Apple to Pay $38 Billion in Taxes on Offshore Cash: DealBook Briefing:

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Good Wednesday. Here’s what we’re watching:

• Apple will pay $38 billion in repatriation tax.

• Could antitrust law fell the tech giants?

•Bank of America reported $2.4 billion in fourth-quarter profit, as well as a $2.9 billion charge tied to the new tax law.

• Goldman Sachs reported a $1.9 billion loss, and a $4.4 billion tax charge.

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Apple will pay $38 billion in repatriation tax.

The tech giant said it will pay $38 billion in taxes to repatriate its overseas cash because of the new law.

As of late September, Apple held about $252 billion in cash offshore.

Under the new tax law, foreign earnings sitting offshore would be considered to be automatically repatriated and taxed at reduced rates.

The iPhone maker also said it expects to invest over $30 billion in capital expenditures in the United States over the next five years.

Could antitrust law fell the tech giants?

That’s the provocative question posed by Greg Ip of the WSJ. And it reflects governments’ growing wariness toward the tech industry.

Google, Amazon and Facebook aren’t like the Standard Oil or AT&T of old, gouging consumers on price. (Indeed, many of their services are free.) But if the question is “Are consumers better off?” then could there be an opening for regulatory action?

More from Mr. Ip:

If market dominance means fewer competitors and less innovation, consumers will be worse off than if those companies had been restrained. “The impact on innovation can be the most important competitive effect” in an antitrust case, says Fiona Scott Morton, a Yale University economist who served in the Justice Department’s Antitrust Division under Barack Obama.

Where tech has support: In its efforts to keep net neutrality regulations, with a lawsuit against the F.C.C. by 22 state attorneys general and a bill by Senate Democrats to undo the repeal using the Congressional Review Act.

Goldman posts first quarterly loss in six years.

Goldman once seemed invincible. Its trading business was a profit machine.

This morning it posted a quarterly loss in part because of the poor performance in its trading unit.

The numbers:

• $1.9 billion. Goldman’s fourth-quarter loss.

• $4.4 billion. The charge Goldman took related to the new tax law, which wiped out nearly half of Goldman’s earnings for the year, according to the WSJ.

• $5.68. The Wall Street firm’s profit per share excluding the tax-related charge, beating the consensus estimate of $4.90 from Wall Street analysts.

•$7.8 billion. Goldman’s revenue for the quarter, down 4 percent. Goldman is the only big bank to report a decline in revenue so far.

• $2.37 billion. Goldman’s trading revenue for the fourth quarter, down 34 percent from a year ago. That was the steepest decline of any of banks reporting so far. Citigroup, JPMorgan and Bank of America have reported declines in trading revenue of 19 percent, 17 percent and 9 percent.

• $1 billion. Goldman’s revenue from buying and selling bonds, commodities and currencies, half of what it generated a year ago. To put that in perspective: Goldman’s fixed-income division at its peak churned out nearly a billion dollars every two weeks.

In unrelated Goldman news…

Federal prosecutors in Manhattan unsealed an indictment charging Nicolas De-Meyer, 40, with stealing $1.2 million worth of rare wine from a former employer. The former employer in question was Mr. Solomon, who employed Mr. De-Meyer as a personal assistant, according to two sources familiar with the matter.

According to the indictment, the wine was stolen from around October 2014 to around October 2016, when Mr. De-Meyer had been asked to transport it from his former employer’s Manhattan apartment to his wine cellar in East Hampton, N.Y.

Mr. De-Meyer was arrested in Los Angeles on Tuesday, according to a spokesman for the Los Angeles federal prosecutor’s office. He could not immediately be reached for comment.

“The theft was discovered in the fall of 2016 and reported to law enforcement at that time,” a Goldman spokesman said.

Excluding tax hit, BofA posts biggest profit in more than a decade.

Bank of America reported $2.4 billion in fourth-quarter profit, after taking a $2.9 billion charge tied to the new tax law.

The numbers:

• $5.3 billion, or 47 cents a share. BofA’s profit in the fourth quarter excluding the tax-related charge. Analysts had expected the bank to report earnings of 44 cents per share.

• $21.1 billion. BofA’s earnings for 2017, excluding the tax-related charge. That matches its biggest annual profit since 2006.

•$20.4 billion. The bank’s revenue for the fourth quarter, up from $19.99 billion a year ago.

•$2.66 billion. BofA’s fourth-quarter trading revenue, down about 9 percent from a year ago.

• $11.46 billion. The bank’s net-interest income, up 11 percent.

CreditTimothy A. Clary/Agence France-Presse — Getty Images

The new tax code and banks: short-term pain, long-term gain

Let’s recount the hits that U.S. banks took from the tax overhaul:

• Citigroup: $22 billion

• JPMorgan Chase: $2.4 billion

• Goldman Sachs: $4.4 billion

We’ll ignore Wells Fargo for now (it gained). The bigger point is that, thanks to lower corporate rates and preferential treatment for pass-through entities, financial institutions are some of the new code’s biggest winners.

More from Jim Tankersley of the NYT:

“The good news is that tax reform has produced both current and future benefits for our shareholders,” PNC’s president and chief executive, Bill Demchak, told analysts on Friday. He said the bank’s preference would be to divert the tax savings “toward dividend” — which is to say, to return a higher dividend to shareholders.

CreditRichard Drew/Associated Press

G.E.’s problems have investors thinking ‘breakup’

The conglomerate itself isn’t planning on going that far just yet.

Here’s John Flannery, its chief, on a conference call yesterday:

“We are looking aggressively at the best structure or structures for our portfolio to maximize the potential of our businesses. Our results, over the past several years, including 2017 and the insurance charge, only further my belief that we need to continue to move with purpose to reshape G.E.”

The context

Mr. Flannery didn’t say anything out of line with his past remarks. It’s just that he said it as G.E. announced an unrelated $6.2 billion charge connected to its legacy insurance portfolio.

Other conglomerates, from Honeywell to United Technologies to Tyco, have explored restructuring to varying degrees, as Wall Street analysts question the viability of the model.

G.E. and its advisers are still thinking about how to reshape the 125-year-old group, whose complexity may mask yet more problems. The company promises an update in spring, and is unlikely to announce something that only fiddles around the edges. But don’t expect plans for it to become three or four fully separate companies.

Critics demand more boldness

• Lex writes, “Once a paragon of management acumen, it is now a rolling train wreck of unexpected and expensive blunders.” (FT)

• Brook Sutherland writes, “The reasons for keeping G.E. together — shared resources and technology — look increasingly tenuous.” (Gadfly)

• Justin Lahart and Spencer Jakab write, “The problem is that G.E.’s parts might be worth a lot less than even the company’s sharply diminished value today.” (Heard on the Street)

CreditT.J. Kirkpatrick for The New York Times

Government shutdown forecast: cloudy

The deadline: 12:01 a.m. Eastern on Saturday

The issues

• Immigration, of course: President Trump still insists on funding for a border wall and Democrats are fuming over his comments on African countries.

• Republicans are weighing whether to use funding for the Children’s Health Insurance Program as a carrot — or stick — for Democrats to join a stopgap funding measure.

The state of play

Red-state Democrats are uneasy about allowing a shutdown in an election year. Some Republicans are irked by a stream of temporary funding resolutions, rather than a full agreement that would permit more military spending.

House Speaker Paul Ryan’s proposal for a continuing resolution — which includes delays to several health care taxes in addition to CHIP funding — has support among many, but not all, Republicans. It has little among House Democrats.

The politics flyaround

• Steve Bannon has been subpoenaed by both Robert Mueller and the House Intelligence Committee. (NYT)

• The C.F.P.B. will reconsider rules on high-interest payday loans, in a potential win for the industry. (WSJ)

• N.Y. Governor Andrew Cuomo unveiled a state budget meant to counter the tax-code changes that hurt high-tax states: “Washington hit a button and launched an economic missile and it says ‘New York’ on it, and it’s headed our way.” (NYT)

• Support for the new tax code has grown, according to a SurveyMonkey poll. (NYT)

• G.M.’s chief, Mary Barra, urged Mr. Trump to be cautious about withdrawing from Nafta. (NYT)

• How Michael Wolff got into the White House. (Bloomberg)

CreditPhoto illustration by Delcan & Company

Forget the Bitcoin frenzy

The biggest thing about virtual currencies isn’t how much their prices rise (or fall). It’s the technology that makes them work, argues Steven Johnson in the NYT Magazine.

More from Mr. Johnson:

What Nakamoto ushered into the world was a way of agreeing on the contents of a database without anyone being “in charge” of the database, and a way of compensating people for helping make that database more valuable, without those people being on an official payroll or owning shares in a corporate entity.

We’ll count him as a skeptic: Dick Kovacevich, the former Wells Fargo C.E.O., told CNBC that he thinks Bitcoin is “a pyramid scheme” that “makes no sense.”

Beware cryptoheists: North Korea looks to be using the same malware found in the Sony Pictures hack and the Wannacry assault against digital currency investors.

Virtual currency quote of the day, from Bloomberg:

“I have a Zen philosophy that you just go with the flow,” said George Tasick, a part-time cryptocurrency trader in Hong Kong whose day job is making fireworks. “I’m not really changing my behavior in any way.”

The issues in selling the Weinstein Company

Issue one: Some potential buyers may want to pick up the troubled studio through the bankruptcy process, to cleanse it of legal liabilities.

Issue two: Advocates for women who have brought allegations against Harvey Weinstein worry that could deny them justice.

More from Jonathan Randles and Peg Brickley of the WSJ:

A Chapter 11 filing would halt lawsuits brought by women against the studio, forcing them to line up with low-ranking creditors to await their fate. Once the money from a sale comes in, bankruptcy law dictates who gets paid first — the banks that kept Weinstein Co. in business — and who gets paid last — women claiming that Weinstein Co. was part of Mr. Weinstein’s pattern of alleged sexual misconduct.

But it’s complicated. A bankruptcy filing could provide legal structures for Mr. Weinstein’s accusers, like a judge’s supervision of sales and settlements.

A suitor from the past: Among the bidders is the previous studio founded by the Weinstein brothers, Miramax, according to Bloomberg.

What about RICO? DealBook’s White Collar Watch takes a look at using the racketeering law against Mr. Weinstein and his company:

RICO lawsuits are tempting. They allow a plaintiff to sue a variety of defendants by claiming that they acted together and seek an award of triple damages, a bonanza in some business disputes that can run into millions of dollars. But these cases should also come with a bright red warning sign: Tread lightly or see your case thrown out of court before it even gets started.

CreditTony Cenicola/The New York Times

The M. & A. flyaround

• Nestlé finally struck a deal to sell its U.S. confectionary business, with Ferrero paying $2.8 billion. Gadfly asks if Hershey should jump on the deal bandwagon. (NYT, Gadfly)

• Qualcomm had a busy deal day yesterday. It made its case against Broadcom’s $105 billion hostile bid, as its own $38.5 billion offer for NXP Semiconductor was rejected by the money manager Ramius. (Qualcomm, Ramius)

• Silver Lake put up a hefty $1.7 billion equity check as part of its $3.5 billion bid for Blackhawk Network. (NYT)

• Celgene is in talks to buy Juno Therapeutics, maker of a cancer treatment, according to unidentified people. (WSJ)

The Speed Read

• Bill Miller, the value investor who beat the S. & P. 500 15 years running (and whose faith in banks was mocked in the movie “The Big Short”), has donated $75 million to the philosophy department of Johns Hopkins University. (NYT)

• YouTube said it had altered the threshold at which videos could accept advertisements and pledged more oversight of top-tier videos. It’s said similar things before. (NYT)

• Amazon has advertised for an expert in health privacy regulations, suggesting it plans to work with outside partners that manage personal health information. (CNBC)

• A federal judge indicated he would approve a $290 million settlement by Pershing Square Capital Management and Valeant Pharmaceuticals with Allergan shareholders who accused them of profiting improperly from a failed takeover bid. (WSJ)

• Informa, which owns the shipping journal Lloyd’s List, is in talks to buy the exhibitions and events company UBM, creating a company worth more than 9 billion pounds, or about $12.4 billion. (FT)

• The National Retail Federation’s annual trade show is starting to look more like CES. (NYT)

• Joseph A. Rice, who fought a hostile takeover of the Irving Bank Corporation as its chairman and chief executive in the 1980s, died on Jan. 8 at 93. (NYT)

• Greenlight Capital’s David Einhorn is betting on Twitter, saying revenue should grow after user-experience improvements. (Bloomberg)

• Melrose Industries, which specializes in turning around manufacturers, has made a hostile public bid worth about $10 billion for GKN, a British maker of aerospace and automotive parts that could face trading issues as Brexit looms. (Bloomberg)

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You can find live updates throughout the day at nytimes.com/dealbook.

