- Investors quickly began selling off sizable amounts of their crypto holdings Thursday amid reports that President Joe Biden will soon propose doubling the capital gain tax rate for investors making more than $1 million annually.
- Among the coins that took heavy beatings were Ethereum, Dogecoin, and Bitcoin, which saw its worst day since February, dropping below 48,000 after a recent peak of nearly 65,000. Outside of crypto, major stock indices largely shrugged off the news.
- Through a capital gains tax hike, Biden hopes to fund his “American Families Plan,” which includes provisions for childcare, universal prekindergarten, paid family leave, and free community college.
- Biden’s proposal is unlikely to pass as is. Instead, economists project that if Congress can agree on the hike, it will likely still be substantial but much more modest in nature.
Cryptocurrencies like Bitcoin, Ethereum, Dogecoin saw major selloffs Thursday evening after multiple news outlets reported that President Joe Biden is preparing to move forward with his plans for a substantial capital gains tax on high earners.
Notably, Bitcoin fell from $55,000 a coin to under $48,000 in the course of a single day, making Thursday easily its worst day since February even though the coin peaked at nearly $65,000 just over a week ago. As of 2 p.m. EST Friday, Bitcoin had once again passed the $50,000 mark.
Similarly, Dogecoin — which has experienced massive gains over the past week — fell over 40% at one point during the evening. As of Friday, Dogecoin has recovered some of those losses, but it is still trading at around 50% of the all-time high of $0.45 that it reached last week.
In total, the cryptocurrency market experienced a $200 billion plunge following the news, according to data from CoinMarketCap.
Meanwhile, the rest of the stock market was largely unaffected. The Dow Jones, S&P 500, and Nasdaq all ended slightly up by Thursday’s closing bell, and all three major indices were still in the green as of midday Friday.
Many expect Bitcoin’s recent drop to only be a temporary setback, predicting that the stock will continue to climb to new highs in the near future.
“I don’t think Biden’s taxes plans will have a big impact on bitcoin,” Ruud Feltkamp, CEO at automated crypto trading bot Cryptohopper, told Reuters. “Bitcoin has only gone up for a long time, it is only natural to see a consolidation. Traders are simply cashing in on winnings.”
Biden’s Tax Plan
Biden is expected to propose a plan that would essentially double capital gains taxes — the taxes paid by investors once they sell-off profitable stock — for people earning $1 million or more through investing.
Currently, the long-term capital gains base rate for those high earners is 20%; however, Biden reportedly wants to raise it to 39.6%. Coupled with an existing surtax on investment income, federal taxes could then climb as high as 43.4% of earnings.
Since the campaign trail, Biden has promised to raise capital gains and income taxes on high earners, arguing that it’s unfair for them to pay lower rates than middle-class Americans.
According to White House Press Secretary Jen Psaki, the president will officially release his tax rate proposal next week as part of his “American Families Plan.” That plan, which would be funded by the tax increases, will reportedly include provisions for childcare, universal prekindergarten, paid family leave, and free community college.
A 39.6% rate cap for high earners is unlikely to ever become reality. As Axios’ Hans Nichols reported, if passed, that number would more than likely wind up around 30% following negotiations in Congress. While that would still amount to a significant tax hike, it would also be significantly lower than Biden’s current reported goal.
If passed later this year, it is currently unclear whether a capital gains increase would be retroactive to 2021 taxes or if it will go into effect next year, though a current proposal regarding corporate tax hikes would not be applied until next year, if passed.
Apple Raises Worker Pay as Unions Gain Ground
The company’s vice president of people and retail was caught trying to dissuade employees from unionizing in a leaked video.
Labor Squeezes Apple into Submission
Apple announced Wednesday that its U.S. corporate and retail employees will see a pay increase later this year, with starting wages bumped from $20 per hour to $22, though stores in certain regions may get more depending on market conditions.
Starting salaries are also expected to increase.
“Supporting and retaining the best team members in the world enables us to deliver the best, most innovative, products and services for our customers,” an Apple spokesman said in a statement. “This year as part of our annual performance review process, we’re increasing our overall compensation budget.”
Some workers were told their annual reviews would be moved up three months and that their pay increases would take effect in early July, according to a memo reviewed by The Wall Street Journal. Furthermore, they were told the increased compensation budget would be in addition to pay increases and special awards already received within the past year.
Feeling squeezed by low unemployment and high inflation, tech companies like Google, Amazon, and Microsoft have changed their compensation structures in recent weeks to pay workers more, and Apple is the latest to bend to market pressure.
Unions Gaining Traction
On Wednesday, The Verge received a leaked video of Apple’s vice president of people and retail, Deirdre O’Brien, explicitly dissuading employees from unionizing.
“I worry about what it would mean to put another organization in the middle of our relationship,” she said. “An organization that does not have a deep understanding of Apple or our business. And most importantly one that I do not believe shares our commitment to you.”
She vocalized more anti-union talking points, like the idea that the company will not be able to make important decisions as quickly with a collective bargaining agreement.
O’Brien has been personally visiting retail stores over the past few weeks in an apparent bid to combat budding union activity.
Apple stores in three locations — New York, Georgia, and Maryland — are currently pushing to unionize, with the latter two set to vote in elections on June 2 and 15, respectively. In response to these efforts, Apple has hired anti-union lawyers, given managers anti-union scripts, and held anti-union captive audience meetings.
