax in any profitable year, Congress and President Biden could take a major step toward a fairer and more sustainable tax system,” authors Matthew Gardner and Steve Wamhoff wrote in the report.

Salesforce, Michaels, Nike and Dish Network did not immediately respond to requests for comment.



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China admonishes H&M over ‘problematic’ map on website

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Swedish retailer H&M continues to clash with Beijing, this time over how it has portrayed the region geographically.

Chinese officials admonished H&M Friday over a “problematic” map on the company’s website in the latest sign of escalating tensions after the Swedish retailer criticized China’s controversial cotton-picking region.

Shanghai government regulators summoned H&M managers to a meeting after internet users complained about the map, officials said on social media.

Chinese officials did not provide any detail about the alleged offense, which they said H&M managers quickly corrected.

But H&M got in trouble with China in 2018 for listing Taiwan as a country on the Taiwanese version of its website. China claims the democratic island country is part of its territory.

H&M was told to “bolster its awareness of the national territory, and really ensure the standardized use of the Chinese map,” the Cyberspace Administration of China’s Shanghai arm said in a post on the WeChat social network, according to The Wall Street Journal.

H&M did not immediately respond to a request for comment Friday.

The map flap is just the latest headache H&M has faced in China, the fast-fashion retailer’s top clothing supplier and its fourth-largest market by sales.

The company was hit with boycott threats last week and had its products pulled from Chinese e-commerce platforms over a statement it made last year saying it does not source cotton from the Xinjiang region, where Beijing has been accused of forced labor practices against Uyghur Muslims.

H&M tried to tamp down the backlash Wednesday with a new statement saying it’s “dedicated to regaining the trust and confidence” of its customers, colleagues and business partners in China, where its store locations were reportedly scrubbed from digital maps last week.

The company said it wants to be “a responsible buyer, in China and elsewhere,” but did not mention Xinjiang specifically.

With Post wires

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