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Senior managers place in typically eventually of delinquent overtime each week, shows CMI survey

Each week, the typical boss works each day greater than what she or he is paid to, a brand new survey through the Chartered Management Institute has revealed, supplying further evidence that the culture of presenteeism is growing over the United kingdom.

The CMI asked over 1,000 managers and located the average respondent labored 7.5 hrs greater than these were contracted to each week. That adds as much as 43.8 times of overtime during the period of annually. An identical CMI survey conducted in 2015 put annual overtime hrs at 39.6 days.

The institute stated the rising gap between contracted and actual hrs of labor is created worse through the dominance of the “always on” digital culture across many industries, with 59 percent of managers saying they “frequently” check their emails outdoors of labor – a rise in the 54 percent who accepted just as much in 2015.

“Britain’s lengthy hrs culture is harmful towards the wellbeing of managers, and it is bashing national productivity. The lean and mean structure of economic means you will find too couple of workers to cope with mounting workloads,” stated Mister Cary Cooper, professor of organisational psychology and health at Manchester Business School.

“Long work hours combined with always-on expectation to reply to emails is eating into home existence, departing managers with little possibility of respite and growing levels of stress. Improving the caliber of working existence for managers is a major advance to solving our productivity crisis,” he added.

The CMI survey also discovered that ten percent managers had time off work for mental health within the this past year. Individuals who did set time aside work accomplished it for typically twelve days.

And also the research also discovered that Brexit was elevated stress for a lot of managers. 25 percent of of individuals asked stated the UK’s election to stop the EU had slashed their feeling of employment. A total of 14 percent said that they work more hrs as a result of the Brexit election.

“The impact of Brexit and also the ongoing political uncertainty is clearly adding to managers’ workplace woes,” stated Petra Wilton, director of strategy in the CMI.

“Not only could they be facing longer working days and also the ‘always-on’ culture that technology enable, however the uncertainties of Brexit are clearly beginning to undermine their employment and feeling of well-being,” she stated.

“It’s hardly surprising that mental health issues and tension is booming as a result.”

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Airbus states insufficient demand could halt A380 production

Airbus has published record aircraft deliveries for that year but signalled further trouble for its poorly selling A380 “superjumbo”.

The organization, which delivered 718 airliners to customers this past year, said it might cut the speed where builds the double-decker jet to simply six annually by 2019, from the peak of 27 a couple of years back.

Airlines have shunned the enormous four-engine airliner towards twin-engine jets, that have lower running costs.

Airbus unsuccessful to land an important order for 36 A380s in the Dubai airshow in November from Emirates, the biggest user from the aircraft, with planned number of 140 of that 100 have finally been paid. 

Failure to secure the offer has tossed the A380’s future into doubt because the current order book runs lower.

Airbus lately delivered the 100th A380 to Emirates Credit: Boomberg

John Leahy, Airbus’s famous chief salesperson, stated: “Emirates may be the only air travel which could take A380s at least rate of six annually for eight to ten years.”

He added: “If we can’t exercise an offer with Emirates we’ll don’t have any choice but to seal lower [the A380 production line].”

Fabrice Bregier, chief operating officer, stated:  “We won’t ever produce white-colored-tails,” talking about aircraft that are built but haven’t been purchased. “But there are more customers beyond Emirates.”

Mr Leahy stated the A380 comes with the next since the busiest airports cannot handle more aircraft. “If people wish to fly they’re going to have to fly on bigger aircraft so we just have that aircraft,” he stated. “The A380 is definitely an aircraft whose time is originating.” 

Last year’s delivery total for those aircraft within the Airbus range was 4pc greater compared to 688 aircraft paid during 2016 and meant the Toulouse-based company has recorded a 15th consecutive year of growing production.

The A320neo was hampered by issues with its advanced engines Credit: Airbus

A late boost in interest in new aircraft in December – together with a record 430-aircraft cope with budget air travel group Indigo Partners – required the annual order book to at least one,109 aircraft.

This last-minute hurry pressed Airbus’s backlog to 7,265 aircraft, worth $1.06 trillion at list prices, meaning the organization has in regards to a decade of labor in hands.

Regardless of the delivery record, Mr Bregier described it as being a “difficult, challenging year”.  A modernised form of the organization bestselling’s aircraft, the A320neo, was hampered by issues with advanced new engines created for it.

“It is very difficult to deliver aircraft without engines,” Mr Bregier stated.

Airbus delivered 558 from the small A320 family in the past year which 181 were the most recent neo version. 

Mr Bregier stated that in the past year Airbus had 60 “gliders”  – aircraft whose engines weren’t ready around the tarmac at its Toulouse and Hamburg bases. About 50 % of those were later delivered, after engine supplier Pratt & Whitney labored through troubles.

Airbus claimed a 55pc share of the market over rival Boeing as a whole orders in the past year, an amount it stated fell to 51pc when measured on value.

However, Boeing is ahead when needed for lucrative wide-body airliners, as Airbus had only 25pc from the that market. In comparison it’s a 59pc business for smaller sized and cheaper single-aisle jets, based on Mr Leahy.

A week ago Boeing reported 2017 deliveries of 763 airliners – an archive – and required 912 orders worth $134.8bn (£99.7bn) at list prices, taking its backlog of orders to five,864 jets, the same as seven year’s work.

Group of doctors is pioneering a way for practicing medicine with marijuana

The Knoxes really are a clan of 4 doctors residing in Or and California who focus on medicinal marijuana. They appear to do very well selling something which is against the law in lots of states, dealing with individuals they are fully aware best.

“We’re all fighting exactly the same fight,” stated Janice Knox, the founding physician behind American Cannabinoid Clinics in Portland, Ore. — and also the mother of two fellow physicians and also the wife from the other. “I think once they do see us they’re amazed at who we’re,” she stated of her patients. The household aims for something not necessarily connected with medicinal marijuana: professionalism.

Knox brought the family’s transfer to medicinal marijuana this year, when she upon the market from the decades-lengthy career in anesthesiology. Certainly one of 15 children, she increased in the San fran and went north for school of medicine within the 1970s.

“There weren’t lots of black people, a minimum of away from the College of Washington,” she stated. “It felt just like a cultural shock after i visited.”

Knox stuck it, selecting a job being an anesthesiologist because she thought — wrongly — it might offer her additional time to boost children. (Much more on these questions minute.) After 35 years, however, she got fed up with working as many as seven days per week. And she or he got fed up with being mistaken for any nurse. “Patients would say, ‘I desire a white-colored male physician,’ ” Knox stated.

After she walked from the job, she had a call from the “card mill” — an exercise known more for writing prescriptions for medicinal marijuana rapidly compared to close focus on patients’ needs. Among the doctors couldn’t be located. Could she complete?

Knox wasn’t sure. Certainly one of her colleagues, a marijuana enthusiast, have been delivered to rehab. And despite attending the College of California at Berkeley, she would be a square — Knox had not seen or smelled marijuana “at a period when drugs were everywhere,” she stated.

But she’d been thinking about natural cures, and she or he decided to complete — and it was amazed to determine the patients weren’t a lot of a reprobates.

“I was shocked to determine the folks that arrived to card mill,” she stated. “Grandmothers, grandfathers, individuals with Seeing Eye dogs. They weren’t whatsoever who I was expecting. . . . They were individuals who traditional medicine had unsuccessful.”

Nor was Knox happy to sign prescriptions and send patients enroute. Some had questions, as anybody would when told to consider any drug. What strain was best? How about dosage? And it was smoking pot much better than a cannabis edible or perhaps a cannabis oil or perhaps a cannabis hands cream?

Knox didn’t know.

“I was embarrassed simply because they expected me, a health care provider, to inform them using this medicine,” she stated. “I couldn’t respond to them. I didn’t know anything about cannabis.”

Undaunted, she delved into research of what’s known as the “endocannabinoid system” — a network of receptors in your body and brain that react to cannabis and regulate, amongst other things, immune response, liver function and producing insulin.

This isn’t just something discussed in parking lots at Phish concerts.

“It’s very, very real,” stated Nora Volkow, director from the National Institute on Substance Abuse in the National Institutes of Health.

Volkow noticed that knowledge of the endocannabinoid system is affected with what she known as a “circular problem.” Despite the fact that more states are relocating to legalize medicinal marijuana, there’s inadequate evidence about how it operates partially since the drug, a federally controlled Schedule 1 substance purportedly of no medical use, is fixed and challenging study.

The Ama views cannabis “a harmful drug and, as a result, a significant public health concern,” based on an insurance policy statement. Even though it thinks the drug shouldn’t be legalized for recreational use, an insurance policy updated this past year advised further study, saying the drug’s Schedule 1 status ought to be reviewed “to facilitate grant applications and also the conduct of well-designed clinical research involving cannabis and it is potential medical utility.”

Knox has read all of the studies she could, attended conferences and been certified like a cannabis specialist. She learned, for instance, the main difference between THC, the cannabis compound, or cannabinoid, that will get people high, and CBD, a cannabinoid that provides therapeutic effects sans psychedelia.

Knox’s husband, David Knox, an urgent situation room physician for 38 years, stored his regular job but additionally began working in the clinic. He understood nothing concerning the endocannabinoid system but rapidly saw the potential for cannabis like a strategy to epilepsy, cancer-therapy negative effects and discomfort, particularly in the center of an opioid epidemic.

Also, he stated President Richard M. Nixon’s decision to sign the Controlled Substances Act, which categorized marijuana like a Schedule 1 drug in 1970, was “one of his greatest crimes.”

“I think most establishment medicine is still this is not on board” with medicinal marijuana, he stated. “That’s the way you were trained.”

Meanwhile, another Knoxes were getting into around the game.

Rachel Knox, 35, and Jessica Knox, 31, appear closer than many brothers and sisters. After departing Portland, where they increased up, they resided together in Boston while Jessica finished her undergraduate degree at Harvard College and Rachel did a publish-baccalaureate enter in preparation for school of medicine at Tufts College. Then both joined Tufts school of medicine, graduating this year from the dual-degree program which offered MBAs.

“If i was alone, we may have become frustrated and altered the brain,” Jessica Knox stated. “Instead, we thought, ‘Oh, my sister’s doing the work, I possibly could get it done, too.’ ”

Once they completed their residencies, Rachel Knox wound up in Portland, while her sister gone to live in Bay Area. But telemedicine permitted Jessica Knox to utilize her sister and her mother in the American Cannabinoid Clinics, in which the family battles the credit card-mill mind-set. Rather of since many patients as you possibly can as rapidly as you possibly can — one that brought to “doctors becoming millionaires,” Rachel Knox stated — the household would really practice medicine with cannabis.

This demands greater than teaching patients to not spill the bong water. Every client differs. Some shouldn’t get high or may have anxiety that doesn’t respond well to products full of THC. Individuals a new comer to marijuana use — “naive users,” as Rachel Knox puts it — might use edibles. But marijuana edibles are notoriously simple to exaggerate, particularly if someone takes them before eating anything.

Veteran pot smokers, meanwhile, should use vaporizing, which Jessica Knox stated “is certainly cleaner, frequently less harsh, and certainly less stigmatic than smoking.” And all sorts of patients should be advised from the possible negative effects associated with a medication. Such as the advantageous results of marijuana, there’s still a great deal to be discovered its dangers, like the chance of cancer of the lung, cognitive impairment or impaired driving.

“If you’re trying something totally new the very first time, maybe do this in your own home on the Saturday when it’s not necessary to visit anywhere out on another have responsibilities in your own home to bother with,” Jessica Knox authored within an email.

But regardless of the selected remedy, the Knoxes aren’t likely to sign a prescription and send patients enroute. “We want our patients arrive at us for guidance, not this card,” Rachel Knox stated. “We’re not here to determine someone every 5 minutes.”

