April 10, 2026 • 37 mins
Six weeks of conflict, a ceasefire on the horizon and a global economy that is forever changed. Stacey and Max make sense of it all and explain what the war in Iran means for oil prices, global trade and America’s place in the world order. Then, with Tax Day approaching, Bloomberg’s Ben Steverman breaks down what’s different this filing season, and tell us if the complications will benefit your bottom line. Plus, tokenmaxxing and a salty economic indicator.
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio News.
Speaker 2 (00:16):
It has been about six weeks since the US and
Israel attacked Iran, and ever since then, I mean, it
has just been pretty NonStop. I mean, there have been
thousands of casualties. We have seen the oil supply to
the world largely hamstrung, and it has just been a
(00:36):
very dramatic back and forth of tweets, of talks, of statements,
and it has completely captivated the attention of the world.
Speaker 3 (00:46):
Yeah, it's a really uncertain time. Who knows how long
this current phase is gonna last. But we're going to
spend a few minutes today just unpacking what we know
right now, where things stand, and what we can expect
going forward.
Speaker 2 (01:01):
Certainly on every level, this is just an incredibly important
and pivotal moment in the world. A little bit closer
to home, there is an ever so slightly less important
and pivotal moment, which is tax season.
Speaker 4 (01:14):
In case you weren't feeling anxious enough about the.
Speaker 5 (01:16):
War, Yeah, this is the week.
Speaker 3 (01:18):
This is the weekend folks where you gotta do your taxes.
Speaker 5 (01:22):
Have you filed your taxes yet?
Speaker 3 (01:24):
We have Ben Steverman, Bloomberg Reporter, Tax guru, basically my
accountant here to tell us all about the tax changes,
and really importantly the question on everybody's mind. Can I
just put my stuff into claude and let them do it.
Speaker 5 (01:47):
From everybody's business. I'm Max Chafkin, and I'm Stacy Vannicksmith.
Speaker 4 (01:50):
Call your accountant or your friendly Bloomberg reporter.
Speaker 3 (01:53):
We're gonna have all the information whether you need to
celebrate or cry this tax season.
Speaker 2 (02:00):
As we're recording here on Thursday, the conflict between the
US and Iran and Israel is on pause. There is
a cease fire, and we're all watching and waiting to
see what happens.
Speaker 1 (02:13):
President Trump seconds ago taking to truth Social to say
that he is talking to Pakistani officials and based on
that conversation, he will agree to stop bombing for two weeks.
He also says that Iran has agreed to open the
strait of horror moves for that time period.
Speaker 6 (02:28):
We're looking at.
Speaker 7 (02:29):
Oil prices plunging and Wtim Brent also seeing premium narrowing
as well.
Speaker 8 (02:36):
We're seeing reports of air defense systems going off in
Tehran tonight.
Speaker 2 (02:40):
This cease fire agreement is not even twenty four hours old.
Speaker 5 (02:44):
In their signs that it's falling apart.
Speaker 3 (02:46):
The White House is demanding Iran reopened the Strait of Ormus.
Speaker 6 (02:49):
It was originally reopened overnight than Iran closed it a
few hours.
Speaker 5 (02:53):
Later Stacy easier.
Speaker 3 (02:55):
Sunday, Trump sends this profane message and threatens essentially to
destroy all of Iran. Says he's gonna destroy an entire civilization.
These threats continue for days, and it leads to this
kind of like dramatic situation on Tuesday night, where it's
either Trump is threatening to destroy huge amounts of infrastructure
(03:19):
potential war crimes. You're not allowed to just bomb civilian
infrastructure according to the Geneva Convention, or Iran is gonna
is supposed to open up the Strait of horm Moves.
What ends up happening is we have this sort of
conditional ceasefire brokeered by Pakistan. The two sides have two
weeks to work it out, and right now not that
(03:41):
much has changed. The fighting seems to have cooled off,
although not entirely. On Wednesday, Israel was still doing some bombing,
Iran was still doing some bombing, and Iran has yet
to let very many ships through the Strait of hormoves
and is saying essentially there are going to control it
(04:01):
and potentially even toll it. So we may sort of
be in a pause, but it's not clear that this
conflict is resolved.
Speaker 2 (04:10):
It's a pause, but it doesn't necessarily seem like at
the end of the pause we will have a productive deal.
Speaker 3 (04:18):
And we had Bloomberg Energy and Commodities columnist Javier Blast
on the podcast six weeks ago. During that podcast, the
kind of consensus was that this thing would last just
a few days, and Javier said, Hey, I'm a glass
half empty kind of guy, and if this lasts longer
than that, it's going to be really, really bad. And
(04:40):
he basically said it would be hard to imagine it
going sixty days. If it went much longer than just
a few days, there would be severe economic consequences.
Speaker 5 (04:50):
Let's just listen to a little.
Speaker 3 (04:51):
Bit of that conversation just to kind of like refresh
our memories, refreshed listeners' memories.
Speaker 9 (04:55):
The US produces a lot of oil is another sported actually,
but the price of oil is set on the glos market,
and a crisis anywhere is a crisis everywhere. Everyone is
going to feel the pain and the price is going
to go up for everyone. The oil market is not
really thinking about sixty days. I think it's thinking more
about six days at the moment. It will mean a
(05:15):
significant oil shock. People say, oh, worst case scenario is
one hundred dollars oil. A truly worst cases scenario. What
I will call it, really worst case scenario. I think
that we go north of two hundred dollars, we will
need massive demand destruction. It will imply an economic shock
of the size that the central banks will have to intervene,
et cetera. Ac It's very ugly, but that's one of
(05:38):
the reasons that I cannot see these lasting sixty days.
I think that the White House will call it over
a lot earlier. There is a lot of cynicism on
Wall Street, and all that will be tacko.
Speaker 5 (05:50):
So we're a glass happ empty days apparently.
Speaker 3 (05:54):
Yeah, we're around forty days. This is a two week
cease far. It seems likely we are getting to six
or very close to it.
Speaker 5 (06:02):
Yeah. Yeah.
Speaker 2 (06:03):
And one of the sort of interesting points about this,
I think one of the reasons that it becomes so
serious after sixty days is it's even when the Strait
of Hormuz opens back up and the oil starts flowing again.
That's twenty thousand barrels of a day of oil that
is not reaching the global market every single day, and
so that starts to compound. And for places like in
(06:27):
the US, we likely won't have a supply issue because
we're we produce so much oil, We're the largest producer
of oil in the world. But for other countries like Japan,
like the Philippines, they import almost all their oil, and
so this becomes a huge supply issue, like gas lines
like it was in the US in the seventies. The
more backed up things get, the longer these whole countries economies,
(06:50):
people go without the ability to get to work, deliver things,
run their business all that, and that compounds. And then
also the longer it takes the price to go back
to normal because there's this big backlog, and so the
price that just means we are all going to be
paying all around the world a higher price for oil
(07:11):
for a long time.
Speaker 5 (07:11):
Would they like to call it econ amongst a long
tail back. At the beginning of the war, we talked
about the gas prices.
Speaker 3 (07:17):
Gas prices shot way up and what happens if it
ends tomorrow? And you were saying gas price are going
to stay up for a very long time. Obviously it's
taken a lot longer than tomorrow. I think we need
to start thinking about something like a new normal here,
a new normal that is not as great as it
(07:37):
was before this thing started. One with elevated commodity prices,
as you said, potential supply chain shortages, and a lot
of countries, especially in Asia, and a situation where Iran,
although weakened, although it's nuclear program has been degraded, according
to the Trump administration, still controls this very crucial trade artery.
Speaker 2 (08:01):
Yeah, yeah, I mean I to me, there are two
main implications, one of them global, one of them more local.
The global one is that I just feel like I'm
watching a lot of trade routes get sent set without
the US in it. The US we've just been the
center of global trade for so long, the US consumer
(08:22):
we've just and especially the oil trade, all of that
happens in dollars. It's one of the reasons that they
say dollars the reserve currency of the world, because all
international trades with oil before now have happened in dollars.
That isn't really happening anymore. That's happening in like Chinese,
Ywon and other countries are basically creating trade locations around US,
(08:43):
which I think has huge long term implications, but more
locally closer to home and with a bunch of elections
coming up. I think also we're getting inflation numbers out
this week which will reflect gas prices, but here at home, gas,
as we've discussed before on the show, gets into everything
because between delivery and our commutes and things like that,
(09:05):
people are very emotional about gas prices and it's looking
like those are going to be elevated for a really
long time.
Speaker 3 (09:09):
You hinted at the politics, but one of the reasons
I think we saw this kind of very erratic messaging
from the White House of the last couple of days.
Speaker 6 (09:19):
You know.
