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close video Hard to get inflation down without a recession: Furman

Harvard economist Jason Furman shares his economic outlook for 2023, focusing on recession fears, the Federal Reserves agenda and geopolitical factors.

A number of business taxes are rising just as the U.S. economy faces the increased risk of a recession, threatening to prolong financial pain for many companies and consumers.

Beginning this year, businesses will face a steeper federal tax burden thanks to several major changes included in the health care and climate change spending bill that Democrats passed over the summer. On top of that, key provisions of the 2017 Republican tax overhaul are set to phase out this year.

Combined, the tax increases are projected to cost businesses about $115 billion this year – a big increase from years' past, according to the Joint Committee on Taxation.

"On the impact of tax increases in a recessionary period, we are highly concerned," Chris Netram, the managing vice president of tax and domestic economic policy at the National Association of Manufacturers (NAM), told FOX Business. "Some of the items that have already taken effect, that Congress failed to reverse at the end of last year, are causing a lot of pain for our members."

NEW YORK, CALIFORNIA SUFFER BIGGEST BLOW AS MORE AMERICANS FLEE TO LOW-TAX STATES

The U.S. Capitol (Anna Rose Layden / Getty Images / File / Getty Images)

Among the increases going into effect this year is a 15% minimum tax on corporations that is based on profits they publicly report on their financial statements to shareholders. The minimum book tax would only hit companies that reported more than $1 billion in income. The levy – a key feature of the Inflation Reduction Act – would affect around 200 of the country's largest corporations with profits exceeding $1 billion and that pay less than the current 21% rate for businesses, according to Democrats.

That spending bill also included a 1% tax on stock repurchases, which will apply to only publicly traded companies.

Experts expect the two taxes to drag on 2023 earnings, with Goldman Sachs forecasting a 1.5% decline per share of S&P 500 companies. The earnings decreases are expected to hit industries like health care and IT because of the low effective tax rate.

UBS strategists led by Solita Marcelli, meanwhile, projected the new taxes would have a "very minimal 1% drag on S&P 500 earnings per share, although some companies will be more affected than others."

President Joe Biden signs the Inflation Reduction Act of 2022 (climate change and health care bill) into law at the White House on Aug. 16, 2022. (Demetrius Freeman / The Washington Post via Getty Images / Getty Images)

NEW IRS TAX BRACKETS TAKE EFFECT IN 2023, MEANING YOUR PAYCHECK COULD BE BIGGER

Those changes come on top of other business tax increases that went into place last year to help pay for Republicans' 2017 tax cuts and will stay in effect until 2026. That includes the gradual phaseout of a 100% bonus depreciation, tighter interest deduction limitation and an increase in international tax rates.

Another provision requires businesses to amortize deductions for research and development expenses over five years instead of taking them all at once. Nearly 180 chief financial officers asked lawmakers in November to reverse course and repeal the law before the end of the year, however, Congress failed to reach an agreement before its last session in December.

Aerospace and defense company Raytheon Technologies said in October that the change already caused its tax bill to spike by $1.5 billion.

Aerospace and defense company Raytheon Technologies said in October that the change already caused its tax bill to spike by $1.5 billion. (AP Photo / Elise Amendola / File / AP Newsroom)

Goldman Sachs sees the R&D, interest and bonus depreciation changes raising the effective corporate tax rate this year by 1.6 percentage points, amounting to a "small" reduction in earnings.

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"Corporate tax policies taking effect in 2023 should have a small hit to aggregate S&P 500 earnings, but the impact will vary across sectors," the bank said in a research note earlier this month.

Netram said NAM is lobbying lawmakers to reverse the changes, particularly on R&D, and indicated there is bipartisan and bicameral support to do so.

"For this current Congress, we are starting in a really strong place," he said. "There is broad support for stopping these tax hikes from going into effect."

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Trump engaged in unprecedented criminal effort to overturn 2020 election, prosecutor’s report says

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Trump engaged in unprecedented criminal effort to overturn 2020 election, prosecutor's report says

President-elect Donald Trump engaged in an unprecedented criminal effort to overturn his 2020 election defeat, according to a report by Special Counsel Jack Smith.

Prosecutor Mr Smith said Mr Trump “inspired his supporters to commit acts of physical violence” in the January 6 riots and knowingly spread a false narrative about fraud in the 2020 election.