Following a year from the Trump administration, the way forward for patients seeking medicinal marijuana still isn’t obvious. Attorney General Shaun Sessions searched for the opportunity to prosecute medicinal marijuana providers in states in which the practice is legal. Such providers happen to be paid by federal law since 2014, but individuals protections expire Friday.

The Knoxes, however, aren’t that worried. While Janice Knox acknowledged that physicians are “in a precarious position” using a federally controlled substance, 29 states and also the District of Columbia have legalized medicinal marijuana eight have legalized recreational use by adults. Because of so many taking advantage of the once verboten drug, it’s difficult to imagine returning.

“We’re likely to plow ahead and do what it’s suitable for us to complete,” she stated.

A Swiss Banker Helped Americans Dodge Taxes. Was It a Crime?

Diane Butrus, a business executive from St. Louis, wandered the streets of Zurich, looking for a bank that would help her keep $1.5 million hidden from America tax collectors.

One bank after another turned her down on that afternoon in 2009. They were worried about a United States crackdown on tax evasion and were no longer willing to shelter American money.

Finally, across the street from a city park, up a discreet elevator, seated in a luxurious conference room, Ms. Butrus found a banker ready to help. His name was Stefan Buck.

Mr. Buck said that his employer, Bank Frey, would be happy to take Ms. Butrus’s money, according to court documents and interviews with Mr. Buck and Ms. Butrus. He instructed her to wire the $1.5 million to Bank Frey. He told her that her name wouldn’t be attached to the new account. It would be known internally as Cardinal, an alias she chose in a nod to her favorite baseball team.

After that, Ms. Butrus contacted Mr. Buck via prepaid cellphones she picked up at a Walgreens drugstore. Every six months or so, she flew to Zurich to withdraw money directly from Mr. Buck. She would return to the United States secretly carrying just under $10,000 in cash — the cutoff for having to make a customs declaration.

The setup allowed Ms. Butrus to avoid paying tens of thousands of dollars in income taxes. And it wouldn’t have been possible without Mr. Buck and Bank Frey.

As much as chocolate and watches, Switzerland is known for bank secrecy. That made the country a destination for money that the wealthy wanted to hide. Last decade, it also made Swiss banks targets for an assault by the United States government, which was tired of Americans escaping taxes on money in offshore accounts.

Many banks came clean, divulging their clients to American authorities. Many Americans, including Ms. Butrus, searched for new places to park their money.

Bank Frey was among the very few to defy the legal onslaught. And Mr. Buck, a clean-cut and self-confident 28-year-old at the time he met Ms. Butrus, was the bank’s public face, responsible for landing and then managing American accounts.

That put Mr. Buck in the government’s cross hairs. In 2013, a federal grand jury indicted him for conspiring to help Americans avoid taxes. It seemed like another blow against Swiss bank secrecy.

But things didn’t go as prosecutors had planned — and the chain of events could have big consequences for America’s fight to keep people from evading taxes using offshore bank accounts.

A Small Outfit

Mr. Buck was raised in Germany. His parents had been championship ice dancers; his mother competed in figure skating for Switzerland in the 1972 Olympics in Japan.

His father ran an insurance company, and Mr. Buck figured that one day he would take it over. But an acquaintance from business school offered him a job in early 2007 at Bank Frey. The bank was tiny, with about 20 employees. Mr. Buck shared an office with four people, including the bank’s receptionist. “We all got along well,” he said.

The business revolved around clients that the bank’s founder, Markus Frey, had accumulated over the years, according to Mr. Buck and the court testimony of another former bank employee. At first, there wasn’t a focus on Americans.

Then, in 2008, a legal earthquake shook the foundations of Swiss banking. American prosecutors started filing criminal charges against bankers and executives who had set up accounts for Americans. In 2009, UBS, the huge Swiss bank, admitted helping Americans hide money from the Internal Revenue Service and agreed to provide authorities with the names of its tax-dodging clients.

Soon Swiss banks were expelling American clients.

Not Bank Frey. It didn’t have offices in the United States, and executives didn’t see it as their responsibility to police whether their clients were paying taxes.

“We decided there’s no reason not to maintain business with American clients,” Mr. Buck said in an interview. Executives consulted with legal experts to ensure they weren’t crossing any lines. “We really tried to make sure that how we did the business is correct.”

Opening accounts for desperate Americans seemed like a golden opportunity. “The positioning of Bank Frey as a solely Swiss private bank is now considered as a competitive advantage by the market,” the bank’s chief executive, Gregor Bienz, said at a board meeting in late 2008, according to records of the meeting. Mr. Bienz didn’t respond to requests for comment.

Over the next few years, hundreds of millions of dollars in American deposits flowed from Swiss banking stalwarts — institutions like Credit Suisse and Julius Baer — to Bank Frey. Its number of American clients roughly tripled, according to court records. By September 2012, nearly half of the bank’s $2.1 billion in assets was held on behalf of American taxpayers.

The Matterhorn Debit Card

Ms. Butrus was one of them. C. Richard Lucy, a former Goldman Sachs and Bank of America executive in New York, was another.

In late 2009, Mr. Lucy’s contact at Julius Baer, where he’d had an account for many years, told him he had to move it elsewhere. Mr. Lucy traveled to Zurich and met with about 15 banks. None would take his money, according to his court testimony.

There was one exception. “A couple of times the name Bank Frey came up as a bank that was new and aggressively seeking out accounts,” he testified. (He didn’t respond to requests for comment.)

Sure enough, when Mr. Lucy showed up at Bank Frey’s offices, Mr. Buck said he would open him an account.

Mr. Lucy was impressed by Mr. Buck’s assurances that his bank had nothing to worry about in the American tax-evasion investigations. “I had found what I was looking for,” Mr. Lucy said.

Mr. Lucy said that Mr. Buck arranged for him to get a Matterhorn-emblazoned debit card that didn’t have Bank Frey’s or Mr. Lucy’s names on it. Mr. Lucy was told that, when he needed money, he should call Bank Frey and ask them to load money onto the debit card. He could use it at any ATM.

Mr. Lucy wanted to bring some account documentation back to New York. He said Mr. Buck advised him not to take anything with Bank Frey’s name on it. (Mr. Buck denies giving that advice.) Mr. Lucy took a pair of scissors and snipped Bank Frey’s name and logo off the paperwork.

Back in Manhattan, Mr. Lucy bought a prepaid phone card for his calls to Zurich. He made them from a pay phone outside his apartment building. When that phone was damaged, the only other functioning pay phone he could find nearby was inside the kitchen of a boutique hotel. Surrounded by the kitchen’s hubbub, he chatted on the phone with his Swiss banker.

By the turn of the decade, other Swiss banks were booting their American customers — and handing them glossy Bank Frey brochures on the way out the door.

Mr. Buck, who eventually rose to be Bank Frey’s head of private banking, said he felt he wasn’t doing anything wrong. All the same, he warned one client, Christine Warsaw, against sending banking instructions through the United States Postal Service, she said in court. “No USPS, use fax,” she wrote in a note to herself. Mr. Buck said he didn’t tell her not to send materials through the mail.

By 2011, it was dangerous for Americans to keep their money in undeclared offshore accounts. More banks were handing over client lists to the Justice Department. If you showed up on a list, prosecutors might pursue you.

A safer option was to turn yourself in to the I.R.S. through a voluntary self-disclosure program. It allowed taxpayers to pay back taxes, cooperate with investigators and move on with their lives.

Ms. Butrus closed her Bank Frey account and eventually declared the money to the I.R.S. She paid her taxes and a stiff penalty and pledged to help the I.R.S. and prosecutors. Mr. Lucy did, too. On disclosure forms, both identified Mr. Buck as their relationship manager.

Prosecutors were hunting for bankers to hold accountable. The theory was that bankers knew they were enabling Americans to break the law and therefore were part of a conspiracy to defraud the United States government. Prosecutors turned to people including Ms. Butrus and Mr. Lucy.

By 2013, more than 20 employees of Swiss financial institutions had been criminally charged. At least a dozen pleaded guilty and received a fine, probation or both. Several hunkered down in Switzerland, which refused to extradite its citizens to the United States for actions that weren’t illegal in Switzerland.

None had actually gone on trial.

‘Do It Now’

At 5 o’clock one morning in April 2013, Mr. Buck was awakened by a phone call. Bank Frey’s chief executive was on the line. “Go look at Bloomberg,” Mr. Buck recalls him saying, referring to the business-news service.

“I’m sleeping,” Mr. Buck said he replied.

“Do it now,” his boss ordered.

Mr. Buck pulled out his cellphone. There it was: an article saying he had been indicted.

Terrified, Mr. Buck skimmed the indictment. The indictment made clear that his former clients were assisting the government. “It was surreal,” Mr. Buck said.

Mr. Buck, 32 years old at the time and single, went to work to hand in his I.D. card and cellphone. He was placed on paid leave; the bank would cover his legal expenses.

Then Mr. Buck headed to his sister’s house. It was her husband’s birthday, and they were hosting a barbecue.

His sister, Sylvia Muther, was nearly nine months pregnant. “We were scared he’d go to jail,” she said. “We tried not to think about that.”

“I got hammered,” Mr. Buck said.

Mr. Buck spent months weighing his options. He could plead guilty and be done with it. He could spend the rest of his life in Switzerland, which wouldn’t extradite him. Or he could fight the charges.

That third road was perilous. If Mr. Buck won at trial, he would be free — and the Justice Department’s fight against bankers who enable tax evasion would be dealt a serious blow. If he lost, he was looking at up to five years in prison.

In October 2014, one of UBS’s top executives, Raoul Weil, went on trial in Florida. Federal prosecutors accused him of helping clients hide billions. Mr. Weil’s lawyers argued he had no knowledge of or responsibility for what had happened. The jury deliberated for barely an hour before acquitting him.

The same week, a Los Angeles jury acquitted an Israeli banker who faced similar accusations. The Americans’ pursuit of foreign bankers no longer looked invincible.

A few months later, on a cloudy morning in January 2015, Mr. Buck was skiing with friends in the Swiss Alps. Above the tree line, they started their descent.

A sign on the slope marked the boundary between France and Switzerland. Mr. Buck realized he was crossing an international border — and that meant he theoretically could be picked up on an American arrest warrant in France. “I was scared,” Mr. Buck said.

He told his friends to continue without him. He snapped off his skis, trudged back up the slope and skied down the Swiss side of the mountain.

Mr. Buck realized he couldn’t spend the rest of his life fearful of crossing a border. “There was no way I was just going to stay in Switzerland,” he said.

Mr. Buck told his lawyer, Marc A. Agnifilo, that he wanted his day in court.

Coming to America

On Nov. 9, 2016, Mr. Buck boarded a flight to New York. He had spent the previous two nights too scared to sleep. Mr. Agnifilo had negotiated with Manhattan prosecutors to let Mr. Buck out on bail once he arrived. The catch was that he would have to stay in the United States, with his passport confiscated, until his trial.

“Do you have any idea when I’m going to come back?” he asked Mr. Agnifilo.

“No,” his lawyer responded. “Hopefully you don’t have a cat you need to feed.”

An I.R.S. agent collected Mr. Buck as he exited the plane in New York. He was fingerprinted, photographed, shackled and driven to a prison next to the Brooklyn Bridge. He spent the night with a cellmate whose hedge fund had been raided that morning by agents with machine guns.

The next day, Mr. Buck pleaded not guilty and was released on bail. He moved into an Upper East Side apartment, paid for by Bank Frey, which by then had ceased operations, its business model seemingly up in smoke.

It would be months before his trial was scheduled.

Mr. Buck made the most of the free time. He trained in Central Park for the New York City Marathon. He became a Yankees fan. For New Year’s, he went to Miami with friends. Since he had no I.D., he couldn’t fly; instead he spent 33 hours on a Greyhound. “He sees it all as an adventure,” Mr. Agnifilo said.

He spent much of his time in Mr. Agnifilo’s 26th-floor law offices, helping his lawyers translate German-language documents.

The crux of the defense was that the responsibility to pay taxes and declare income did not rest with Mr. Buck. It was his clients who had decided not to pay taxes. He was under no obligation to tattle; in fact, he was prohibited from doing so by Swiss bank-secrecy laws.

Trial preparations dragged on, partly because Mr. Agnifilo also was representing Martin Shkreli, the hedge fund manager who eventually would be convicted of fraud.