Speaker 3 (09:19):
Part of it, of course, is that this is how
Donald Trump negotiates art of the deal, YadA YadA. But
the other part of it is the polling numbers have
been horrible on this. Usually historically during conflicts, there is
this thing, the rally around the flag effect, where people
tend to at least briefly support the sort of military
(09:39):
whatever the military action is, because they want to support
the troops who are in harm's way.
Speaker 5 (09:44):
Obviously this was a little bit different.
Speaker 3 (09:45):
This is not a ground conflict, and this was basically
underwater from the beginning, Like more Americans are against this
than for it, and in the last six weeks or so,
it has become much more popular. It was unpopular at
the beginning. At the beginning of this conflict has become
more unpopular. The overall approval ratings for Donald Trump also
(10:08):
have fallen. He is basically less popular than he has been.
This is this is politically bad, and you're seeing prediction
markets and so on go from giving the Democrats kind
of an outside chance of retaking the Senate to now
it's either even or it's a little bit ahead for
the Democrats. We could be watching Donald Trump's sort of
(10:28):
presidency kind of collapsing. I'm not saying like he's gonna
be removed from office or something, although some Democrats of
course have suggested that, but just that he is losing
a lot of political capital basically by the day, and
because this ceasefire is so chaotic and so on, it's
hard to see how he kind of brings it back quickly,
(10:49):
especially before the midterm. Like I said, this is like
a really unpopular war, So it's hard to imagine that's
going to like somehow dramatically turn around. It seems like,
you know, our our our sort of best case scenario.
The thing that we're all hoping for is that we
kind of get back to where things were the the
I think a more interesting question is like who won
(11:10):
this conflict?
Speaker 4 (11:11):
Was it Iran or the US? And we were gonna
it is not over yet.
Speaker 2 (11:15):
I would like to point out, as much as I
feel like we're getting that message, it definitely isn't well.
Speaker 4 (11:19):
And both sides, of course, are claiming victory.
Speaker 5 (11:23):
Iran Ron everybody wins.
Speaker 4 (11:27):
The US.
Speaker 3 (11:28):
Donald Trump saying, you know, we've we've you know, dramatically
limited uh the you know this this regime that he
sees is as being malign. He's he said, there's been
regime change, you know on the Iranian side. You know, frankly,
there really hasn't been regime change. I mean, there some
leaders have changed, but it's it's basically the same regime.
(11:49):
And they're gonna sort of say that they have managed
to assert control over the Strait of Horn moves A
little bit.
Speaker 5 (11:56):
Hard to argue with that.
Speaker 3 (11:57):
The other day, Donald Trump proposed a joint venture with Iran,
where because Iran has been threatening to toll oil as
much as a dollar a barrel, which would be a
ton of money, millions of dollars I think for the
biggest ships to go through the straight of form of
yeah exactly. So so now from now on, every benk.
Speaker 5 (12:15):
Like a couple of million dollars a ship from what
I remember, yeah exactly.
Speaker 3 (12:19):
And and Trump said, oh, well, maybe we'll split it
with Iran. So that's kind of would be a fun
and unexpected turn of events if this, if this turns
into a little JV.
Speaker 5 (12:30):
Although as is the beginning of a beautiful friend.
Speaker 3 (12:33):
As good a deal maker as Donald Trump is, and
I think we have to admit that at times he
has been that one feel feels feels like a like
it may be unrealistic.
Speaker 2 (12:43):
Yeah, I mean, at least economically speaking, I don't see
a scenario where this is a win at all. It
could All I see are different kinds of losses at
different scales. But I mean I do think, at least
in the immediate future in this country that politically this
is really tough. And you know, we're seeing prices rising
(13:06):
already and the longer the straight stays closed, and the
longer it is before this gets resolved, obviously, the more
lives are lost.
Speaker 5 (13:14):
That's the part that really matters. But also the more
expensive everything is all around the world.
Speaker 3 (13:19):
Stacy got we gotta hit the question. I'm sure you
are thinking about. That's keeping you up at night. But
what what does the FED? What does the FED do
about this?
Speaker 2 (13:29):
Well, this puts the FED in a really tough position
because you know, this word is stagflation gets thrown around
a lot. Basically that is just for me. When I
hear stagflation, I just see it's like a pick your
poison situation. Do you remember in The Princess Bride, when
there's that moment when carry El wins. It's down at
the table with Walla Sean and he's like, I.
Speaker 4 (13:50):
Know that, you know that, I know that, Yes, I
remember it.
Speaker 5 (13:54):
Yes, that amazing moment.
Speaker 2 (13:56):
And it turns out both of the sorry spoiler alert,
it turns out both of the cups are poison. Ba see,
I'm sorry it's been I feel like there's a statute
of limitations on spoilers, and we have passed that with
The Princess Bride. But it's a great moment, and the
wayson I think about it is I feel like that's
the moment the Feds in where basically both of the
cups are poisoned. If they raise interest rates in order
(14:17):
to control inflation, which is likely to go up because
of gas prices going up and pushing the price of
everything up. If it raises interest rates in order to
combat that, that's really hard on the rest of the economy.
That means it's more expensive for businesses to borrow money,
so they make less money, so they hire less, they
might lay people off, they cut back on expenses. That is,
(14:39):
that's like slowing growth in order to get inflation under control.
That's just bad all around. But if they cut interest
rates to help the economy, prices can go out of control.
Because the prices for everything are already going up. You
don't want to end up in a situation where you're
paying fifteen dollars for your Starbucks latte, and that can
really take on a life of its own inspire a
(14:59):
lot of control. So I just feel like, if you're
Jerome Powell, you are like Wallace Sean trying to figure
out which of the poisoned cups to drink because it's
a loser situation.
Speaker 5 (15:10):
Listeners.
Speaker 3 (15:11):
You know, let us know what you want to know
about about this war and how it affects us. Everybody's
at Bloomberg dot net and we will we will try
to do our best to find out. Stacy. It is
almost April fifteenth. It's gonna be tax day here in
(15:34):
the US before we know it. Millions of Americans, including
I believe are Everybody's business co host Stacy Vanick Smith,
have been waiting until the last minute to file their
federal and state returns.
Speaker 4 (15:45):
Stacy, what are you doing?
Speaker 2 (15:47):
Appreciate getting called out like this, Listen. I did quite
a bit of freelance work last year. I needed to
get an accountant, don't I. Oh yeah, radio is extremely
lucrative in case you're looking for just a cash windfall
in your life. No, but I needed to hire an accountant,
(16:08):
and he did not by the time I got around asking, which,
in my defense, was in early March or maybe mid
March the earliest he could do.
Speaker 5 (16:17):
I'm going to do my taxes later.
Speaker 3 (16:18):
Today, right, I will take that on. That's all I
need to know. But you know what, Stacy, You're not
the only person who is feeling a little bit of anxiety.
Speaker 5 (16:30):
I am not alone. You are not alone.
Speaker 4 (16:32):
And now I'm not saying me because I did my taxes?
Speaker 5 (16:35):
Why have you done your taxes? Yeah?
Speaker 4 (16:37):
But our producer Jasmin JT. Green went out in New.
Speaker 3 (16:40):
York City to ask people how they're feeling about tax day.
Speaker 7 (16:44):
So, with tax Day coming up in a few days,
I've just been asking how is your tax preparation?
Speaker 10 (16:49):
Ben?
Speaker 5 (16:49):
Have you done it yet? Are you nervous about it?
Speaker 11 (16:52):
I did my taxes with somebody who did it for me,
and I'm prepared by making sure my taxes was in
order by December. Zaka Masha get that tax many beforehand.
Speaker 8 (17:03):
So this is actually the first year that I've been
ahead of the game and gotten everything to my accountant
ahead of tax day. So it'll be the first time
in five years that I haven't had to file for
an extension.
Speaker 10 (17:14):
The thought of, like eventually filing taxes is kind of
like concerning and like kind of stressful. I don't know
how to file. I hope I will eventually learn how
to file my taxes, but I think.
Speaker 5 (17:26):
That's an ensue for later on. Were you surprised by
your results?
Speaker 11 (17:34):
I absolutely wise. They got me what they needed to
get me, and I was so happy that they got
me to hem out.
Speaker 7 (17:41):
Have you been following it all, like the changes with
the tax code and things like that?
Speaker 8 (17:45):
Yeah, I have been, absolutely, especially the forty thousand dollars
for homeowners and the credits that are here. Very few
things I can agree with the current administration, but this
is a nice benefit to see some of that, and
grateful luckily my accountant is also master of these things,
so when I brought up the questions, he was able
to help educate me across them.
Speaker 5 (18:04):
What makes you nervous?
Speaker 10 (18:05):
I think just like having this like obligation and like
responsibility to like pay something on a specific time, and
like I'm like not like in that world yet, and
I don't know what to expect.
