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Illustration: Sarah Grillo/Axios
The U.S. tax system does one thing right: It collects taxes in a very smart way.
The big picture: When Trump cut taxes in 2017, the White House also cut the amount that workers saw withheld from their paychecks. The result was an immediate pay hike — that went largely unnoticed.
This year, refunds are generally lower than they were previously. Increasingly they're zero; sometimes they're negative, and extra tax payments are owed.
The bottom line: Most of Trump's tax cut went to corporations rather than individuals, and many families, especially in coastal blue states, saw their total tax bill rise. By reducing withholding, the Trump administration probably thought it was making the tax cut immediate. Instead, that had the effect of making a tax cut feel more like a tax hike.
*The survey was conducted online within the U.S. by The Harris Poll on behalf of Axios from Feb. 14–15, 2019 among 2,042 U.S. adults ages 18 and older, among whom 945 were employed. This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated.
Illustration: Lazaro Gamio/Axios
It's not just the Trump administration that has problems with expectations management. A recent basic-income trial in Finland was cut short by the incoming conservative government, before preliminary results came out showing improved health and reduced stress among people receiving a no-strings €560 ($640) per month.
Stock buybacks have suddenly become a hot-button political issue on both sides of the aisle. A subject you might normally expect to occupy a breakout panel discussion in a CFO convention is now set to become central to the 2020 presidential campaign.
The big picture: Buybacks are extremely popular in corporate America, which spent some $1 trillion on them last year.
My thought bubble: Rubio is correct that since buybacks are economically equivalent to dividends, it makes sense that their tax treatment should be identical. What's more, buybacks are governed by federal law, unlike dividends, and are therefore easier to legislate against. But banning them outright would be easier than the contortions that Schumer, Sanders and Rubio are about to get themselves into.
Many buybacks are funded with debt issuance. That increases a company's liabilities, and since the proceeds are used to buy stock that is then immediately canceled, it does nothing for the company's assets.
The other side: The companies with the largest negative shareholders' equity also tend to own extremely valuable brands. If you included a reasonable brand value on the asset side of Starbucks' balance sheet, then it would no longer look insolvent. The same goes for most of the other companies on this list.
One curiosity: The buyback-happy company at the top of this list, Philip Morris International, was spun out of Altria in 2008, around the same time that Kraft was also spun out. But Kraft, having merged with Heinz, now finds itself at the other end of the league table, with $65.4 billion in shareholders' equity.
Trivia: Which company has the most shareholders' equity? That would be Berkshire Hathaway, on $375.6 billion.
Illustration: Rebecca Zisser/Axios
For two years, Apple's AirPods were a bizarre curiosity. They were clever, but they looked odd and didn't sell very well. Then, they exploded, and according to one source, they have sold more units than even the iPhone at the same age.
The rise of AirPods has also followed the iPhone upgrade cycle. When people get a new iPhone without a headphone jack, that's often their impetus to buy headphones they can use across all of their devices.
Our thought bubble, from Axios' Courtenay Brown, who got a pair of AirPods for Christmas: "One day without AirPods taught me that I've forgotten how to talk on the phone and basically do my job without them. Ordinary bluetooth headphones — which squeeze my ears, make them sweat and are just a way less seamless experience — are not an adequate replacement."
This is a picture of distress. Car loans are the last debt that Americans generally default on, since a car is in most cases necessary to get to work.
Why you’ll hear about this again: This degree of woe is happening despite a growing economy and record-low unemployment. If and when a recession hits, expect these numbers to get a lot worse.
Workers are finding their voice, whether it's through formal work stoppages (a lot of teachers went on strike in 2018) or through other means.
Platinum and palladium are two very similar metals — they sit right above each other on the periodic table, are found in the same mines, and are both used primarily in catalytic converters for automobiles. Up until 2016, their prices tended to rise and fall in unison.
What’s happening: Since Volkswagen’s diesel-gate, demand for platinum — used in diesel-fueled cars — has waned. Palladium, which is used for catalytic converters in gasoline-fueled cars, has benefited.
Fun fact: An ounce of palladium now costs more than an ounce of gold, for the first time since 2002.
Art dealer Mary Boone was sentenced to 30 months in prison this week, despite receiving support from a wide range of art-world boldface names. She evaded more than $3 million in taxes between 2009 and 2011.
My thought bubble: 30 months is a harsh sentence, but prosecutions for tax evasion are very rare. If sentences were short and uncommon, they would have negligible deterrent effect.
Illustration: Rebecca Zisser/Axios
U.S. stock and bond markets are closed for Presidents Day tomorrow. 49 S&P 500 companies, including Walmart, will report earnings this week, writes Courtenay. Berkshire Hathaway’s earnings on Saturday will be accompanied, as ever, by Warren Buffett’s much-read annual letter to shareholders.
The Commerce Department will release a report to the White House today that could give President Trump the “authority to impose tariffs on foreign cars and car parts on the basis of national security,” per the New York Times.
Yet another round of U.S.-China talks kicks off in Washington this week.
The delayed Nigerian presidential election will take place on Saturday.
Fitch will review Italy’s credit rating on Friday, and the country might see its BBB rating downgraded.
Photo by Julie Dermansky/Corbis via Getty Images
After Hurricane Katrina, Brad Pitt founded Make It Right to rehouse residents of New Orleans's mostly destroyed Lower 9th Ward.
Frank Gehry designed this 1,780-square-foot duplex, built to LEED Platinum certification standards. It was one of 109 homes ultimately built by Make It Right.
"We went into it incredibly naive," Pitt told the New Orleans Times-Picayune newspaper in August 2015. Today, neither he nor the nonprofit are returning reporters' calls.