Mr. Buck had heard of Mr. Shkreli. He hadn’t realized they would be sharing a lawyer. Mr. Agnifilo and Mr. Buck both recall shouting matches over whether the lawyer was sufficiently devoted to his client’s case.

Mr. Buck’s trial started in October. Prosecutors branded him as a crucial cog in an international tax-evasion scheme.

Mr. Agnifilo decided that Mr. Buck shouldn’t testify. While the defendant was confident of his innocence, the cross-examination promised to be brutal. And Mr. Buck’s English was imperfect.

Jurors heard from a parade of Mr. Buck’s former clients, including Ms. Butrus and Mr. Lucy. They testified that Mr. Buck and Bank Frey had been instrumental in allowing them to dodge taxes.

“We didn’t want anyone, specifically the I.R.S., to find out we had an account at the time,” Ms. Butrus testified.

Prosecutors said all the secrecy — the nameless debit cards, the scissored bank paperwork, the shadowy phone calls — showed Mr. Buck knew what he was doing was wrong. “These are techniques used by a person who is trying to keep from getting caught, not by a person who thinks he’s operating legally,” said Sarah E. Paul, an assistant United States attorney, near the end of the trial.

Then it was Mr. Agnifilo’s turn.

“At the center of the crime scene, there is an American with a pen,” he intoned. “Stefan Buck has nothing whatsoever, nothing whatsoever, to do with the choice that an American taxpayer makes” to not declare offshore assets.

Mr. Agnifilo said the fact that Mr. Buck came to America, rather than staying in Switzerland, confirmed that he had nothing to hide. “Let Mr. Buck go back to Switzerland,” he finished.

It was a moving performance. “I’m close to crying the first time in 25 years,” Mr. Buck wrote on a Post-it note he handed his lawyers.

The judge, Jed S. Rakoff, also was impressed. “I knew you were a powerful orator,” he told Mr. Agnifilo after the jury left, “but you have exceeded all bounds.”

The jury deliberated for a little more than a day. On Nov. 21, Mr. Buck was sitting on a toilet in the courthouse bathroom when the verdict came in. He hustled to the courtroom.

A pair of United States Marshals hovered at the back. “Are they here for me?” Mr. Buck recalled asking his lawyer.

No, Mr. Agnifilo fibbed. He knew the marshals were there to take Mr. Buck into custody if he was found guilty.

The jury filed in and delivered the verdict: not guilty.

Afterward, Mr. Buck spoke to the jurors in the hallway — the first time they had heard his voice. “Happy Thanksgiving,” he told them.

A Changed Calculus

Mr. Buck’s acquittal reverberated through the legal community. The Justice Department had now lost the three cases it had tried against foreign bankers who helped Americans avoid taxes.

Dozens more cases are pending. Those who represent accused Swiss bankers say they expect Mr. Buck’s verdict to embolden defendants and to cause prosecutors to think twice before bringing new charges.

“It should change their calculus,” said Marc S. Harris, a lawyer at Scheper Kim & Harris, who successfully defended the Israeli banker in 2014. He said the cases represented a “misguided effort” by the Justice Department to respond to political pressure to prosecute bankers.

In early December, Mr. Buck’s family and friends greeted him at the Zurich airport with a giant welcome-home poster. His priority was to get to the Alps for peak ski season.

“The timing of my return is perfect,” he said. He hopes to get back to work soon in the Swiss finance industry.

Apple facing class-action lawsuits over Meltdown and Spectre bugs

Apple continues to be hit with a minimum of three class-action lawsuits within the major processor vulnerabilities revealed now.

The issues, known as Meltdown and Spectre, exist within almost all modern processors and may allow online hackers to steal sensitive data although no data breaches happen to be reported yet. While Spectre affects processors produced by a number of firms, Meltdown seems to mainly affect Apple processors made since 1995.

Three separate class-action lawsuits happen to be filed by plaintiffs in California, Or and Indiana seeking compensation, with increased expected. The 3 cite the safety vulnerability and Intel’s delay in public places disclosure from the time it was initially notified by researchers from the flaws in June. Apple stated inside a statement it “can confirm it understands the category actions but because these proceedings are ongoing, it might be inappropriate to comment”.

The plaintiffs also cite the alleged computer slowdown that’ll be brought on by the fixes required to address the safety concerns, which Apple disputes is a significant component. “Contrary with a reports, any performance impacts are workload-dependent, and, for that average computer user, shouldn’t be significant and will also be mitigated with time,” Apple stated within an earlier statement.

Q&A

So what can I actually do concerning the Meltdown and Spectre flaws?

Users can perform little to prevent the safety flaws aside from update their computers using the latest security fixes as quickly as possible. Fixes for Linux and Home windows happen to be available. Chromebooks updated to Chrome OS 63, which began moving in mid-December, happen to be protected.

Android devices running the most recent security update, including Google’s Nexus and Pixel smartphones, happen to be protected. Updates are anticipated to become delivered soon. Users of other devices will need to wait for a updates to become pressed out by third-party manufacturers, including Samsung, Huawei and OnePlus.

An update from Apple on precisely what it takes because of its Mac computers and iOS devices is anticipated.

“The security vulnerability revealed by these reports shows that this generally is one of the biggest security flaws ever facing the American public,” stated Bill Doyle of Doyle APC, among the lawyers representing plaintiffs Steven Garcia and Anthony Stachowiak who sued within the northern district of California. “It is imperative that Apple act quickly to repair the problem and be sure individuals are fully paid for all losses endured because of their actions.”

Chris Cantrell of Doyle APC, told Law.com: “I fully expect there to become additional filings [with respect to consumers and companies] which this can go the typical route of multidistrict litigation. Only the amount of devices that we’re speaking about … the majority of the desktop and laptops being used today.”

Legal experts stated consumers would need to prove concrete damages and injury to proceed with claims. But experts also expect that consumer class-action lawsuits might be only one cost Apple will face within the wake from the Meltdown revelations.

Eric Manley, dean of Vanderbilt University’s Owen Graduate School of Management, stated: “The potential liability is very large for Apple. Everyone is going to be scrambling within the next couple of days to determine precisely how big it’s.Inches

Big cloud providers for example Amazon . com, Google and Microsoft will probably seek some type of compensation from Apple for just about any software or hardware fixes they have to make which may potentially impact their overall computational capacity, security experts stated.

Amazon . com, Microsoft and Google all stated they don’t expect significant performance trouble for many of their cloud-computing customers.

However the incident will probably spur cloud companies to press Apple for affordable prices on chips later on talks, stated Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh, which owns shares in Apple.

“What [Intel’s cloud customers] are likely to have to say is, ‘you wronged us, we hate you, but when we are able to obtain a discount, we’ll still purchase from you’,” Forrest stated.

Forrest also suggests Apple might have to increase its nick development spending to pay attention to security.

Banks and financial services firms are attempting to know very well what it’ll cost you to reply to the safety issues, the Financial Services Information Discussing and Analysis Center (FS-ISAC) stated inside a statement.

The worldwide industry group added: “In accessory for the safety factors elevated with this design flaw, performance degradation is anticipated, that could want more processing power for affected systems to pay and keep current baseline performance.

“There will have to be consideration and balance between fixing the possibility security threat v the performance along with other possible impact to systems.”

First on the hefty to-do list for Congress: Avoid a shutdown

THE TICKER

Want more tales such as this? Have them here.

Welcome back. And here’s wishing you’d a restful holiday, because Washington is beginning 2012 with a great deal on its plate.

Looming early and enormous: The us government has no money Jan. 19. Averting a shutdown will need Senate Majority Leader Mitch McConnell (R-Ky.) to strike an offer with recently empowered Senate Democrats, who using the seating of Alabama’s Doug Johnson will chop the GOP’s majority to 51 votes. The negotiations look exceedingly difficult, thinking about the plethora of billed issues  — including measures to stabilize medical health insurance markets give a lengthy-term immigration fix to protect “dreamers” address pension shortfalls for miners, food service workers yet others supply emergency funding for last year’s spate of disasters and lift budget caps on Government and domestic spending. (Given everything, Compass Point’s Isaac Boltansky pegs the chances of the mid-The month of january shutdown at 60 %.)

Talks around the immigration piece resume now, per The Washington Post’s Shaun Stein, who reports that bipartisan congressional leaders mind towards the White-colored House tomorrow to satisfy with budget director Mick Mulvaney and legislative matters chief Marc Short: 

“Congressional Democrats express openness to locating additional funding for border security but have eliminated funding the wall across the U.S.-Mexico border that Trump guaranteed throughout his presidential campaign… Democrats they are under intense pressure from Hispanic lawmakers and liberal activists to reject any government funding deal that doesn’t resolve the DACA issue. Already, Democratic senators have helped pass multiple funding deals that didn’t include DACA protections, including one out of December.”

Meanwhile, another avoidable fiscal showdown looms: Lawmakers most likely only have until mid-March to boost your debt ceiling. The Treasury exceeded its borrowing authority recently and it has been employing “extraordinary measures,” borrowing using their company accounts, to guarantee the government doesn’t default on its obligations. Also around the must-do list: finding a lasting means to fix funding the Children’s Medical Health Insurance Program, which provides coverage for 9 million, after Congress approved a 3-month patch in December along with a measure reauthorizing warrantless surveillance of foreign intelligence targets. 

But President Trump and the GOP are searching to remain on offense after closing the entire year using their improbably fast rewrite from the tax code. Which will mean various things to various Republicans, based on where they sit. Trump appears anxious to tackle a set of his populist campaign promises, with new pushes for infrastructure spending along with a trade attack. 

Trump continues to be teasing a major infrastructure proposal because the campaign, as he promised to release $1 trillion of recent paying for rebuilding the nation’s crumbling public works. The administration is anticipated to detail its vision inside a 70-page plan this month, and also the big querry is still how it ought to be funded. “I wish to perform a trillion-dollar infrastructure bill, a minimum of,” Trump told the brand new You are able to Occasions a week ago, however it isn’t obvious the amount of that he’ll propose covering through direct spending. (Can remember the administration this past year known as for matching $200 billion in federal outlays with four occasions much privately investment, but Trump made an appearance to bail around the idea within the fall.) 

The actual process from the proposal aside, finding bipartisan buy-set for any big new program appears like a lengthy shot.

Last year, Democrats sounded encouraging notes about dealing with Trump on this type of plan. A political eternity has passed since, and today the party is eyeing the actual chance of riding a wave of anti-Trump animus to power within the midterms. And also the Republicans most likely will face divisions about how exactly much infrastructure spending to use the nation’s charge card after approving $1.5 trillion in deficit-financed tax cuts. 

On trade, obama looks primed to create good on his threats to obtain tough on which he’s known as abusive buying and selling practices through the Chinese — or to back away.

Forcing now you ask , a choice due through the finish from the month on imposing tariffs or quotas on Chinese solar power panels and automatic washers. The Post’s David Lynch says: “Trump may also order new limits on Chinese purchase of the U . s . States or raise tariffs unilaterally — a probable breach of U.S. commitments around the world Trade Organization — pending the end result of the broader analysis into Beijing’s alleged failure to safeguard foreign companies’ ip legal rights, analysts say. And White-colored House action arrives on the separate Commerce Department probe triggered by worries concerning the national security impact of rising imports of Chinese steel and aluminum.”

Congressional Republicans produce other priorities. McConnell signaled recently he promises to give “early consideration” to some bank deregulation package that’s got wide backing from his party while splitting Democrats. House Speaker Paul D. Ryan (R-Wis.) has spoken up his curiosity about cutting anti-poverty spending by putting new limits on who’s qualified for food stamps and housing benefits. 

MARKET MOVERS

Wages rise. WSJ’s Shayndi Raice and Eric Morath: “In U.S. metropolitan areas using the tightest labor markets, personnel are finding something that’s lengthy been missing in the broader economic expansion: faster-growing paychecks. Workers in metro areas using the cheapest unemployment have one of the most powerful wage growth in the united states. The labor market in places like Minneapolis, Denver and Fort Myers, Fla., where unemployment rates stand near or perhaps below 3%, has tightened to some extent where companies are raising pay to draw in employees, frequently from competitors. It’s a result entirely expected in economic theory, only one that’s been largely absent so far within the upturn that started greater than eight years back.”