Speaker 7 (18:18):
It is a little scary, mostly because when there's winess,
like jobs that don't give you like your w two
at the end, you have to do all do that
about yourself and you have to have the accurate number,
and sometimes it's like hard to find like an account
to do it for you. So I feel like it's
a very scary process not knowing how to like do
all that. But when the time comes, I feel like,
hopefully I'll learn.
Speaker 3 (18:38):
Wow, there are some people who are really on top
of things.
Speaker 2 (18:42):
Yeah, I am very happy for the people who are
so prepared.
Speaker 5 (18:47):
That's great for them.
Speaker 3 (18:48):
Luckily, we have Bloomberg reporter Ben Steverman to chat with
us about what's changing this tax season.
Speaker 4 (18:53):
Ben, Welcome back to everybody's business.
Speaker 5 (18:55):
Thank you. Happy to be here, Ben.
Speaker 4 (18:56):
I want to take you back ancient history.
Speaker 3 (19:00):
First Trump administration twenty seventeen, and we were having a
conversation about taxes that feels very different from the one
that we're having today. Let's just listen to a quick
clip of Paul Ryan, the former House Majority leader, who
I vaguely remember.
Speaker 6 (19:16):
We want to simplify the system for Americans, for families,
for workers, and in addition to helping businesses be more
competitive so that they can keep hiring and grow. We
want to simplify systems so much that ninety six percent
of American workers can fill their taxes on a postcard.
That kind of dramatic simplification is possible a postcard.
Speaker 3 (19:39):
I feel like we should have the postcard by now.
And given that people have been talking about this, I'm
sure you're about to say basically for decades, like why
is it so complicated to do your taxes in the
United States?
Speaker 12 (19:53):
Paul Ryan, Just to give him a little bit of credit,
they did simplify the tax code in twenty seven. The
problem is that the complexity the tax code has been
growing and growing over the years. I was just talking
to like this brand corporation researcher that had actually mapped
the tax code over the years. But basically they were
saying three percent a year is the growth of the
(20:17):
tax code in terms of the number of words, Like it.
Speaker 5 (20:20):
Gets three percent more complex every year.
Speaker 12 (20:22):
Yeah, yeah, basically, and when you add that up we've
had the income tax since nineteen thirteen, that gets pretty big.
Speaker 2 (20:29):
In many countries, it is essentially a postcard system, right,
Why is our tax code so complicated and apparently getting
more complicated by the year.
Speaker 5 (20:40):
Yeah.
Speaker 12 (20:41):
Other countries have a much simpler and quicker system where
often the tax authority will send you your information and
you just look at over the numbers and you say, oh,
that looks right, and then you sign off and send
it back. In our tax system, it's like everybody is
treated like almost like a business in and of themselves.
You're able to play a lot of games often that
(21:03):
you're able to pursue strategies and like there's a lot
of loopholes, and there's a lot of lobbyists who have
lobbied for those loopholes.
Speaker 2 (21:10):
Yeah, there's a lot of policy that gets enacted through
our tax system, like mortgage deductions, and like it's like
a way for the government to encourage you or discourage
you from.
Speaker 5 (21:20):
Doing things right from charity without having to pass a
lot right.
Speaker 12 (21:24):
Right healthcare expenses, and when you layer those things on
top of each other, it just gets really complicated. The
other thing is that TurboTax into it is owns TurboTax
and that's the market leader for online filing and HNR
block and the accountant, the accountants, they are also a
powerful lobby And there have been proposals and there has
(21:46):
been free filing through the federal government. There was a
pilot program under the Biden administration. And a lot of
those efforts to simplify things filing and automate filing for
Americans have been.
Speaker 2 (21:58):
Quashed and big tax in quashed it, Yes, exactly, quash
the postcard dream.
Speaker 5 (22:03):
Yeah.
Speaker 3 (22:03):
Then can I ask, is there an argument for why
our system is preferable.
Speaker 4 (22:09):
To the systems used in other countries.
Speaker 3 (22:12):
Like what do the tax preparers who lobby against these
changes say, like, beyond the fact that they don't want
this industry to go away, that's going to cost jobs
and could lead to economic dislocation. Is there some kind
of argument for our strategy where everyone is like a
little tax optimizing and it has the ability to employ
(22:32):
these complicated strategies and higher accountants and do sophisticated stuff
that in another country like only a business would do.
Speaker 12 (22:39):
Yeah, there is an argument for that. And the argument
is that people benefit from a more adversarial relationship basically
with the irs, Like why are The argument is like
we should not trust the irs to do our taxes
for us.
Speaker 5 (22:53):
Like don't tread on me taxes? Yeah, exactly.
Speaker 12 (22:55):
What if you have the IRS filling out the form
for you, maybe it's not maximizing your deductions, maybe it
doesn't know certain things about you.
Speaker 5 (23:04):
It almost certainly doesn't that.
Speaker 12 (23:06):
Ultimately, this is your responsibility and you have the ability
to maximize.
Speaker 5 (23:10):
You know, this is the American dream.
Speaker 4 (23:11):
This is the American dream.
Speaker 2 (23:13):
Everybody gets to spend weeks on their taxes.
Speaker 5 (23:16):
Honestly, I sort of, I mean I see.
Speaker 3 (23:19):
It right, Like the a situation where the government is
in control of all the data and is basically telling
people here's what you owe with very little information, very
little transparency. You could imagine a situation, especially where you
don't have a lot of trust in your leaders, where
that is I can't believe to say this a slippery
slope to something that's that feels more authoritarian. So I
(23:42):
am going to choose to believe when I'm in this
complicated process that basically takes a full weekend of digging
through receipts and stuff, that I am exercising my freedom.
Speaker 2 (23:54):
That elevated cortisol is just that the feeling of freedom
running coursing through your.
Speaker 3 (24:00):
But Ben, what has changed, like what has gotten more
complicated with the passage of the big beautiful bill.
Speaker 12 (24:07):
Trump on the campaign trail came up with these really
almost brilliant slogans no tax on tips, no tax on overtime,
no tax on seniors, no tax on auto own interest.
They were just campaign slogans like literally Trump dreaming up
no tax on tips while he was in Las Vegas,
and he supped to a server and so those things
(24:28):
were actually actualized in the tax code and along with
an extension of all the other changes that had happened
in twenty seventeen that actually made taxes more complicated for businesses.
They were basically tax cuts for businesses, but they did
make things a little bit more complicated.
Speaker 5 (24:43):
Plus the salt cap.
Speaker 12 (24:45):
They expanded the salt cap from ten thousand to forty
thousands so that people can deduct their local and state tax.
Speaker 2 (24:51):
If you paid ten thousand dollars to New York State,
then you can deduct that fully from your federal yeah it.
Speaker 12 (24:57):
Was you can deduct up to forty thousand. But every
single one of these things comes with all this fine
print because if they didn't want to give them make
these unlimited, they didn't want everyone to start getting paid
in tips or overtime through some method, and there's income limits,
and of course it doesn't apply to your payroll taxes.
(25:18):
You end up with relatively narrow groups of people that
are benefiting from these things, including the forty thousand dollars
cell caps. So a lot of people are getting to
the end of this tax season, I think, and they're realizing, Oh,
I don't qualify for the forty thousand dollars cell cap
because I made too much money last year, I forgot
but I cashed in those stock options, or my business
(25:40):
did really did better than I thought, and so I'm
making a little bit too much, or I work too
much overtime and now I can't take the overtime deduction.
I think that what we have now is sort of
a very complicated system for accountants and for regular peoples
sometimes where they're having to rerun the analysis a couple
of times, and there's a lot of real.
Speaker 2 (26:00):
One of the things that's come up again and again
is basically, you know, there's like the tax the rich
signs and a lot of allegations post big beautiful bill
that it just gave tax cuts to the rich. Who
pays taxes in the US? Like when you look into
the numbers, who is paying most of the taxes.
Speaker 12 (26:20):
One of the ways that people talk about this is
who think that taxes should be lower on rich people.
Speaker 5 (26:26):
They say, rich people are already paying so much money
in taxes.
Speaker 12 (26:29):
Yeah, and that is true if you're first of all,
if you're talking about federal income taxes, but there are
also payroll taxes that are also a huge amount of money,
trillions of dollars. They're just coming into the Treasury as well,
and working salaried hourly workers, they pay a huge share
of that, and rich people really don't pay that much
in that into that pool at all. The other thing
(26:52):
is that if you're a rich person, it really depends on.
Speaker 5 (26:55):
How you earn your money.
Speaker 12 (26:56):
So, uh, if you are a CEO and you or
you're a hedge fund trader, or your professional athlete or
you're an entertainer, you're paying you could be been paying
like almost fifty percent of your income and taxes. And
when we talk about the high tax rates in New
York City, you have state and local as well, and
(27:17):
that's how you get to almost fifty percent. If you're
in California, in New York, one of the high tax states,
you can paying a lot. But if you are a
business owner under the twenty seventeen law and now permanently
in the code, you have the ability to deduct almost
about twenty percent of your taxes comes off just by
being a business owner in certain industries, most industries. And
(27:39):
then if you are an investor, you're paying a much
lower rate.