However, efforts to bring Mr Trump to trial over his attempt to hold on to power were thwarted by his re-election in November, the special prosecutor said in his report, which was released by the Department of Justice on Tuesday.

He also found charges could be justified against Mr Trump’s co-conspirators but reached no final conclusions.

FILE - Rioters loyal to President Donald Trump rally at the U.S. Capitol in Washington, Jan. 6, 2021. (AP Photo/Jose Luis Magana, File)
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Rioters loyal to President Donald Trump rally at the US Capitol on 6 January, 2021. Pic: AP

Mr Smith resigned in the wake of Mr Trump’s election victory in November.

“Indeed, but for Mr Trump’s election and imminent return to the Presidency, the Office assessed that the admissible evidence was sufficient to obtain and sustain a conviction at trial,” Mr Smith’s report said.

The release of the report comes a few days after Mr Trump was sentenced following his conviction in the Stormy Daniels hush money case.

FILE - Special counsel Jack Smith speaks to the media about an indictment of former President Donald Trump, Aug. 1, 2023, at an office of the Department of Justice in Washington.  (AP Photo/J. Scott Applewhite, File)
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Special counsel Jack Smith. Pic: AP

President-elect Mr Trump has consistently criticised Mr Smith and allies have suggested the special counsel should now face criminal charges for pursuing the case against him.

In the wake of the release of the report, Mr Trump called Mr Smith “deranged” and criticised the report’s “fake findings”.

Released alongside the report was a letter from lawyers for Mr Trump to the justice department, dated 6 January 2025.

In it, they called for Mr Smith to “terminate all efforts toward the preparation and release” of the report, which they said was “consistent with the bad-faith crusade” that they said Mr Smith conducted on behalf of the Biden-Harris administration.

The special prosecutor defended his investigation, saying: “The claim from Mr Trump that my decisions as a prosecutor were influenced or directed by the Biden administration or other political actors is, in a word, laughable.”

Read more:
January 6: The case against Donald Trump
January 6: How four hours of mayhem unfolded

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Hush money case: Trump reacts to becoming a felon

Mr Smith’s case had faced legal hurdles even before it was clear that Mr Trump would be returning to the White House.

It was paused for months as the former president pursued a legal claim that he could not be prosecuted for official actions taken during his time as commander-in-chief.

The Supreme Court, with its conservative majority, largely agreed with him, granting former presidents broad immunity from criminal prosecution.

Other allegations in the report released today include:

• Mr Trump contacted legislators and executives at state level and “urged them to take action to ignore the vote counts and change the results”

• Mr Trump and co-conspirators launched a plan to use fraudulent electors in seven states that he had lost in the 2020 election to send false certifications to Washington DC

• Frustrated with the justice department because it had identified no evidence of substantial fraud in the 2020 election, Mr Trump “attempted to wield federal power to perpetuate his fraud claims and retain office”

• Mr Trump repeatedly pressed then vice president Mike Pence to use his ministerial position as president of the Senate to change the election outcome – something Mr Pence repeatedly refused to do.

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Police investigating ‘possible human cause’ behind Los Angeles wildfire

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Police investigating 'possible human cause' behind Los Angeles wildfire

Police are reportedly focusing on a possible human cause in early investigations into what caused the deadly Palisades fire in Los Angeles.

Several law enforcement sources told Sky’s partner site NBC News potential lines of inquiry involve fireworks or unauthorised individuals camping in the area.

Stressing no conclusions have been reached, they said other possibilities include accidental equipment-related ignition, and said arson is not being ruled out.

Fires latest – at least 24 people killed

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Sky presenter challenges LA officials

At least 24 people have been killed and thousands of homes destroyed in the wildfires that have raged across Los Angeles.

Most of the destruction has been wrought by the Palisades fire, which has torched nearly 24,000 acres and is just 14% contained, according to the California Department of Forestry and Fire Protection (Cal Fire).

Officials have not yet identified the cause of any of the Los Angeles fires.

More on California Wildfires

Pic: Reuters
Firefighters put out a smouldering hot spot. Pic: Reuters
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Firefighters put out a smouldering hot spot. Pics: Reuters

A lawsuit has been filed against utility company Southern California Edison claiming its equipment sparked the Eaton fire.

The blaze in the foothills of the San Gabriel Mountains east of the city has burned through 14,000 acres and was 33% contained, according to Cal Fire.