No IPO avalanche in 2018. WSJ’s Maureen Farrell and Corrie Driebusch: “The marketplace for U.S. initial public choices bounced in 2017, however, many bankers and investors continued to be frustrated as top-tier companies stick to the sidelines. That’s unlikely to alter in 2018. The amount of companies raising profit U.S. markets is anticipated to get, quite a few the greatest-valued, big-name private companies, including Airbnb Corporation., Uber Technologies Corporation. and WeWork Cos., are anticipated to carry off ongoing public not less than another year…

Although a lot of behemoths are suppressing, some notable names will test the marketplace in 2018. Music-streaming company Spotify AB is among the best-known firms likely to go public—but it’s unlikely to boost anything if this debuts around the New You are able to Stock Market. Spotify needs to visit public in March or April via a so-known as direct listing that wouldn’t raise funds or use underwriters to market the stock, based on people acquainted with the procedure… Meanwhile, Dropbox Corporation., that was worth $10 billion if this last elevated capital in 2014, is get yourself ready for an inventory that may are available in either March or April and it is likely to value the organization roughly around or possible above its latest round of non-public financing”

Eight Items to Watch in Markets in 2018

The Wall Street Journal’s Heard in the pub team evaluates the entire year ahead in markets. Here’s what you need to watch, from wages to technology towards the Chinese economy.

WSJ

A Large Year for the stock exchange

The main stock exchange indexes broke numerous records in 2017, rising consistently all year round. Investors were heartened by President Trump’s promise to chop taxes and rules. Strong economic growth all over the world and nary an indication of inflation also led to investors’ cheery mood.

NYT

Pension Funds’ Dilemma: Things To Buy When There Is Nothing Cheap?

Retirement systems that manage money for firefighters, police officials, teachers along with other public workers aren’t pulling back on pricey bets for 2018, a period when financial markets are rising all over the world.

WSJ

New You are able to Given Takes Names searching for Next Chief

It might be the trickiest job to complete central banking. And because the Fed Bank of recent You are able to search committee casts a large internet to locate a substitute because of its outgoing president, William Dudley, the wish list gets lengthy.

Bloomberg

Cash On THE HILL

TAX FLY-AROUND:

Blue-condition Dems plot to bar. NYT’s Ben Casselman: “Democrats in high-cost, high-tax states are plotting methods to do what their states’ representatives in Congress couldn’t: blunt the outcome from the recently passed Republican tax overhaul. Governors and legislative leaders in New You are able to, California along with other states are thinking about legal challenges to aspects of what the law states which they say unfairly pick out areas. They’re searching at methods for raising revenue that aren’t penalized through the new law. And they’re thinking about altering their condition tax codes to permit residents to benefit from other federal regulations and tax breaks — essentially, restoring deductions the tax law scaled back. One proposal would replace condition earnings taxes, which aren’t fully deductible underneath the new law, with payroll taxes on employers, that are deductible. Also try this is always to allow residents to exchange their condition tax payments with tax-deductible charitable contributions for their condition governments.”

Goldman’s $5 billion tax hit. WSJ’s Liz Hoffman: “Goldman Sachs Group Corporation. will require a $5 billion earnings charge associated with the current tax overhaul, a 1-time jolt likely to be adopted with a longer-term windfall from lower rates. Companies from Wall Street towards the heartland are wrestling using the immediate implications of the very most sweeping changes towards the nation’s tax code in 30 years. Goldman’s announcement on Friday, which creates its first quarterly reduction in six years, also hints of broader turbulence visiting U.S. corporate earnings in 2012.

Under one estimate, companies within the S&P 500 index could have to take tax-related earnings charges of $235 billion—about 1% of the combined market price. The charge will swing Goldman to some quarterly loss and eliminate a lot of its full-year profit. However the firm, like its brethren on Wall Street and across a lot of corporate America, is a champion over time because it enjoys the cheapest U.S. corporate tax rate in eight decades and will get new versatility in the way it funds itself, invests in the industry and returns capital to shareholders.”

Goldman gives early stock awards to 300. CNN Money: “Inside a race against looming changes towards the tax code, Goldman Sachs passed out huge amount of money price of stock awards to hundreds employees. The move helps you to save the firm an believed $140 million on its goverment tax bill the coming year, a resource acquainted with the problem told CNNMoney. Based on public filings published Friday, 10 Goldman executives — including Chief executive officer Lloyd Blankfein and far from the company’s C-Suite — received stock awards worth a combined $94.8 million on Thursday. However the individuals stocks were not said to be delivered until The month of january.”

Gig workers benefit, conditionally. NYT’s Noam Scheiber. “The brand new tax law will probably accelerate a hotly disputed trend within the American economy by rewarding workers who sever formal relationships using their employers and be contractors… That’s just because a provision within the tax law enables sole proprietors — together with proprietors of partnerships or any other so-known as pass-through entities — to subtract 20 % of the revenue using their taxed earnings. The tax savings, that could be for sale $15,000 each year for a lot of affluent couples, may prove enticing to workers…

However it can lead to an erosion from the protections which have lengthy been a cornerstone of full-time work. Formal employment, in the end, provides not only earnings. Unlike independent contractors, employees get access to unemployment insurance when they lose their jobs and workers’ compensation if they’re hurt at the office. They’re paid by workplace anti-discrimination laws and regulations and also have a federally backed right to create a union.”

Tax lobbyists hit pay dirt. Politico’s Theodoric Meyer: “Instead of streamlining the tax code, Republicans make it more difficult by jamming via a new number of temporary regulations and tax breaks for from craft brewers to citrus growers. Lobbyists expect these breaks, referred to as tax extenders, to create paydays for a long time. Adding for their workload: Republicans rammed their bill through Congress so rapidly that it is almost sure to require follow-up legislation to repair the mistakes and miscalculations still being discovered, based on interviews with six tax lobbyists.”

IRS guidance confuses. Bloomberg’s Erik Wasson and Lynnley Browning: “New guidance in the Irs that limits taxpayers’ capability to subtract prepaid property levies on their own 2017 tax statements causes confusion nationwide as people hurry to pay for ahead of time not understanding whether they’re wasting their money and time. The IRS stated Wednesday that taxpayers can subtract prepaid condition and native property taxes for 2018 on 2017 returns only when the required taxes were assessed before 2018. The brief guidance — which doesn’t define the word “assessed” — had local tax officials scratching their heads. Some begin to see the issue being an early signal of far wider confusion that’s not far off — the foreseeable consequence of passing an invoice that rewrites the tax code just two days before most of the changes take hold.”

Increase in house values to slow. The Post’s Kathy Orton and Aaron Gregg: “The steady rise in housing prices in most of the nation’s priciest markets, such as the Washington region, is anticipated to slow in future years, analysts say, because the Republican tax law starts to reshape a main issue with the U.S. economy… Economists and housing experts broadly agree the alterations will slow cost increases in costly housing markets — though nobody expects housing values to say no, because of the overall strength from the economy cheap you will find relatively couple of houses for purchase in top markets.”

Caterpillar’s Swiss profits. WSJ’s Andrew Tangel and Michael Rapoport: “Greater than a decade before federal agents showed up at Caterpillar Corporation. CAT -.53% in March with search warrants, an anonymous worker claimed inside a letter to the leader that something was wrong about how exactly the heavy-machinery maker used a subsidiary in Europe to contract its goverment tax bill… Two CEOs and a minimum of four investigations later, Caterpillar faces a possible goverment tax bill of $2 billion in the IRS, that is challenging the amounts compensated on profits from parts sales made with the Swiss unit, known as Caterpillar SARL. The raids in March, brought through the Commerce Department, were an indication of an intensifying criminal analysis in to the company’s taxes and exports. No civil or criminal charges happen to be filed against Caterpillar or anybody at the organization. A business spokeswoman states it “believes its tax position is right” and it is “in the entire process of answering the government’s concerns.”

Anger but no action against Equifax. Politico’s Martin Matishak: “The huge Equifax data breach, which compromised the identities in excess of 145 million Americans, motivated a telling response from Congress: It didn’t do anything. Some industry leaders and lawmakers thought September’s thought from the massive invasion — which required place several weeks following the credit rating agency unsuccessful to do something on the warning in the Homeland Security Department — may be the lengthy-envisioned incident that motivated Congress to finally fix the country’s confusing and ineffectual data security laws and regulations. Instead, the aftermath from the breach performed out just like a familiar script: white-colored-hot, bipartisan outrage, adopted by proceedings along with a flurry of proposals that went nowhere. Out of the box frequently the situation, Congress progressively now use other priorities — this time around probably the most sweeping tax code overhaul inside a generation, and the other mad scramble to finance the us government.”

Five ways financial laws and regulations could alternation in 2018

Republicans have made limited progress on President Trump’s pledge to “dismantle” the Dodd-Frank Act, which the Republicans had wished to gut through the finish of 2017.

The Hill

POCKET CHANGE

With Disney Deal Looming, Murdoch’s Empire Is Fractured

Rupert Murdoch’s decision to market the majority of twenty-first century Fox has numerous wondering exactly what the future holds for him and also the two sons who appeared around the cusp of overtaking his vast empire.

NYT

How Come Mutual Fund Charges Excessive? This Millionaire Knows

Within an era of Amazonian cost destruction, mutual money is an outlier. Weak company directors, complacent investors and also the lure of wealthy profits are some of the reasons.

NYT

‘We get this amazing problem’: Puerto Rico seeks aid for thousands of squatters

The area wants U.S. help to bring generations of illegal settlers in to the mainstream as a direct consequence of Hurricane Maria.

Politico

TRUMP TRACKER

The Trump impact on business. NYT’s Binyamin Appelbaum and Jim Tankersley: “A wave of optimism has taken over American business leaders, which is starting to result in the type of purchase of baby plants, equipment and factory upgrades that bolsters economic growth, spurs job creation — and could finally raise wages considerably. While business leaders are looking forward to the tax cuts that work this season, the newly found confidence was inspired through the Trump administration’s regulatory pullback, less because deregulation is saving companies cash except since the administration has instilled a belief running a business executives that new rules aren’t coming.”

Trump’s shrinking government. The Post’s Lisa Rein and Andrew Ba Tran: “Nearly annually into his takeover of Washington, President Trump makes a substantial lower payment on his campaign pledge to contract the government paperwork, a shift lengthy searched for by conservatives that may eventually bring the workforce lower to levels not observed in decades. Through the finish of September, all Cabinet departments except Homeland Security, Veterans Matters and Interior had less permanent staff than when Trump required office in The month of january — with many shedding 100s of employees, based on an analysis of federal personnel data through the Washington Publish.

The diminishing federal footprint uses Trump guaranteed in last year’s campaign to “cut a lot your mind will spin,” also it reverses a lift in hiring under The President. The falloff continues to be driven by an exodus of civil servants, a reduced corps of political appointees as well as an effective hiring freeze. Despite the fact that Congress didn’t pass a brand new budget in the newbie, the drastic spending cuts Trump specified by the spring — which may slash greater than 30 % of funding at some agencies — also offers triggered a spending slowdown, based on officials at multiple departments.”

A brand new worry: The South China Ocean. The Post’s Emily Rauhala: “Getting added a large number of acres towards the Spratly Islands recently, China has become building out bases there. Once operational, these outposts will let the Chinese military to higher patrol the South China Ocean, potentially altering the neighborhood balance of power. It is both a territorial dispute along with a test of regional influence, by having an more and more assertive China frequently appearing to create the terms. Though Chinese reclamation and building predate Trump, many expected the Republican president to break the rules more forcefully compared to previous administration… But experts see couple of signs the problem is a White-colored House priority.”

Anthony Scaramucci Is Telling Pals That Jesse Trump Wants Him Back

Trump, meanwhile, once wondered if his short-resided communications director was on drugs.

Daily Animal

THE REGULATORS

Judge States PricewaterhouseCoopers Was Negligent In Colonial Bank Failure

PricewaterhouseCoopers was negligent regarding the among the greatest bank failures from the economic crisis, a federal judge ruled.

WSJ

OPINIONS

Business

The Dow jones gets near 25,000, the ‘death tax’ lives along with other 2017 surprises

It’s been an infinitely more interesting stock exchange year than I was expecting.

Allan Sloan

The Republicans tax plan creates among the largest new loopholes in decades

The brand new 20% deduction for “pass-through earnings” disproportionately benefits the rich and penalizes workers.