Speaker 5 (27:45):
I guess it's ina like if your money is in stocks.
Speaker 12 (27:48):
Yeah, stocks, qualified dividends, carried interest, if you're a private
equity person, you're paying a much lower rate.
Speaker 5 (27:54):
So those folks are paying much.
Speaker 12 (27:56):
Lower taxes, often lower taxes than they're secretaries or the
janitor in the office or whatever.
Speaker 5 (28:03):
Like percentage wise or actually effective.
Speaker 12 (28:05):
Tax rate can be lower than somebody who's a working
class or middle class person in some cases, if you're
including payroll taxes as well.
Speaker 3 (28:13):
Ben, I gotta admit something, and Stacy, you're gonna laugh
at me. I, as listeners of this podcast know, I
am a certified AI skeptic. I am not a big
user of the large language models and the chatbots. Although
as I was gathering my information to send my account,
I had a thought which was like I should I
(28:35):
should do claude or whatever I should, I should put
this into grock And we're doing that. They are, and
Ben wrote a story about it, and I just wanted
to hear quickly the case against doing this, because I
think that's where you wound up in order.
Speaker 5 (28:48):
Is there a case against it. I am not a
skeptic of AI.
Speaker 12 (28:54):
I talked to a ton of accountants, and I talked
to a couple of CEOs of AI. Tax companies like
companies that are offering AI tax service to accountants, and
my colleague Charlie Wells, who worked with me on it,
he talked to a bunch of people who've been using
AI to do their taxes, and what we learned is
(29:14):
that it just makes a lot of mistakes, like a
lot the large language models are still messing up numbers,
first of all, but then also it seems to have
some problems with time. Often will be applying like twenty
twenty three rules to twenty twenty six and it doesn't
understand the difference. And I talked to a researcher at
(29:34):
a university about this and he was like, there's just
some like the large language models, a probability based system
just has a real problem with a hierarchical based system
like taxes, where there is usually one right answer, you
have to go down the subclauses and the exceptions. And
also it really interfaces with the real world in ways
(29:55):
that are messy and complicated and very particular to you,
and the model doesn't know those details about you necessarily
the way that your accountant may know or may just
be able to into it. So AI is definitely being
helpful for folks. It's like a good tax research tool.
(30:15):
It's good if you don't understand what the salt deduction
even is, it can explain it to you. And another
thing that people have been using it for is preparing
their personal information to shift over to the accountant. If
you want to go through your expenses and find out
which ones were the deductible ones, it might be helpful
for that. But to actually file your taxes, it's we're
(30:37):
nowhere you're being able to do that yet with AI.
Speaker 5 (30:40):
But people are doing it. They're trying this tax season.
Who are the winners? Who are the losers?
Speaker 12 (30:49):
So the winners are somebody who is making pretty good
money in a tip job or an overtime job, but
not too much. Seniors who aren't making too much, aren't
over a certain income limit, are also going to be
able to take a little bit more of a deduction.
They're going to notice their refund goes up. Who are
(31:10):
else are the winners? Business owners corporations got to keep
a lot of their wins in the last law, which
were really significant. The losers are salaried workers basically just
didn't get anything. To be honest, they got some lower
rates that they kept some lower rates in twenty seventeen,
but they also lost those deductions, and then the salt
(31:33):
cap will benefit like the extra salt cap will benefit
some affluent people a lot. But if you're too affluent,
if you make too much money, more than six hundred
thousand dollars, you basically don't get nothing.
Speaker 3 (31:45):
Ben Severman, thanks for being here, my pleasure. Thanks for
having me, Stacy, it's underrated story time. I've got a
funny one for you. You are you familiar with the
term token maxing?
Speaker 5 (32:05):
I am not, okay, So token.
Speaker 3 (32:07):
Maxing this is all the rage among tech companies. Token
maxing is when you try to use as much AI
as possible on your job, and is that the token.
These are tokens. They cost money each token. Each time
you use a token, you are paying money. And there's
been some reporting, first in the New York Times and
(32:29):
then a couple of weeks ago and then the information
about these tech companies that they're so enthusiastic about AI.
They've created leader boards to rank how many tokens employees
are using, and it's it's potentially like millions of dollars
a month per employee, and they're celebrating this. They're like,
good job you have spent millions of dollars on like
(32:50):
AI things.
Speaker 2 (32:52):
So like, if you're at a company then and you
use AI to like draft your emails, then the company
gives you a token.
Speaker 5 (33:00):
It's like Chuck Cheese, but with AAR.
Speaker 3 (33:02):
The company pays money to Nthropic or open ai for
that email, and then at the end of the month
is like which person spent the most money at open
ai or Anthropic and like gives them a gold start.
Speaker 5 (33:16):
They're actually Facebook has these.
Speaker 2 (33:17):
Well I know who would be leading the leaderboard on
the Everybody's business.
Speaker 4 (33:21):
Yeah, Stacey has been token vaccine more than me.
Speaker 3 (33:24):
But the thing that's crazy is that these this is
as if a company. This is like a company's celebrating
who logs the most first class airline miles in a
given month. You have people spending huge sums of money,
like I said, millions of dollars a month for like
a single employee at Facebook.
Speaker 4 (33:43):
And not only are they like where I come from.
Speaker 3 (33:46):
If you do this, maybe your boss is like, hey,
do you really need to file a huge expense report?
But know that at some of these Silicon valleyes that companies,
they are so excited about AI. It's the other way,
They're like, great work, keep vibe coding, don't stop, keep
spending that money. I will say, after this information story
came out, Meta, the parent company of Facebook, took down
(34:06):
their token leader board, not because they said it was
a bad idea, but because they said it had been
leaking and I think it was a little bit embarrassing.
Dell Stacy, what is your underrated story?
Speaker 2 (34:15):
I'm so glad you asked. Now, I did ask you
to bring something into the studio. I'm going to ask
you to take it out now.
Speaker 5 (34:19):
I have my own bag of Dorito's.
Speaker 2 (34:23):
Okay, mine, this is my new economic indicator of choice.
Speaker 3 (34:29):
I've got a pack of cool Ranch Dorito's. I think
it's like a snack size. I don't know what you've
got there.
Speaker 5 (34:35):
Yeah, I also have a snack size. I have the Classic.
Speaker 2 (34:39):
But let me explain why I think Dorito's are the
economic indicator.
Speaker 5 (34:43):
For me of this week.
Speaker 2 (34:44):
Pepsi Co, which is the company that owns Dorito's, it
missed its revenue target by a billion dollars for the
second year in a row, and the reason it said
it is missing these targets is because of Dorito's. It
specifically talked about raising its It raised its price of
Doritos by about fifty percent since the beginning of the
(35:04):
pandemic to seven dollars. Not quite this small, but like
the larger snack size like I've been selling for seven dollars.
Speaker 3 (35:12):
Like this is like a normal size bag of Dorito's
you buy at the grocery store costs seven dollars. That's
got to be what it is, okay, which seems like
a lot of money for Doritos.
Speaker 5 (35:20):
It seems like a lot of money for Doritos, and
consumers stopped buying it.
Speaker 2 (35:24):
So I was turned onto the story because of a
great article by our colleague Christina Peterson about how the
seven dollars Doritos are taking down PepsiCo. But what I
think is so interesting about this is, ever since like
the middle of the pandemic, when we started to see
inflation rise, consumers have basically been just paying the higher
and higher prices that we've seen coming. Because if you're
(35:46):
a person, you're going to the store, you don't know,
You're like, I guess this is supply chain issues. I
guess this is inflation. I guess this is tariffs. Whatever
it is, we have been paying the higher prices. So
companies have been nudging up their prices, sometimes because they
had to because the cross were going up, sometimes because
they thought they could. And there was just this sort
(36:06):
of wonder that economists kept talking about, like, oh, people
will just pay it, Like the prices go up and
people keep buying, people keep buying more and more. Well,
it seems like we've hit that ceiling, which with the Doritos,
suddenly people are like, you know what, I'm not paying
seven dollars for a bag of Doritos. And I think
that's starting to happen across the economy.
Speaker 3 (36:26):
This is called demand destruction, right, Stacey, that's the economic term.
Speaker 5 (36:29):
Did we talk about this with oil?
Speaker 3 (36:31):
I mean there's a point this could very well happen
with gas prices too, right, If they goes above a
certain level, people stop using whatever this good is.
Speaker 4 (36:40):
And I guess we found the point with Doritos.
Speaker 2 (36:43):
Although seven dollars, I don't know, you're not at your
demand destruction.
Speaker 5 (36:47):
Your is not destroyed.
Speaker 3 (36:49):
It might still be worth it.
Speaker 5 (36:53):
It's very cheesy and delicious. I don't know if it's
seven dollars.