Where some of the fires are

Edison has acknowledged fire agencies are investigating whether its equipment may have started a smaller fire in the LA area that broke out on the same day.

Read more:
Santa Ana winds that fuelled wildfires are back – here’s what it could mean

A woman walks past destroyed homes. Pic: Reuters
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A woman walks past destroyed homes. Pic: Reuters

It comes as additional firefighters and water tankers have deployed ahead of the forecast return of fierce Santa Ana winds which threaten to whip up the two massive wildfires.

Planes have been working to douse homes and hillsides with pink fire-retardant chemicals, while dozens of water trucks have worked to replenish supplies after hydrants ran dry last week.

“We’re absolutely better prepared,” LA County Fire Chief Anthony Marrone said when he was asked what will be different from a week ago.

But he warned high winds could ground firefighting aircraft and said if they reach 70mph “it’s going to be very difficult to contain that fire”.

A third fire that has burned nearly 800 acres is 95% contained, while three other fires in California have been fully brought under control in recent days.

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Pixxel to Launch India’s First Private Satellite Network

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Pixxel to Launch India’s First Private Satellite Network

India’s Pixxel is set to launch three of its six hyperspectral imaging satellites aboard a SpaceX rocket from California on Tuesday, the first such network in the country’s nascent private space sector, Pixxel’s chief told Reuters.

The satellites will be placed in a sun-synchronous orbit at roughly 550 km, with the remaining three slated for deployment in the second quarter of the year.

The launch is scheduled to take place at the Vandenberg Space Force Base at around 10:45 a.m. Pacific Time (1845 GMT) on Tuesday – just after midnight the next day in India – subject to final approvals.

Pixxel’s founder and chief executive Awais Ahmed told Reuters that it plans to add 18 more spacecraft to the six it has already developed, eyeing a share of the satellite imaging market projected to reach $19 billion (roughly Rs.1,64,451 crore) by 2029.

The launch is a milestone for India’s nascent private space sector and for Google-backed Pixxel, a five-year-old startup.

It aims to use hyperspectral imaging — a technology that captures highly detailed data across hundreds of light bands — to serve industries such as agriculture, mining, environmental monitoring, and defence.

The company says its satellites can deliver insights to improve crop yields, track resources, monitor oil spills and country borders in much better details than current technology allows.

“The satellite imagery market today is around $4.3 billion (roughly Rs. 37,219 crore), with analysis adding another $14 billion (roughly Rs. 1,21,180 crore). By 2029, the market is projected to reach $19 billion (roughly Rs. 1,64,457 crore). Hyperspectral imaging, which is new, could realistically capture $500 million (roughly Rs. 4,327 crore) to $1 billion (roughly Rs. 8,676 crore) of this, plus additional revenue from analysis,” Ahmed said.

Ahmed said Pixxel has signed up around 65 clients, including Rio Tinto, British Petroleum, and India’s Ministry of Agriculture, with some already paying for data from its demo satellites. Contracts are in place for future data from the Firefly constellation.

“For defence-use cases, conversations are happening predominantly in the US and India, and in other regions through resellers and partners. Usually, government agencies want to see things launched and working before committing to procurement,” Ahmed, 27, said.

Pixxel expects to make first contact with the satellites about two-and-a-half hours after launch, with full commercial imaging capabilities expected by mid-March.

However, its expansion plans face stiff competition in a global satellite market dominated by the United States and China.

The US leads in commercial and government satellite launches, driven by private companies like SpaceX and government contracts, while China has emerged as a competitor with aggressive state-backed initiatives and a rapid expansion into low Earth orbit satellites.

India, despite its established spacefaring capabilities, holds only a two percent share of the global commercial space market. The government is now banking on private players to increase that share, aiming to grow the country’s space sector from $8 billion (roughly Rs. 69,258 crore) to $44 billion (roughly Rs. 3,80,976 crore) by 2030.

Pixxel hopes to leapfrog these challenges with its Firefly constellation, which boasts a 5-meter resolution and a 40-km swathe width—outperforming competitors such as Finland’s Kuva Space and San Francisco-based Orbital Sidekick, whose satellites typically have lower resolution and narrower coverage.

“If and once their commissioning is successful, they’ll have more imaging capacity than ISRO in the hyperspectral band, which for the Indian industry is a watershed moment,” said Narayan Prasad, chief operations officer at Netherlands-based space industry marketplace Satsearch.

© Thomson Reuters 2025

(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)

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