LA Occasions

DAYBOOK

Approaching

  • The Heritage Foundation holds a magazine discussion on “Crashback: The Ability Clash Between your U.S. and China within the Pacific” on Thursday.

  • The American Enterprise Institute holds attorney at law on “Reconnecting Healthcare Policy with Financial aspects: Finding and Fixing Distortive Incentives” on Thursday.

  • The Nation’s Economists Club holds a lunch discussion on “The Return of Trillion Dollar Deficits” on Thursday.

  • Brookings Institution holds a celebration entitled “Should the Given stick to the two percent inflation target or re-think it?” on Jan. 8.

  • The American Enterprise Institute holds a celebration on “New considering poverty and economic mobility” on Jan. 18.

THE FUNNIES

In The Post’s Tom Toles: 

BULL SESSION

See President Trump’s New Year’s Eve party at Marly-a-Lago:

Watch Wolf Blitzer “sing” the language t the greatest 2017 hits:

‘Is Penney’s likely to close, too?’

Barbara Cake had made the purchase. A guy was hovering close to the gold bracelets in the J.C. Penney jewellery counter when she stated, “Hi, mister, how’s it going?” Before lengthy, he was swiping his charge card for a bracelet and two gemstone earrings for his wife. But Barbara wasn’t done.

“If she doesn’t such as these,” she told the client, “then let her know you realize lots of girls that would.”

“I simply want my hubby to purchase us a watch,” she ongoing. “She ought to be truly pleased with these.”

Barbara ripped the receipt in the register, pointed in the flimsy paper and, inside a tone that sounded as though she were revealing a sworn secret, she delivered her favorite line.

“Just wait until the thing is that which you saved.”

There have been four days until Christmas, which customer had made the decision against shopping on the web arrive at a genuine store and speak with real people. To Barbara, that meant she’d to supply something he couldn’t receive from clicking buttons on the computer. Is the Internet assure the client he was making the best choice? Would it praise him as a thoughtful husband? Would it make certain he was getting the perfect deal?

Which was what Barbara could offer in the last remaining mall within the only mall in Hermitage, a town of 16,000 in Western Pennsylvania. J.C. Penney was once 1 of 3 anchor stores in the Shenango Valley Mall. Then, eventually last March, both Sears and Macy’s shut lower, becoming two greater than 500 shops that closed across the nation in 2017. Headlines have known as the shrinking of those American staples the “retail apocalypse.” In Hermitage, employees known as it “the funeral,” due to the way it sounded as customers arranged to create their final purchases. “I’m so sorry,” they stated. “I’m in shock.” “What will you do?” “What can i do?”

What may have been just an indication of the occasions inside a bigger city would be a existence-altering and economy-altering loss for Hermitage, the type of place too much everywhere that need considering a suburb, but too developed that need considering rural in order to attract visitors with small-town charm. The nearest factor Hermitage needs to a downtown may be the intersection where its mall sits, encircled by McDonald’s, Walgreens and Dunkin’ Donuts. The greatest structures lower the street are Kohl’s, Kmart and Walmart. The retail market is the 3rd-largest employer around, just behind healthcare and manufacturing.

When Macy’s and Sears closed, nearly 200 people lost their jobs — the same as one in five retail positions within the city. Within the several weeks that adopted, strips of tape stored appearing around the mall directory, blacking the names of stores that adopted suit: FYE, Rue 21, GNC, the neighborhood antiques store, Jammin Jac’s pizza shop. At most of the companies that continued to be, feet traffic and purchasers figures plummeted.

But come November, J.C. Penney was still being open, and the most crucial season in retail involved to start. Sharon Loughner, the overall manager, was certain that the hurry of holiday customers was coming and, with little selection of what to do, they could be visiting her store. She’d require more workers to complete all of the extra fetching, folding, stacking and selling, and thus she released a phone call for periodic employees.

One of the parade of well-qualified applicants from Hermitage and towns nearby came Barbara, a 67-year-old lady who appeared to represent everything retail was once. She was impeccably outfitted on her interview. She planned to put on a pantsuit every day. She spoken about serving the customer’s every need. She addressed everybody, regardless of how old they are, as “sir” or “ma’am.”

For J.C. Penney to achieve success, it needed employees like Barbara, whose necklace and bracelet, Sharon observed, coordinated perfectly together with her outfit. Sharon considered the department in which the purchase of merely one item could equal twelve sweaters in ­revenue.

“How do you want,” she requested Barbara, “to work behind the jewellery counter?”

Barbara recognized, not thinking concerning the joint disease in her own hands that will allow it to be difficult to work the little clasps, the this problem in her own right feet that will rebel if she was for hrs, the studying glasses she will have to begin to see the small figures around the cost tags. She’d been a professional secretary for 30 years, and today, a couple of years into her retirement, tried the mathematics on her behalf savings, her loan payment and her grandchildren’s Christmas presents and made the decision the time had come to go back to work.

The task at J.C. Penney was guaranteed only until 2012, but when she labored with enough contentration, she thought, they may keep her on. Like a “sales affiliate,” she’d be anticipated to market about $1,500 price of merchandise each day and will bring home $8.50 an hour or so, before tax.

She studied on gemstone ratings and learned to lock the jewellery counter’s glass cases to assist prevent shoplifting. She learned to not inquire if customers had J.C. Penney charge cards, but to visualize they did, so that they would seem like they ought to. “And that’ll be in your Penney’s card, mister?” She survived Black Friday, perfecting her reaction to unhappy customers: a give her bedazzled brooch along with a sincere apology. “I’m sorry, ma’am, we do not have the Fitbit here.”

Sometimes she worried she may be using this position from somebody that needed it greater than she did. For a lot of of her co-workers, Penney’s would be a second job. Amanda in jewellery had four children to aid. Tina home based goods was taking proper care of her sick mother. Marcia within the men’s department have been let go when Macy’s left. The workers bristled whenever a customer requested, “Is Penney’s likely to close, too?”

The issue had been requested constantly throughout the holidays, as customers came back towards the Shenango Valley Mall and saw, some the very first time, the hallways of empty storefronts. There is nowhere except Penney’s to purchase men’s dress clothes. The shop noted for its elastic waistband pants for “mature women” was still being thriving, but staples for example Bath & Body Works and also the Hallmark store stored reporting drops in profits for their corporate proprietors. Less than 100 people still labored in the mall year-round.

One of these was Don Howell, the person some shoppers known as the rent-a-cop, but who known as themself director of public safety. Don roams the wide halls for hrs each day, putting on a round-brimmed hat, a gold badge along with a radio to page the mall office, because there’s really an excuse for just one officer at any given time.

Once the mall tenants stored complaining the building’s Nj-based owner wasn’t doing almost anything to enhance the mall’s situation, Don made the decision to provide themself another title: assistant mall manager. That’s how he introduces themself as he emails established retail giants hoping they’ll take a risk around the mall. He’s contacted Target and Rural King, Boscov’s and Dick’s Sports. He has been around talks having a local loaves of bread that could be thinking about that old GNC space. To date, the greatest success is a local cafe that opened up with what was once a united states Bald eagle.

As he listens to shoppers complaining concerning the condition from the mall, he provides them with an easy solution: “Use it,” he states, “or lose it.”

72 hours before Christmas, Barbara showed up within the J.C. Penney break room to locate her co-workers huddled round the local newspaper.

“Wow, see this,” she stated, picking up. A photograph from the mall was towards the top of the page.

The content stated the county had made the decision the mall building and also the property it sits on is not worth what it really was previously. Soon, the quantity of taxes the mall proprietors spend the money for city could be cut by over fifty percent. This could result in the mall simpler to market — but means huge losses in revenue for that city and it is schools.

“Yep, people’s home and property values will be going lower now,” stated Lori Ost, who was simply working at J.C. Penney for 4 years.

“Is that what it’s saying?” Barbara requested, considering her home four miles in the mall.

“Hermitage is not this is exactly what Hermitage has,” Lori stated. “I could be available hustling every single day to obtain business in here. Perhaps a lower cost will attract potential customers.”

Barbara nodded her head, opening the paper to locate all of those other article.

“If I’d that sort of cash,” Lori stated, “I’d just purchase it and tear it lower and make something totally new.”

Barbara closed the paper. “That’s really frightening,” she stated, after which she went lower towards the sales floor, where virtually every customer she met could be affected if a person did choose to tear lower the mall.

Here came the “mall walkers,” who showed up for his or her exercise ­every trip to 9 a.m. There is John and Marty, two older gentlemen, supported by Jim, the more youthful one whom they let join their routine after he lost his job in the Cooper Bessemer engine-making plant nearby. There is Tom and Lorene, a few who was simply walking within the mall every cold day since 1991. They hadn’t yet visited the mall’s new cafe, where coffee is $2.50 more costly than at Auntie Anne’s. “We’re not necessarily fancy Starbucks people,” they described.

Here came the type of shoppers malls usually have relied on: the browsers, who saw shopping as something fun to complete. Liz and Bob Adams planned on obtaining a Paw Patrol toy for his or her grand son but wound up in the jewellery counter.

“There are a few bargains today. You’d be shocked,” Barbara said excitedly.

Liz hovered close to the gemstone rings. She and Bob had both been widowed before they met. Usually at Christmas they stated “we are each other’s gift,” however these rings, Liz told Bob, were really beautiful.

Barbara demonstrated them the “Holiday Extra Effort” deal that meant they might have an extra 30 percent if they spent greater than $500. They left having a $612 ring, $1,887 from the retail cost.

Then came the kind of customer Barbara loved helping most: individuals to whom a visit to the mall was a special event that needed to be saved for, as it absolutely was on her becoming an adult in Shamokin, Pa. She was certainly one of eight children. Her mother would send her to scour the Woolworths, W.T. Grant and Newberry stores to determine what had the very best cost before they bought anything.

Now she met a 7-year-old named A.J., whose mother had given him $50 from her Social Security check, her only earnings, to purchase her a Christmas gift. A.J. requested his grandma and grandpa to consider him to purchase her some jewellery.

“She likes pink,” A.J. told Barbara.

“She likes earrings that dangle,” his grandmother stated.

Barbara walked these to the instances of silver hoops, towards the bracelets, towards the pendants with 1/10 karat of the gemstone on special for $25.

“Nothing gold?” the grandmother requested.

Barbara placed her give her brooch. “Not for $50,” she apologized.

She walked it well towards the situation of gold anyway, opened up it and began getting each box, checking barcode symbols and adding all of the coupons she could.

“His mother does not have an excessive amount of real stuff,” A.J.’s grandmother stated.

On the situation, Barbara found a $124 set of earrings on purchase for $31.79. The jewels were cz, however the thin metal loops were 10-karat gold.

“A bargain,” she guaranteed. A.J. gave her a thumbs up.

Barbara checked out her watch as she rang them up. She’d spent nearly 40 minutes helping them. She understood she wouldn’t meet her sales goal today.

By 12 ,, 23, the slowdown had begun. Barbara’s manager published an indication in the counter saying the fine jewellery department was under $8,000 from the holidays goal. “Ladies!” she authored. “Keep pushing, we’re almost there!” However the snow was coming lower during Barbara’s closing shift, and she or he understood it might stop her customers from visiting. She had been concerned about driving to her daughter’s house on Xmas Day. She’d in the bank enough to purchase her 8- and 10-year-old granddaughters ­iPads, which she’d purchased online with discounts.

Barbara viewed the final-minute shoppers browse — far too late to purchase things online now, she thought. She attempted to market a $60 watch to some mother searching on her boy but rapidly brought out the $29 one once the lady grimaced in the cost. “A steal!” she stated as she paid the receipt.

A husband purchased a necklace and earring set at nearly 70 percent off. “She’s likely to think you conned the financial institution to obtain her gift,” Barbara stated.

She rang up purchases for purchasers who didn’t wish to stand in the standard checkout line, selling them jeans and socks and pajama bottoms.

“I feel weird just standing here,” she stated.

Inside a couple of days, the shop managers would call Barbara to inquire about if sherrrd like to remain on following the holidays. They’d warn her the job could be far less hrs come The month of january. After customers finished their publish-Christmas returns, things could be slow, a minimum of until Love Day. They simply weren’t sure how slow.

“Excuse me?” a person stated, and Barbara switched around.

“Yes, mister,” she stated. “What can one provide for you today?”

“Where’s the men’s bathroom?” he requested.