Speaker 2 (36:56):
Worth of cheesy and delicious. Seven dollars is a lot,
but This show is produced by Jasmine JT. Green and
Stacy Wong. Magnus Hendrickson is our supervising producer, Sam Roge,
Chandel's Engineering, and Dave forself factchecks. Special thanks to Jeff Muscus,
(37:17):
Julia Rubin, Maria Ling, and Angel Recu. If you have
a minute, please rate and review the show.
Speaker 5 (37:22):
It really means a lot to us.
Speaker 2 (37:23):
And if you have a story that should be our business,
email us at Everybody's at Bloomberg dot net.
Speaker 5 (37:28):
That is, Everybody's with an S at Bloomberg dot net.
Speaker 2 (37:31):
Thank you for listening, See you next week.
Bloomberg Audio Studios, podcasts, radio News.
Speaker 2 (00:16):
It has been about six weeks since the US and
Israel attacked Iran, and ever since then, I mean, it
has just been pretty NonStop. I mean, there have been
thousands of casualties. We have seen the oil supply to
the world largely hamstrung, and it has just been a
(00:36):
very dramatic back and forth of tweets, of talks, of statements,
and it has completely captivated the attention of the world.
Speaker 3 (00:46):
Yeah, it's a really uncertain time. Who knows how long
this current phase is gonna last. But we're going to
spend a few minutes today just unpacking what we know
right now, where things stand, and what we can expect
going forward.
Speaker 2 (01:01):
Certainly on every level, this is just an incredibly important
and pivotal moment in the world. A little bit closer
to home, there is an ever so slightly less important
and pivotal moment, which is tax season.
Speaker 4 (01:14):
In case you weren't feeling anxious enough about the.
Speaker 5 (01:16):
War, Yeah, this is the week.
Speaker 3 (01:18):
This is the weekend folks where you gotta do your taxes.
Speaker 5 (01:22):
Have you filed your taxes yet?
Speaker 3 (01:24):
We have Ben Steverman, Bloomberg Reporter, Tax guru, basically my
accountant here to tell us all about the tax changes,
and really importantly the question on everybody's mind. Can I
just put my stuff into claude and let them do it.
Speaker 5 (01:47):
From everybody's business. I'm Max Chafkin, and I'm Stacy Vannicksmith.
Speaker 4 (01:50):
Call your accountant or your friendly Bloomberg reporter.
Speaker 3 (01:53):
We're gonna have all the information whether you need to
celebrate or cry this tax season.
Speaker 2 (02:00):
As we're recording here on Thursday, the conflict between the
US and Iran and Israel is on pause. There is
a cease fire, and we're all watching and waiting to
see what happens.
Speaker 1 (02:13):
President Trump seconds ago taking to truth Social to say
that he is talking to Pakistani officials and based on
that conversation, he will agree to stop bombing for two weeks.
He also says that Iran has agreed to open the
strait of horror moves for that time period.
Speaker 6 (02:28):
We're looking at.
Speaker 7 (02:29):
Oil prices plunging and Wtim Brent also seeing premium narrowing
as well.
Speaker 8 (02:36):
We're seeing reports of air defense systems going off in
Tehran tonight.
Speaker 2 (02:40):
This cease fire agreement is not even twenty four hours old.
Speaker 5 (02:44):
In their signs that it's falling apart.
Speaker 3 (02:46):
The White House is demanding Iran reopened the Strait of Ormus.
Speaker 6 (02:49):
It was originally reopened overnight than Iran closed it a
few hours.
Speaker 5 (02:53):
Later Stacy easier.
Speaker 3 (02:55):
Sunday, Trump sends this profane message and threatens essentially to
destroy all of Iran. Says he's gonna destroy an entire civilization.
These threats continue for days, and it leads to this
kind of like dramatic situation on Tuesday night, where it's
either Trump is threatening to destroy huge amounts of infrastructure
(03:19):
potential war crimes. You're not allowed to just bomb civilian
infrastructure according to the Geneva Convention, or Iran is gonna
is supposed to open up the Strait of horm Moves.
What ends up happening is we have this sort of
conditional ceasefire brokeered by Pakistan. The two sides have two
weeks to work it out, and right now not that
(03:41):
much has changed. The fighting seems to have cooled off,
although not entirely. On Wednesday, Israel was still doing some bombing,
Iran was still doing some bombing, and Iran has yet
to let very many ships through the Strait of hormoves
and is saying essentially there are going to control it
(04:01):
and potentially even toll it. So we may sort of
be in a pause, but it's not clear that this
conflict is resolved.
Speaker 2 (04:10):
It's a pause, but it doesn't necessarily seem like at
the end of the pause we will have a productive deal.
Speaker 3 (04:18):
And we had Bloomberg Energy and Commodities columnist Javier Blast
on the podcast six weeks ago. During that podcast, the
kind of consensus was that this thing would last just
a few days, and Javier said, Hey, I'm a glass
half empty kind of guy, and if this lasts longer
than that, it's going to be really, really bad. And
(04:40):
he basically said it would be hard to imagine it
going sixty days. If it went much longer than just
a few days, there would be severe economic consequences.
Speaker 5 (04:50):
Let's just listen to a little.
Speaker 3 (04:51):
Bit of that conversation just to kind of like refresh
our memories, refreshed listeners' memories.
Speaker 9 (04:55):
The US produces a lot of oil is another sported actually,
but the price of oil is set on the glos market,
and a crisis anywhere is a crisis everywhere. Everyone is
going to feel the pain and the price is going
to go up for everyone. The oil market is not
really thinking about sixty days. I think it's thinking more
about six days at the moment. It will mean a
(05:15):
significant oil shock. People say, oh, worst case scenario is
one hundred dollars oil. A truly worst cases scenario. What
I will call it, really worst case scenario. I think
that we go north of two hundred dollars, we will
need massive demand destruction. It will imply an economic shock
of the size that the central banks will have to intervene,
et cetera. Ac It's very ugly, but that's one of
(05:38):
the reasons that I cannot see these lasting sixty days.
I think that the White House will call it over
a lot earlier. There is a lot of cynicism on
Wall Street, and all that will be tacko.
Speaker 5 (05:50):
So we're a glass happ empty days apparently.
Speaker 3 (05:54):
Yeah, we're around forty days. This is a two week
cease far. It seems likely we are getting to six
or very close to it.
Speaker 5 (06:02):
Yeah. Yeah.
Speaker 2 (06:03):
And one of the sort of interesting points about this,
I think one of the reasons that it becomes so
serious after sixty days is it's even when the Strait
of Hormuz opens back up and the oil starts flowing again.
That's twenty thousand barrels of a day of oil that
is not reaching the global market every single day, and
so that starts to compound. And for places like in
(06:27):
the US, we likely won't have a supply issue because
we're we produce so much oil, We're the largest producer
of oil in the world. But for other countries like Japan,
like the Philippines, they import almost all their oil, and
so this becomes a huge supply issue, like gas lines
like it was in the US in the seventies. The
more backed up things get, the longer these whole countries economies,
(06:50):
people go without the ability to get to work, deliver things,
run their business all that, and that compounds. And then
also the longer it takes the price to go back
to normal because there's this big backlog, and so the
price that just means we are all going to be
paying all around the world a higher price for oil
(07:11):
for a long time.
Speaker 5 (07:11):
Would they like to call it econ amongst a long
tail back. At the beginning of the war, we talked
about the gas prices.
Speaker 3 (07:17):
Gas prices shot way up and what happens if it
ends tomorrow? And you were saying gas price are going
to stay up for a very long time. Obviously it's
taken a lot longer than tomorrow. I think we need
to start thinking about something like a new normal here,
a new normal that is not as great as it
(07:37):
was before this thing started. One with elevated commodity prices,
as you said, potential supply chain shortages, and a lot
of countries, especially in Asia, and a situation where Iran,
although weakened, although it's nuclear program has been degraded, according
to the Trump administration, still controls this very crucial trade artery.
Speaker 2 (08:01):
Yeah, yeah, I mean I to me, there are two
main implications, one of them global, one of them more local.
The global one is that I just feel like I'm
watching a lot of trade routes get sent set without
the US in it. The US we've just been the
center of global trade for so long, the US consumer
(08:22):
we've just and especially the oil trade, all of that
happens in dollars. It's one of the reasons that they
say dollars the reserve currency of the world, because all
international trades with oil before now have happened in dollars.
That isn't really happening anymore. That's happening in like Chinese,
Ywon and other countries are basically creating trade locations around US,
(08:43):
which I think has huge long term implications, but more
locally closer to home and with a bunch of elections
coming up. I think also we're getting inflation numbers out
this week which will reflect gas prices, but here at home, gas,
as we've discussed before on the show, gets into everything
because between delivery and our commutes and things like that,
(09:05):
people are very emotional about gas prices and it's looking
like those are going to be elevated for a really
long time.