In the United States, unionized workers make about 13.2% more than non-unionized workers in the same sector, according to the Economic Policy Institute.
As of Wednesday, Apple’s shares had fallen 21% since the start of the year, but sales grew 34% last year to almost $300 billion.
See what others are saying: (The Wall Street Journal) (CNBC) (The Verge)
Employees at Activision Blizzard’s Raven Software Form First Union at a Major Gaming Company
Organizers say the decision has the potential to upend labor practices in the gaming industry.
Raven Software QA Testers Win Union Bid
A group of 28 workers at Activision Blizzard subsidiary Raven Software voted to form the first-ever union at a major U.S. gaming company.
While the Game Workers Alliance is a small union, organizers in the space say its formation represents a major shift for the gaming industry and will encourage others in the sector to follow suit.
The newly unionized workers are quality insurance (QA) testers working at the Wisconsin-based studio to develop “Call of Duty.” QA testers work to sort out any glitches in games, and the jobs are notoriously known for extreme crunch periods where staffers work long stretches of hours before a game’s release.
During crunch periods, employees are regularly given 12- to 14-hour shifts with just a few days off each month in order to meet release deadlines.
Many QA testers have said they are treated as second-class to others in the industry. They are paid much lower — often minimum wage or close to it — work on contract cycles and, as a result, feel disposable.
That particular sentiment was underscored for workers at Raven Software in December when the company ended the contracts of about a dozen QA testers. The decision prompted the remaining QA testers to hold a walkout and, shortly after that, they began organizing to form a union, which they dubbed the Game Workers Alliance.
Activision’s Battle Against Unionization Effort
Activision did not support the push for unionization and actively fought against it. The company refused to voluntarily recognize the union, and just days after the group filed a petition with the National Labor Relations Board, it moved QA testers to different departments across its properties.
Activision also announced it would convert over 1,000 temporary QA workers to full-time employees, give them a pay raise to $20 an hour, and provide more benefits. However, management said the move would not apply to the unionizing workers because, under federal law, they could not try to encourage workers from voting against unionization by offering pay hikes or benefits. Union leaders repudiated that argument.
Additionally, Activision fought against the union petition, arguing that any union would need to include all of the studio’s employees, but the Labor Board rejected the claim and let the effort proceed.
According to multiple reports, Activision management continued to push against the union in the weeks leading up to the vote. Some Raven employees told The Washington Post company leaders had suggested at a town hall meeting that unionization could hurt game development and impact promotions and benefits. The following day, the managers allegedly sent an email urging workers to “vote no.”
On Monday, Labor Board prosecutors announced they had determined that Activision illegally threatened workers and enforced a social media policy that violated bargaining rights. Activision denied the new allegations.
The two parties will have until the end of the month to file an objection, and if none are filed, the union becomes official. It is currently unclear how Activision and Raven will respond, but they have signaled that they might not make the transition period easy for the union.
According to internal documents seen by Bloomberg, the company has repeatedly mentioned that it can take a while for a union to negotiate its first contract.
In a statement following the vote, an Activision spokesperson told The Post that the company respects the right of its employees to vote for or against a union, but added: “We believe that an important decision that will impact the entire Raven Software studio of roughly 350 people should not be made by 19 of Raven employees. We’re committed to doing what’s best for the studio and our employees.”
See what others are saying: (The New York Times) (The Washington Post) (Bloomberg)
Uber Forks Over $19 Million in Fine for Misleading Australian Riders
The penalty is just the latest in a string of lawsuits going back years.
Uber Gets Fined
Uber has agreed to pay a $19 million fine after being sued by the Australian Competition and Consumer Commission for making false or misleading statements in its app.
The first offense stems from a company policy that allows users to cancel their ride at no cost up to five minutes after the driver has accepted the trip. Despite the terms, between at least December 2017 and September 2021, over two million Australians who wanted to cancel their ride were nevertheless warned that they may be charged a small fee for doing so.
Uber said in a statement that almost all of those users decided to cancel their trips despite the warnings.
The cancellation message has since been changed to: “You won’t be charged a cancellation fee.”
The second offense, occurring between June 2018 and August 2020, involved the company showing customers in Sydney inflated estimates of taxi fares on the app.
The commission said that Uber did not ensure the algorithm used to calculate the prices was accurate, leading to actual fares almost always being higher than estimated ones.
The taxi fare feature was removed in August 2020.
A Troubled Legal History
Uber has been sued for misleading its users or unfairly charging customers in the past.
In 2016, the company paid California-based prosecutors up to $25 million for misleading riders about the safety of its service.
An investigation at the time found that at least 25 of Uber’s approved drivers had serious criminal convictions including identity theft, burglary, child sex offenses and even one murder charge, despite background checks.
In 2017, the company also settled a lawsuit by the Federal Trade Commission (FTC) for $20 million after it misled drivers about how much money they could earn.
In November 2021, the Justice Department sued the company for allegedly charging disabled customers a wait-time fee even though they needed more time to get in the car, then refused to refund them.
Later the same month, a class-action lawsuit in New York alleged that Uber charged riders a final price higher than the upfront price listed when they ordered the ride.