She pointed him within the right direction. There have been still two hrs to visit until night time and shutting. She tucked a feet from her heels and extended. Then she arrived at for any roll of sponges, selected up a twig bottle and started to shine the glass counters, attempting to make everything as shiny as she thought it ought to be.

Tax Law Provides a Carrot to Gig Workers. However It Might Have Costs.

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The brand new tax law will probably accelerate a hotly disputed trend within the American economy by rewarding workers who sever formal relationships using their employers and be contractors.

Management consultants may soon strike out by themselves, and stockbrokers may spend time their very own shingle.

More cable repairmen and delivery motorists, a number of whom find sort out gig economy apps like Uber, can also be lured into contracting plans.

That’s just because a provision within the tax law enables sole proprietors — together with proprietors of partnerships or any other so-known as pass-through entities — to subtract 20 % of the revenue using their taxed earnings.

The tax savings, that could be for sale $15,000 each year for a lot of affluent couples, may prove enticing to workers. “If you’re over the median although not in the very, top, you might think you’d be turning over it through,” stated David Kamin, a professor of tax law at New You are able to College.

The supply might also grow to be a benefit for employers who are attempting to reduce their payroll costs. Workers hired as contractors, who are usually cheaper, may be not as likely to complain regarding their status underneath the new tax law.

“Firms presently have lots of incentives to show workers into independent contractors,” stated Lawrence Katz, a labor economist at Harvard. “This reinforces the present trends.”

However it can lead to an erosion from the protections which have lengthy been a cornerstone of full-time work.

Formal employment, in the end, provides not only earnings. Unlike independent contractors, employees get access to unemployment insurance when they lose their jobs and workers’ compensation if they’re hurt at the office. They’re paid by workplace anti-discrimination laws and regulations and also have a federally backed right to create a union.

Individuals protections don’t generally affect contractors. Nor do minimum-wage and overtime laws and regulations.

“What you’re losing may be the safety nets for individuals workers,” stated Catherine Ruckelshaus from the National Employment Law Project, an advocacy group.

Traditional full-time jobs also insulate workers from the highs and lows within the interest in their professional services. Consider, for example, the erratic earnings of retail or fulfillment-center workers hired within the fall and release following the holidays.

Workers like janitors were once typically around the payrolls of huge companies, enabling their wages to increase with individuals of other employees when the business did well. Now, such jobs are more and more made by contractors.CreditLucy Nicholson/Reuters

And since companies have internal pay scales, the cheapest-compensated employees makes greater than they’d around the open market.

“It was once that the likes of G.M. or even the local bank or factory directly employed the janitor, the clerical worker,” Professor Katz stated, noting their pay would rise as well as other employees’ when the organization was succeeding.

Unwinding employment relationships eliminates these benefits, growing the volatility of workers’ incomes and magnifying pay disparities and inequality.

It’s hard to say the number of workers would decide to become contractors because of the brand new provision, which for couples frequently starts to phase out in a taxed earnings above $315,000. Mr. Kamin stated joint filers who make near to $315,000 and may transform many of these earnings into business earnings would think it is most compelling to help make the change. (It may be more compelling still if a person spouse’s employer offered the pair medical health insurance, which many employers provide while they aren’t needed to.)

However, many people neglect to make use of existing tax deductions, such as the one that freelancers may take for his or her expenses, stated Jamil Poonja of Stride Health, which will help self-employed workers buy medical health insurance. That could reflect the possible lack of access among lower-earning workers to stylish tax advice.

The tax benefit may be offset in some instances by the requirement for contractors to pay for both employer and worker area of the federal payroll tax.

Many employers happen to be pushing the limitations of who they treat as employees and who they treat as independent contractors.

Theoretically, it’s the nature from the job, and never the employer’s whim, that should really determine the worker’s job status.

If your company exerts sufficient control of workers by setting their schedules or just how much you pay customers, and when workers largely rely on the organization for his or her livelihood, what the law states typically views individuals workers to become employees.

True contractors are meant to retain control of most facets of their job and may typically generate earnings through entrepreneurial skill, and not simply by working longer hrs.

Used, however, a lot of companies classify workers who’re clearly employees as contractors, since they’re usually less expensive to make use of. And lots of labor advocates repeat the new tax break will encourage more employers to go down that path by providing them yet another carrot to dangle before workers.

“The risk presented with this provision is the fact that employers can turn to workers and say, ‘You understand what, your taxes goes lower, allow me to classify you being an independent contractor,’” stated Seth Harris, a deputy labor secretary under The President.

Something that makes workers more prone to accept this kind of arrangement causes it to be harder to root out violations from the law. This is because the companies accountable for policing misclassification — the Labor Department, the Irs, condition labor and tax government bodies — don’t have the sources to recognize greater than a fraction from the violations by themselves.

“Your likelihood of locating a worker that’s been misclassified in the event that worker hasn’t complained are worse than your odds of locating a leprechaun riding a unicorn,” Mr. Harris stated.

David Weil, the administrator from the Labor Department’s Wage and Hour Division under Mr. Obama, believes the modification will prove to add fuel to some trend that’s been several decades within the making.

In that time, as Mr. Weil documented inside a book about them, “The Fissured Workplace,” employers have continuously pressed more work outdoors their organizations, paring the amount of people they employ and interesting an increasing quantity of contractors, temporary workers and freelancers.

The tax law will accelerate the shift, he stated, because employers who’re already keen to reorganize in this manner will notice that even less workers will probably object because of the tax benefits.

The result from the deduction might be especially big in industries where misclassification has already been rampant.

Many small-time construction contractors hire full-time workers who ought to be considered employees but they are stored on as freelancers or compensated underneath the table, stated Kyle Makarios, political director for that U . s . Brotherhood of Carpenters and Joiners of the usa.

Mr. Makarios stated the pass-through provision would encourage much more building contractors to misclassify workers, letting them reduce their labor costs and underbid contractors who abide by the guidelines.

The practice by ride-hailing the likes of Uber and Lyft of classifying motorists as independent contractors has lengthy been belittled by labor advocates and plaintiffs’ lawyers. They reason that the businesses control crucial options that come with the significant relationship and hold the majority of the economic power.

Neil Bradley, senior v . p . and chief policy officer in the U.S. Chamber of Commerce, stated that gig-economy companies classify workers as contractors if this suits the requirements of their business and the man didn’t expect that to alter. Also, he stated he didn’t expect firms with traditional business models to follow along with suit because of the brand new provision.

“I think the choice will probably be driven through the considerations” that lawyers cite, like the quantity of control a business exercises, he stated, “not with this goverment tax bill.”

But Mr. Weil was less sanguine.

“These types of methods to which makes it simpler to slip into independent contractor status reflect unequal bargaining power,” he stated. “When you additionally yet another financial incentive, you’re just unwinding the entire system.”

Follow on twitter: @noamscheiber

Jesse Drucker contributed reporting.

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At Vice, Cutting-Edge Media and Allegations of Old-School Sexual Harassment

Viceland, a Vice Media television channel, celebrated the start of a show at Comic Con in San Diego in July.CreditJoe Scarnici/Getty Images for VICELAND

One woman said she was riding a Ferris wheel at Coney Island after a company event when a co-worker suddenly took her hand and put it on his crotch. Another said she felt pressured into a sexual relationship with an executive and was fired after she rejected him.

A third said that a co-worker grabbed her face and tried to kiss her, and she used her umbrella to fend him off.

These women did not work among older men at a hidebound company. They worked at Vice, an insurgent force in news and entertainment known for edgy content that aims for millennial audiences on HBO and its own TV network.

But as Vice Media has built itself from a fringe Canadian magazine into a nearly $6 billion global media company, its boundary-pushing culture created a workplace that was degrading and uncomfortable for women, current and former employees say.

An investigation by The New York Times has found four settlements involving allegations of sexual harassment or defamation against Vice employees, including its current president.

The Vice offices in Williamsburg, Brooklyn. Started as a small magazine in Canada, Vice has evolved into a $6 billion global media company.CreditNatalie Keyssar for The New York Times

In addition, more than two dozen other women, most in their 20s and early 30s, said they had experienced or witnessed sexual misconduct at the company — unwanted kisses, groping, lewd remarks and propositions for sex.

The settlements and the many episodes of harassment the women described depict a top-down ethos of male entitlement at Vice, where women said they felt like just another party favor at an organization where partying often was an extension of the job.

What stands out about the women’s accounts — in the wake of a public reckoning over sexual assault and harassment by mostly older men — is that the allegations involve men in their 20s, 30s and 40s who came of age long after workplace harassment was not only taboo but outlawed.

“The misogyny might look different than you would have expected it to in the 1950s, but it was still there, it was still ingrained,” said Kayla Ruble, a journalist who worked at Vice from 2014 to 2016. “This is a wakeup call.”

Vice and its co-founder and chief executive, Shane Smith, have long been open about the company’s provocative atmosphere. But Vice is now struggling to reconcile its past — famous for coverage of streetwear, drugs and sex, as well as its raucous parties — with its emergence as a global media company backed by corporate giants like Disney and Fox.

Shane Smith, a founder of Vice and the company’s chief executive, reporting in Greenland on rising sea levels for the HBO series “Vice.”CreditVice

In a statement provided to The Times, Mr. Smith and another co-founder, Suroosh Alvi, said “from the top down, we have failed as a company to create a safe and inclusive workplace where everyone, especially women, can feel respected and thrive.”

They said that a “boys club” culture at Vice had “fostered inappropriate behavior that permeated throughout the company.” The company distributed a longer version of the statement to its employees on Saturday.

The company said it has been taking steps to transform itself in recent months as the national debate over sexual harassment reshapes workplaces, and as it became aware that The Times and other news outlets were working on articles about the experiences of women at Vice.

Vice has formed a Diversity and Inclusion Advisory Board, which includes the feminist icon Gloria Steinem and is led by the lawyer Roberta Kaplan; hired a new head of human resources; and terminated three employees for what it called behavior inconsistent with its values. It also forbade romantic relationships between supervisors and their employees — which several current and former employees said were not uncommon and led to many problems.

The settlement involving Vice’s president, Andrew Creighton, was struck in 2016, when Mr. Creighton, 45, paid $135,000 to a former employee who claimed that she was fired after she rejected an intimate relationship with him, according to people briefed on the matter and documents viewed by The Times. The woman declined to comment and asked that she not to be identified to protect her privacy.

Earlier this year, the company settled for an unknown amount with Martina Veltroni, a former employee who claimed that her supervisor retaliated against her after they had a sexual relationship, among other allegations, according to people briefed on the agreement and documents viewed by The Times. The supervisor, Jason Mojica, the former head of Vice News, was fired late last month. Ms. Veltroni declined to comment.

And last January, Vice reached a $24,000 settlement with Joanna Fuertes-Knight, a former journalist in its London office, who said she had been the victim of sexual harassment, racial and gender discrimination and bullying, according to documents viewed by The Times. Among Ms. Fuertes-Knight’s claims were that a Vice producer, Rhys James, had made racist and sexist statements to her, including asking about the color of her nipples and whether she slept with black men. Ms. Fuertes-Knight, who is of mixed race, is bound by a confidentiality agreement and declined to comment.

Mr. James was put on leave in late November, according to a Vice spokesman. In the settlement agreement, both Vice and Mr. James denied any liability. Mr. James did not respond to messages sent seeking comment.

A fourth settlement, struck in 2003, involved claims that Vice defamed a female writer by publishing that she had agreed to have sex with a rapper whom she had interviewed, when she had not.

In response to questions about the settlements, a Vice spokesman said that the company had made “few settlements” over its 23-year history and that no Vice employee had been involved in more than one. “In some cases, it’s clear that the company and our managers made mistakes,” the company said. “In others, we disagree with the way in which the underlying facts have been characterized.”

Details about the settlements and the culture of the company are based on interviews with more than 100 current and former Vice employees. As word spread within the media industry that The Times was reporting on Vice, more than a dozen women and men contacted The Times with accounts that they said were humiliating and emotionally traumatic. Several broke confidentiality agreements to speak on the record, but many spoke on the condition of anonymity, citing those agreements and fear of reprisal.

The Times also examined more than 100 pages of legal documents, emails, text messages and other filings related to Vice’s operations, the settlements and allegations of harassment.