Speaker 3 (09:09):
You hinted at the politics, but one of the reasons
I think we saw this kind of very erratic messaging
from the White House of the last couple of days.
Speaker 6 (09:19):
You know.
Speaker 3 (09:19):
Part of it, of course, is that this is how
Donald Trump negotiates art of the deal, YadA YadA. But
the other part of it is the polling numbers have
been horrible on this. Usually historically during conflicts, there is
this thing, the rally around the flag effect, where people
tend to at least briefly support the sort of military
(09:39):
whatever the military action is, because they want to support
the troops who are in harm's way.
Speaker 5 (09:44):
Obviously this was a little bit different.
Speaker 3 (09:45):
This is not a ground conflict, and this was basically
underwater from the beginning, Like more Americans are against this
than for it, and in the last six weeks or so,
it has become much more popular. It was unpopular at
the beginning. At the beginning of this conflict has become
more unpopular. The overall approval ratings for Donald Trump also
(10:08):
have fallen. He is basically less popular than he has been.
This is this is politically bad, and you're seeing prediction
markets and so on go from giving the Democrats kind
of an outside chance of retaking the Senate to now
it's either even or it's a little bit ahead for
the Democrats. We could be watching Donald Trump's sort of
(10:28):
presidency kind of collapsing. I'm not saying like he's gonna
be removed from office or something, although some Democrats of
course have suggested that, but just that he is losing
a lot of political capital basically by the day, and
because this ceasefire is so chaotic and so on, it's
hard to see how he kind of brings it back quickly,
(10:49):
especially before the midterm. Like I said, this is like
a really unpopular war, So it's hard to imagine that's
going to like somehow dramatically turn around. It seems like,
you know, our our our sort of best case scenario.
The thing that we're all hoping for is that we
kind of get back to where things were the the
I think a more interesting question is like who won
(11:10):
this conflict?
Speaker 4 (11:11):
Was it Iran or the US? And we were gonna
it is not over yet.
Speaker 2 (11:15):
I would like to point out, as much as I
feel like we're getting that message, it definitely isn't well.
Speaker 4 (11:19):
And both sides, of course, are claiming victory.
Speaker 5 (11:23):
Iran Ron everybody wins.
Speaker 4 (11:27):
The US.
Speaker 3 (11:28):
Donald Trump saying, you know, we've we've you know, dramatically
limited uh the you know this this regime that he
sees is as being malign. He's he said, there's been
regime change, you know on the Iranian side. You know, frankly,
there really hasn't been regime change. I mean, there some
leaders have changed, but it's it's basically the same regime.
(11:49):
And they're gonna sort of say that they have managed
to assert control over the Strait of Horn moves A
little bit.
Speaker 5 (11:56):
Hard to argue with that.
Speaker 3 (11:57):
The other day, Donald Trump proposed a joint venture with Iran,
where because Iran has been threatening to toll oil as
much as a dollar a barrel, which would be a
ton of money, millions of dollars I think for the
biggest ships to go through the straight of form of
yeah exactly. So so now from now on, every benk.
Speaker 5 (12:15):
Like a couple of million dollars a ship from what
I remember, yeah exactly.
Speaker 3 (12:19):
And and Trump said, oh, well, maybe we'll split it
with Iran. So that's kind of would be a fun
and unexpected turn of events if this, if this turns
into a little JV.
Speaker 5 (12:30):
Although as is the beginning of a beautiful friend.
Speaker 3 (12:33):
As good a deal maker as Donald Trump is, and
I think we have to admit that at times he
has been that one feel feels feels like a like
it may be unrealistic.
Speaker 2 (12:43):
Yeah, I mean, at least economically speaking, I don't see
a scenario where this is a win at all. It
could All I see are different kinds of losses at
different scales. But I mean I do think, at least
in the immediate future in this country that politically this
is really tough. And you know, we're seeing prices rising
(13:06):
already and the longer the straight stays closed, and the
longer it is before this gets resolved, obviously, the more
lives are lost.
Speaker 5 (13:14):
That's the part that really matters. But also the more
expensive everything is all around the world.
Speaker 3 (13:19):
Stacy got we gotta hit the question. I'm sure you
are thinking about. That's keeping you up at night. But
what what does the FED? What does the FED do
about this?
Speaker 2 (13:29):
Well, this puts the FED in a really tough position
because you know, this word is stagflation gets thrown around
a lot. Basically that is just for me. When I
hear stagflation, I just see it's like a pick your
poison situation. Do you remember in The Princess Bride, when
there's that moment when carry El wins. It's down at
the table with Walla Sean and he's like, I.
Speaker 4 (13:50):
Know that, you know that, I know that, Yes, I
remember it.
Speaker 5 (13:54):
Yes, that amazing moment.
Speaker 2 (13:56):
And it turns out both of the sorry spoiler alert,
it turns out both of the cups are poison. Ba see,
I'm sorry it's been I feel like there's a statute
of limitations on spoilers, and we have passed that with
The Princess Bride. But it's a great moment, and the
wayson I think about it is I feel like that's
the moment the Feds in where basically both of the
cups are poisoned. If they raise interest rates in order
(14:17):
to control inflation, which is likely to go up because
of gas prices going up and pushing the price of
everything up. If it raises interest rates in order to
combat that, that's really hard on the rest of the economy.
That means it's more expensive for businesses to borrow money,
so they make less money, so they hire less, they
might lay people off, they cut back on expenses. That is,
(14:39):
that's like slowing growth in order to get inflation under control.
That's just bad all around. But if they cut interest
rates to help the economy, prices can go out of control.
Because the prices for everything are already going up. You
don't want to end up in a situation where you're
paying fifteen dollars for your Starbucks latte, and that can
really take on a life of its own inspire a
(14:59):
lot of control. So I just feel like, if you're
Jerome Powell, you are like Wallace Sean trying to figure
out which of the poisoned cups to drink because it's
a loser situation.
Speaker 5 (15:10):
Listeners.
Speaker 3 (15:11):
You know, let us know what you want to know
about about this war and how it affects us. Everybody's
at Bloomberg dot net and we will we will try
to do our best to find out. Stacy. It is
almost April fifteenth. It's gonna be tax day here in
(15:34):
the US before we know it. Millions of Americans, including
I believe are Everybody's business co host Stacy Vanick Smith,
have been waiting until the last minute to file their
federal and state returns.
Speaker 4 (15:45):
Stacy, what are you doing?
Speaker 2 (15:47):
Appreciate getting called out like this, Listen. I did quite
a bit of freelance work last year. I needed to
get an accountant, don't I. Oh yeah, radio is extremely
lucrative in case you're looking for just a cash windfall
in your life. No, but I needed to hire an accountant,
(16:08):
and he did not by the time I got around asking, which,
in my defense, was in early March or maybe mid
March the earliest he could do.
Speaker 5 (16:17):
I'm going to do my taxes later.
Speaker 3 (16:18):
Today, right, I will take that on. That's all I
need to know. But you know what, Stacy, You're not
the only person who is feeling a little bit of anxiety.
Speaker 5 (16:30):
I am not alone. You are not alone.
Speaker 4 (16:32):
And now I'm not saying me because I did my taxes?
Speaker 5 (16:35):
Why have you done your taxes? Yeah?
Speaker 4 (16:37):
But our producer Jasmin JT. Green went out in New.
Speaker 3 (16:40):
York City to ask people how they're feeling about tax day.
Speaker 7 (16:44):
So, with tax Day coming up in a few days,
I've just been asking how is your tax preparation?
Speaker 10 (16:49):
Ben?
Speaker 5 (16:49):
Have you done it yet? Are you nervous about it?
Speaker 11 (16:52):
I did my taxes with somebody who did it for me,
and I'm prepared by making sure my taxes was in
order by December. Zaka Masha get that tax many beforehand.
Speaker 8 (17:03):
So this is actually the first year that I've been
ahead of the game and gotten everything to my accountant
ahead of tax day. So it'll be the first time
in five years that I haven't had to file for
an extension.
Speaker 10 (17:14):
The thought of, like eventually filing taxes is kind of
like concerning and like kind of stressful. I don't know
how to file. I hope I will eventually learn how
to file my taxes, but I think.
Speaker 5 (17:26):
That's an ensue for later on. Were you surprised by
your results?
Speaker 11 (17:34):
I absolutely wise. They got me what they needed to
get me, and I was so happy that they got
me to hem out.
Speaker 7 (17:41):
Have you been following it all, like the changes with
the tax code and things like that?
Speaker 8 (17:45):
Yeah, I have been, absolutely, especially the forty thousand dollars
for homeowners and the credits that are here. Very few
things I can agree with the current administration, but this
is a nice benefit to see some of that, and
grateful luckily my accountant is also master of these things,
so when I brought up the questions, he was able
to help educate me across them.