In their statement, Mr. Smith and Mr. Alvi said the problems “happened on our watch and ultimately we let far too many people down. We are truly sorry for this.” They also expressed “extreme regret for our role in perpetuating sexism in the media industry and society in general.”

The Early Years: A Cowboy Culture

A brash maverick and consummate salesman, Mr. Smith, 48, transformed Vice from a free magazine in Montreal into a global company with roughly 3,000 employees, a television network, a digital footprint, a film-production company as well as a daily news show and documentary program on HBO.

A video Vice produced on cannabis culture.CreditVideo by VICE

Along the way Mr. Smith regularly mocked traditional media companies as stodgy and uncreative. But in recent years he set about courting conglomerates like the Walt Disney Company and 21st Century Fox, which were eager to profit on Vice’s cachet with millennial audiences. The latest round of investment gave the company a valuation of more than $5.7 billion.

Behind that ascent, however, is a more disturbing aspect of Vice’s operations. People involved with Vice during its early days described a punk-rock, male-dominated atmosphere in which attempts to shock sometimes crossed a line.

In a 2012 interview with the Financial Times, Mr. Smith recalled his earlier days with Vice. “I would be at the party and would just want to get wasted, take coke and have sex with girls in the bathroom,” he said.

In 2003 Vice reached a $25,000 settlement with the freelance writer Jessica Hopper. The deal involved defamation claims tied to an interview she did with the rapper Murs that was published in the February 2003 issue of the magazine, according to a copy of the agreement viewed by The Times. During the interview, Murs asked Ms. Hopper if he could have sex with her. She said no and included that answer in her article.

Jessica Hopper, a freelance writer who reached a settlement with Vice in 2003 over defamation claims related to an article she wrote for the company’s magazine.CreditNatalie Keyssar for The New York Times

But before the article was published, the magazine changed her response to yes and printed it under the headline, “I Got Laid But Murs Didn’t.”

Mortified, Ms. Hopper hired lawyers. The two sides struck a settlement that, in addition to a payout, required Vice to print a retraction and a formal apology.

“People marveled at their ability to make their own rules and blindly disregard everyone else’s,” Ms. Hopper said in an interview. She declined to comment on the existence of a settlement.

“The editor of the piece at that time has not been with the company in a decade,” Vice said in a statement. “Ms. Hopper was right to call us on our conduct at the time, and we are still ashamed of it.’’

Mr. Smith, who had long celebrated a life of hard-partying excess, married a woman in 2009 who had worked at Vice and started wearing suits to the office, current and former employees said. But they also suggested that he oversaw a company where issues of sexual misconduct and harassment festered.

In their statement, Mr. Smith and Mr. Alvi admitted that dysfunction and mismanagement from the company’s early days “were allowed to flourish unchecked.”

Women said that they felt that rejecting sexual advances from bosses could result in reassignment or lost work, and that when they reported problems, executives downplayed the allegations. Some said that while they considered taking legal action, they thought they lacked the financial resources to sue and feared that Vice would retaliate.

“There is a toxic environment where men can say the most disgusting things, joke about sex openly, and overall a toxic environment where women are treated far inferior than men,” said Sandra Miller, who worked as head of branded production at Vice from 2014 to 2016.

Sandra Miller, who led Vice’s branded production efforts from 2014 to 2016, said she never experienced harassment there, but said it was “overall a toxic environment where women are treated far inferior than men.”CreditNatalie Keyssar for The New York Times

She said that as a 50-year-old woman she did not face harassment but witnessed “the complicity of accepting that behavior, covering up for it, and having even the most progressive people look the other way.”

The workplace problems were particularly disappointing, many women said, because they had viewed Vice as their dream opportunity. The company didn’t pay well, some said, but it was the definition of cool for those who wanted to create entertainment and journalism on the cutting edge. The company bestowed select staff members rings that spell V-I-C-E — considered the ultimate prize.

People worked long hours and partied together afterward. And that’s where the lines often blurred. Multiple women said that after a night of drinking, they wound up fending off touching, kissing and other advances from their superiors.

An issue of Vice magazine.

Two women told The Times about episodes involving Mike Germano, Vice’s chief digital officer who founded Carrot Creative, the digital ad agency that Vice acquired in 2013. Amanda Rue, a former strategist, said that at Carrot’s holiday party in 2012 Mr. Germano told her that he hadn’t wanted to hire her because he wanted to have sex with her.

Gabrielle Schaefer, who worked closely with Mr. Germano as director of communications at Carrot, said he made her feel uncomfortable during a work event at a bar one night in 2014 when he pulled her onto his lap. After Ms. Schaefer reported the incident to human resources, she said, she felt that she fell out of favor at the company and eventually left.

“Carrot has been repeatedly recognized as one of the industry’s best places to work, and I do not believe that these allegations reflect the company’s culture — or the way we treat each other,” Mr. Germano said in a statement. “With regards to the incident with Ms. Schaefer, I agreed at that time it was inappropriate, I apologized, and it was resolved with the help of HR.” He said that days later Ms. Schaefer joined his family for dinner and that they “continued to work together amicably.”

Andrew Creighton, left, president of Vice Media, with Mr. Smith at a company party in 2011.CreditAstrid Stawiarz/Getty Images

In the settlement involving Mr. Creighton, the woman claimed she felt pressured to submit to advances he made during a series of work meetings from 2013 to 2015, according to people familiar with the matter and letters sent between lawyers for the woman and Vice.

In a letter to the woman’s lawyer, Vice denied the allegations and said the woman had initiated and pursued a sexual relationship with Mr. Creighton. The company said in the letter that her termination was based on poor performance.

The dispute was settled in December 2016 after the woman filed a complaint with the United States Equal Opportunity Commission. (She withdrew her complaint as a condition of the agreement.)

In a statement, Mr. Creighton said that he and the woman were “close friends for several years before she joined Vice,” and that they were “occasionally intimate” once she began working there. He said he was not involved in the decision to let her go.

“I apologize for the situation, and it has caused much thought in my responsibilities of care for my colleagues, and I will hold myself and others accountable in constructing a respectful workplace environment.”

Agreements Encourage Silence

Executives erected a wall of silence around the company. Employees were required to sign a confidentiality agreement when they joined Vice, stating that during and after their employment they would not publicly disparage the company, according to a copy viewed by The Times.

Until recently, Vice also required employees to sign a nontraditional workplace agreement acknowledging that they would be exposed to explicit, potentially disturbing material but that they did not find such content or “the workplace environment” to be offensive or disturbing.

Some employees said that they took the agreement to mean that they could not complain about issues of harassment.

Vice said the agreement “was always meant to address content — it had nothing to do with conduct,” and that when it learned the language was causing confusion, it eliminated the agreement.

In the months before the Columbia Journalism Review published an article in 2015 about the culture at Vice, and was looking into the treatment of women at the company, lawyers for Vice warned at least one former employee, Murray Waas, who had worked as an investigations editor, about “his strict confidentiality obligations’’ and of the financial penalties he could face for talking to another media outlet.

“I am sure he knows Vice will pursue all of its remedies aggressively,” Michael Delikat, a partner at the law firm Orrick, Herrington & Sutcliffe, said in an email sent to Mr. Waas’s lawyer, a copy of which was viewed by The Times.

In a statement, Vice said, “NDA’s have been a standard part of settlements in all cases in all industries for years and years,’’ adding, “This is not a letter we would send today.”

Asked whether the company would release current and former employees who had experienced or witnessed sexual harassment from their confidentiality agreements, the company said: “Like many other companies and policymakers, we are watching developments and considering the issue.”

When the Columbia Journalism Review published its article, it included a quote from Nancy Ashbrooke, the former human resources director at Vice, stating that since she joined the company in 2014 sexual harassment had “not been an issue.” (Ms. Ashbrooke worked as vice president of human resources at Harvey Weinstein’s Miramax Films from 1991 to 2000.)

Current and former employees disputed Ms. Ashbrooke’s statement.

Kate Goss, a former project manager at Vice, said that in the summer of 2015 she reported an incident that occurred after a work event to her bosses and human resources. She said that on the Ferris wheel at Coney Island a creative director put her hand in his crotch without her consent. Ms. Goss said Ms. Ashbrooke told her there needed to be multiple incidents in order for her to take action against the other employee.

Ms. Goss discussed the incident with a co-worker at the time, which The Times confirmed.

Jason Mojica, who led Vice’s documentary films unit, was involved in a settlement with a former female employee. He was fired in November.CreditJemal Countess/Getty Images

Abby Ellis, a former Vice journalist, said that in 2013 Mr. Mojica, the former head of Vice News, tried to kiss her against her will. She said that she yelled at him and hit him with an umbrella multiple times. She said that she faced other unwanted advances from Mr. Mojica after the incident.

Ms. Ellis said that after the episode she felt that their relationship soured and that she was missing out on newsroom opportunities, so she reported it to Ms. Ashbrooke. Ms. Ashbrooke responded by telling Ms. Ellis that because she was an attractive woman she would face similar behavior throughout her career. Ms. Ellis discussed the episode with several co-workers at the time, which The Times confirmed.

“As women, we get harassed everywhere and we don’t feel compelled to report it because it’s not considered a reportable offense,” Ms. Ellis said. “We’re expected to put up with it; it’s the cost of doing business.”

Mr. Mojica said that he remembered “misreading a moment and foolishly trying to kiss Abby” but that the episode had a “very different tone.” He added, “I was quickly rebuffed, and I immediately apologized.” He said he thought the incident had “no impact” on their professional relationship.

Two years later, Helen Donahue, a former employee, reported to Ms. Ashbrooke that Mr. Mojica had grabbed her breasts and buttocks at a company holiday party. Ms. Donahue said that Ms. Ashbrooke told her that the incident was not sexual harassment but rather someone making a move on her.

“She said I should just forget about it and laugh it off,” Ms. Donahue said.

Helen Donahue, a former Vice employee, said she had been groped at a company party. She said that the head of human resources told her to “laugh it off.”CreditKendrick Brinson for The New York Times

Mr. Mojica said that while he recalled talking to Ms. Donahue at the party, he did not “remember doing anything of the sort.”

Ms. Ashbrooke, who left the company in recent months, said in a statement: “As a woman and HR professional, I support anyone who believes they have been mistreated and throughout my career, I have worked to help companies build respectful workplaces with no tolerance for inappropriate behavior.”

The settlement involving Mr. Mojica came after lawyers for Martina Veltroni sent a letter to Vice outlining her claims that her relationship with Mr. Mojica derailed her career at Vice, according to letters sent between lawyers for the woman and Vice.

In a letter to Ms. Veltroni’s lawyers, Vice denied the allegations against Mr. Mojica and said that Ms. Veltroni was trying to “recast her consensual and desired sexual relationship with her former supervisor” into a claim of harassment.

Mr. Mojica said that he had “never retaliated against” Ms. Veltroni and that he was not involved in the discussions with Ms. Veltroni’s lawyer or the resulting agreement.

Mr. Smith and another Vice founder, Suroosh Alvi, said in a statement: “From the top down, we have failed as a company to create a safe and inclusive workplace where everyone, especially women, can feel respected and thrive.“CreditJesse Dittmar for The New York Times

On Nov. 30, after a report appeared in The Daily Beast on Vice’s culture, and aware that The Times was investigating its workplace, Vice announced that it had terminated three employees, including Mr. Mojica, for “behavior that is inconsistent with our policies, our values, and the way in which we believe colleagues should work together.”

Mr. Mojica said he was not given a reason for his termination.

Efforts at Reform

Vice said that it has updated its sexual harassment policies, clarified sexual harassment reporting procedures and created an employee hotline. The company also said that it has made a commitment to reaching gender pay parity by the end of 2018, expanded maternity and paternity benefits, and introduced mandatory respect and sensitivity training for all employees.

The company’s new human resources director, Susan Tohyama, has retained an outside investigator “to conduct investigations into current or historical workplace issues that are brought to our attention.”

Vice’s recent efforts at reform have had some stumbles, though. In mid-November top managers conducted a “state of the union” session with employees that did not include any mention of sexual harassment, an issue that was roiling workplaces around the country.

Many employees said they found the session tone deaf, prompting Mr. Smith to send a note to the staff that night saying that “we missed the mark, especially when it came to clearly addressing issues around sexual harassment at Vice.”

“Yes, we can change the world,” he wrote, “but first we have to start at home.”

Doris Burke and Kitty Bennett contributed research

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