Speaker 5 (18:04):
What makes you nervous?
Speaker 10 (18:05):
I think just like having this like obligation and like
responsibility to like pay something on a specific time, and
like I'm like not like in that world yet, and
I don't know what to expect.
Speaker 7 (18:18):
It is a little scary, mostly because when there's winess,
like jobs that don't give you like your w two
at the end, you have to do all do that
about yourself and you have to have the accurate number,
and sometimes it's like hard to find like an account
to do it for you. So I feel like it's
a very scary process not knowing how to like do
all that. But when the time comes, I feel like,
hopefully I'll learn.
Speaker 3 (18:38):
Wow, there are some people who are really on top
of things.
Speaker 2 (18:42):
Yeah, I am very happy for the people who are
so prepared.
Speaker 5 (18:47):
That's great for them.
Speaker 3 (18:48):
Luckily, we have Bloomberg reporter Ben Steverman to chat with
us about what's changing this tax season.
Speaker 4 (18:53):
Ben, Welcome back to everybody's business.
Speaker 5 (18:55):
Thank you. Happy to be here, Ben.
Speaker 4 (18:56):
I want to take you back ancient history.
Speaker 3 (19:00):
First Trump administration twenty seventeen, and we were having a
conversation about taxes that feels very different from the one
that we're having today. Let's just listen to a quick
clip of Paul Ryan, the former House Majority leader, who
I vaguely remember.
Speaker 6 (19:16):
We want to simplify the system for Americans, for families,
for workers, and in addition to helping businesses be more
competitive so that they can keep hiring and grow. We
want to simplify systems so much that ninety six percent
of American workers can fill their taxes on a postcard.
That kind of dramatic simplification is possible a postcard.
Speaker 3 (19:39):
I feel like we should have the postcard by now.
And given that people have been talking about this, I'm
sure you're about to say basically for decades, like why
is it so complicated to do your taxes in the
United States?
Speaker 12 (19:53):
Paul Ryan, Just to give him a little bit of credit,
they did simplify the tax code in twenty seven. The
problem is that the complexity the tax code has been
growing and growing over the years. I was just talking
to like this brand corporation researcher that had actually mapped
the tax code over the years. But basically they were
saying three percent a year is the growth of the
(20:17):
tax code in terms of the number of words, Like it.
Speaker 5 (20:20):
Gets three percent more complex every year.
Speaker 12 (20:22):
Yeah, yeah, basically, and when you add that up we've
had the income tax since nineteen thirteen, that gets pretty big.
Speaker 2 (20:29):
In many countries, it is essentially a postcard system, right,
Why is our tax code so complicated and apparently getting
more complicated by the year.
Speaker 5 (20:40):
Yeah.
Speaker 12 (20:41):
Other countries have a much simpler and quicker system where
often the tax authority will send you your information and
you just look at over the numbers and you say, oh,
that looks right, and then you sign off and send
it back. In our tax system, it's like everybody is
treated like almost like a business in and of themselves.
You're able to play a lot of games often that
(21:03):
you're able to pursue strategies and like there's a lot
of loopholes, and there's a lot of lobbyists who have
lobbied for those loopholes.
Speaker 2 (21:10):
Yeah, there's a lot of policy that gets enacted through
our tax system, like mortgage deductions, and like it's like
a way for the government to encourage you or discourage
you from.
Speaker 5 (21:20):
Doing things right from charity without having to pass a
lot right.
Speaker 12 (21:24):
Right healthcare expenses, and when you layer those things on
top of each other, it just gets really complicated. The
other thing is that TurboTax into it is owns TurboTax
and that's the market leader for online filing and HNR
block and the accountant, the accountants, they are also a
powerful lobby And there have been proposals and there has
(21:46):
been free filing through the federal government. There was a
pilot program under the Biden administration. And a lot of
those efforts to simplify things filing and automate filing for
Americans have been.
Speaker 2 (21:58):
Quashed and big tax in quashed it, Yes, exactly, quash
the postcard dream.
Speaker 5 (22:03):
Yeah.
Speaker 3 (22:03):
Then can I ask, is there an argument for why
our system is preferable.
Speaker 4 (22:09):
To the systems used in other countries.
Speaker 3 (22:12):
Like what do the tax preparers who lobby against these
changes say, like, beyond the fact that they don't want
this industry to go away, that's going to cost jobs
and could lead to economic dislocation. Is there some kind
of argument for our strategy where everyone is like a
little tax optimizing and it has the ability to employ
(22:32):
these complicated strategies and higher accountants and do sophisticated stuff
that in another country like only a business would do.
Speaker 12 (22:39):
Yeah, there is an argument for that. And the argument
is that people benefit from a more adversarial relationship basically
with the irs, Like why are The argument is like
we should not trust the irs to do our taxes
for us.
Speaker 5 (22:53):
Like don't tread on me taxes? Yeah, exactly.
Speaker 12 (22:55):
What if you have the IRS filling out the form
for you, maybe it's not maximizing your deductions, maybe it
doesn't know certain things about you.
Speaker 5 (23:04):
It almost certainly doesn't that.
Speaker 12 (23:06):
Ultimately, this is your responsibility and you have the ability
to maximize.
Speaker 5 (23:10):
You know, this is the American dream.
Speaker 4 (23:11):
This is the American dream.
Speaker 2 (23:13):
Everybody gets to spend weeks on their taxes.
Speaker 5 (23:16):
Honestly, I sort of, I mean I see.
Speaker 3 (23:19):
It right, Like the a situation where the government is
in control of all the data and is basically telling
people here's what you owe with very little information, very
little transparency. You could imagine a situation, especially where you
don't have a lot of trust in your leaders, where
that is I can't believe to say this a slippery
slope to something that's that feels more authoritarian. So I
(23:42):
am going to choose to believe when I'm in this
complicated process that basically takes a full weekend of digging
through receipts and stuff, that I am exercising my freedom.
Speaker 2 (23:54):
That elevated cortisol is just that the feeling of freedom
running coursing through your.
Speaker 3 (24:00):
But Ben, what has changed, like what has gotten more
complicated with the passage of the big beautiful bill.
Speaker 12 (24:07):
Trump on the campaign trail came up with these really
almost brilliant slogans no tax on tips, no tax on overtime,
no tax on seniors, no tax on auto own interest.
They were just campaign slogans like literally Trump dreaming up
no tax on tips while he was in Las Vegas,
and he supped to a server and so those things
(24:28):
were actually actualized in the tax code and along with
an extension of all the other changes that had happened
in twenty seventeen that actually made taxes more complicated for businesses.
They were basically tax cuts for businesses, but they did
make things a little bit more complicated.
Speaker 5 (24:43):
Plus the salt cap.
Speaker 12 (24:45):
They expanded the salt cap from ten thousand to forty
thousands so that people can deduct their local and state tax.
Speaker 2 (24:51):
If you paid ten thousand dollars to New York State,
then you can deduct that fully from your federal yeah it.
Speaker 12 (24:57):
Was you can deduct up to forty thousand. But every
single one of these things comes with all this fine
print because if they didn't want to give them make
these unlimited, they didn't want everyone to start getting paid
in tips or overtime through some method, and there's income limits,
and of course it doesn't apply to your payroll taxes.
(25:18):
You end up with relatively narrow groups of people that
are benefiting from these things, including the forty thousand dollars
cell caps. So a lot of people are getting to
the end of this tax season, I think, and they're realizing, Oh,
I don't qualify for the forty thousand dollars cell cap
because I made too much money last year, I forgot
but I cashed in those stock options, or my business
(25:40):
did really did better than I thought, and so I'm
making a little bit too much, or I work too
much overtime and now I can't take the overtime deduction.
I think that what we have now is sort of
a very complicated system for accountants and for regular peoples
sometimes where they're having to rerun the analysis a couple
of times, and there's a lot of real.
Speaker 2 (26:00):
One of the things that's come up again and again
is basically, you know, there's like the tax the rich
signs and a lot of allegations post big beautiful bill
that it just gave tax cuts to the rich. Who
pays taxes in the US? Like when you look into
the numbers, who is paying most of the taxes.
Speaker 12 (26:20):
One of the ways that people talk about this is
who think that taxes should be lower on rich people.
Speaker 5 (26:26):
They say, rich people are already paying so much money
in taxes.
Speaker 12 (26:29):
Yeah, and that is true if you're first of all,
if you're talking about federal income taxes, but there are
also payroll taxes that are also a huge amount of money,
trillions of dollars. They're just coming into the Treasury as well,
and working salaried hourly workers, they pay a huge share
of that, and rich people really don't pay that much
in that into that pool at all. The other thing
(26:52):
is that if you're a rich person, it really depends on.
Speaker 5 (26:55):
How you earn your money.
Speaker 12 (26:56):
So, uh, if you are a CEO and you or
you're a hedge fund trader, or your professional athlete or
you're an entertainer, you're paying you could be been paying
like almost fifty percent of your income and taxes. And
when we talk about the high tax rates in New
York City, you have state and local as well, and
(27:17):
that's how you get to almost fifty percent. If you're
in California, in New York, one of the high tax states,
you can paying a lot. But if you are a
business owner under the twenty seventeen law and now permanently
in the code, you have the ability to deduct almost
about twenty percent of your taxes comes off just by
being a business owner in certain industries, most industries. And
(27:39):
then if you are an investor, you're paying a much
lower rate.
Speaker 5 (27:45):
I guess it's ina like if your money is in stocks.
Speaker 12 (27:48):
Yeah, stocks, qualified dividends, carried interest, if you're a private
equity person, you're paying a much lower rate.
Speaker 5 (27:54):
So those folks are paying much.
Speaker 12 (27:56):
Lower taxes, often lower taxes than they're secretaries or the
janitor in the office or whatever.
Speaker 5 (28:03):
Like percentage wise or actually effective.
Speaker 12 (28:05):
Tax rate can be lower than somebody who's a working
class or middle class person in some cases, if you're
including payroll taxes as well.
Speaker 3 (28:13):
Ben, I gotta admit something, and Stacy, you're gonna laugh
at me. I, as listeners of this podcast know, I
am a certified AI skeptic. I am not a big
user of the large language models and the chatbots. Although
as I was gathering my information to send my account,
I had a thought which was like I should I
(28:35):
should do claude or whatever I should, I should put
this into grock And we're doing that. They are, and
Ben wrote a story about it, and I just wanted
to hear quickly the case against doing this, because I
think that's where you wound up in order.
Speaker 5 (28:48):
Is there a case against it. I am not a
skeptic of AI.
Speaker 12 (28:54):
I talked to a ton of accountants, and I talked
to a couple of CEOs of AI. Tax companies like
companies that are offering AI tax service to accountants, and
my colleague Charlie Wells, who worked with me on it,
he talked to a bunch of people who've been using
AI to do their taxes, and what we learned is
(29:14):
that it just makes a lot of mistakes, like a
lot the large language models are still messing up numbers,
first of all, but then also it seems to have
some problems with time. Often will be applying like twenty
twenty three rules to twenty twenty six and it doesn't
understand the difference. And I talked to a researcher at
(29:34):
a university about this and he was like, there's just
some like the large language models, a probability based system
just has a real problem with a hierarchical based system
like taxes, where there is usually one right answer, you
have to go down the subclauses and the exceptions. And
also it really interfaces with the real world in ways
(29:55):
that are messy and complicated and very particular to you,
and the model doesn't know those details about you necessarily
the way that your accountant may know or may just
be able to into it. So AI is definitely being
helpful for folks. It's like a good tax research tool.
(30:15):
It's good if you don't understand what the salt deduction
even is, it can explain it to you. And another
thing that people have been using it for is preparing
their personal information to shift over to the accountant. If
you want to go through your expenses and find out
which ones were the deductible ones, it might be helpful
for that. But to actually file your taxes, it's we're
(30:37):
nowhere you're being able to do that yet with AI.
Speaker 5 (30:40):
But people are doing it. They're trying this tax season.
Who are the winners? Who are the losers?
Speaker 12 (30:49):
So the winners are somebody who is making pretty good
money in a tip job or an overtime job, but
not too much. Seniors who aren't making too much, aren't
over a certain income limit, are also going to be
able to take a little bit more of a deduction.
They're going to notice their refund goes up. Who are
(31:10):
else are the winners? Business owners corporations got to keep
a lot of their wins in the last law, which
were really significant. The losers are salaried workers basically just
didn't get anything. To be honest, they got some lower
rates that they kept some lower rates in twenty seventeen,
but they also lost those deductions, and then the salt
(31:33):
cap will benefit like the extra salt cap will benefit
some affluent people a lot. But if you're too affluent,
if you make too much money, more than six hundred
thousand dollars, you basically don't get nothing.
Speaker 3 (31:45):
Ben Severman, thanks for being here, my pleasure. Thanks for
having me, Stacy, it's underrated story time. I've got a
funny one for you. You are you familiar with the
term token maxing?
Speaker 5 (32:05):
I am not, okay, So token.
Speaker 3 (32:07):
Maxing this is all the rage among tech companies. Token
maxing is when you try to use as much AI
as possible on your job, and is that the token.
These are tokens. They cost money each token. Each time
you use a token, you are paying money. And there's
been some reporting, first in the New York Times and
(32:29):
then a couple of weeks ago and then the information
about these tech companies that they're so enthusiastic about AI.
They've created leader boards to rank how many tokens employees
are using, and it's it's potentially like millions of dollars
a month per employee, and they're celebrating this. They're like,
good job you have spent millions of dollars on like
(32:50):
AI things.
Speaker 2 (32:52):
So like, if you're at a company then and you
use AI to like draft your emails, then the company
gives you a token.
Speaker 5 (33:00):
It's like Chuck Cheese, but with AAR.
Speaker 3 (33:02):
The company pays money to Nthropic or open ai for
that email, and then at the end of the month
is like which person spent the most money at open
ai or Anthropic and like gives them a gold start.
Speaker 5 (33:16):
They're actually Facebook has these.
Speaker 2 (33:17):
Well I know who would be leading the leaderboard on
the Everybody's business.
Speaker 4 (33:21):
Yeah, Stacey has been token vaccine more than me.
Speaker 3 (33:24):
But the thing that's crazy is that these this is
as if a company. This is like a company's celebrating
who logs the most first class airline miles in a
given month. You have people spending huge sums of money,
like I said, millions of dollars a month for like
a single employee at Facebook.
Speaker 4 (33:43):
And not only are they like where I come from.
Speaker 3 (33:46):
If you do this, maybe your boss is like, hey,
do you really need to file a huge expense report?
But know that at some of these Silicon valleyes that companies,
they are so excited about AI. It's the other way,
They're like, great work, keep vibe coding, don't stop, keep
spending that money. I will say, after this information story
came out, Meta, the parent company of Facebook, took down
(34:06):
their token leader board, not because they said it was
a bad idea, but because they said it had been
leaking and I think it was a little bit embarrassing.
Dell Stacy, what is your underrated story?
Speaker 2 (34:15):
I'm so glad you asked. Now, I did ask you
to bring something into the studio. I'm going to ask
you to take it out now.
Speaker 5 (34:19):
I have my own bag of Dorito's.
Speaker 2 (34:23):
Okay, mine, this is my new economic indicator of choice.
Speaker 3 (34:29):
I've got a pack of cool Ranch Dorito's. I think
it's like a snack size. I don't know what you've
got there.
Speaker 5 (34:35):
Yeah, I also have a snack size. I have the Classic.
Speaker 2 (34:39):
But let me explain why I think Dorito's are the
economic indicator.
Speaker 5 (34:43):
For me of this week.
Speaker 2 (34:44):
Pepsi Co, which is the company that owns Dorito's, it
missed its revenue target by a billion dollars for the
second year in a row, and the reason it said
it is missing these targets is because of Dorito's. It
specifically talked about raising its It raised its price of
Doritos by about fifty percent since the beginning of the
(35:04):
pandemic to seven dollars. Not quite this small, but like
the larger snack size like I've been selling for seven dollars.
Speaker 3 (35:12):
Like this is like a normal size bag of Dorito's
you buy at the grocery store costs seven dollars. That's
got to be what it is, okay, which seems like
a lot of money for Doritos.
Speaker 5 (35:20):
It seems like a lot of money for Doritos, and
consumers stopped buying it.
Speaker 2 (35:24):
So I was turned onto the story because of a
great article by our colleague Christina Peterson about how the
seven dollars Doritos are taking down PepsiCo. But what I
think is so interesting about this is, ever since like
the middle of the pandemic, when we started to see
inflation rise, consumers have basically been just paying the higher
and higher prices that we've seen coming. Because if you're
(35:46):
a person, you're going to the store, you don't know,
You're like, I guess this is supply chain issues. I
guess this is inflation. I guess this is tariffs. Whatever
it is, we have been paying the higher prices. So
companies have been nudging up their prices, sometimes because they
had to because the cross were going up, sometimes because
they thought they could. And there was just this sort
(36:06):
of wonder that economists kept talking about, like, oh, people
will just pay it, Like the prices go up and
people keep buying, people keep buying more and more. Well,
it seems like we've hit that ceiling, which with the Doritos,
suddenly people are like, you know what, I'm not paying
seven dollars for a bag of Doritos. And I think
that's starting to happen across the economy.
Speaker 3 (36:26):
This is called demand destruction, right, Stacey, that's the economic term.
Speaker 5 (36:29):
Did we talk about this with oil?
Speaker 3 (36:31):
I mean there's a point this could very well happen
with gas prices too, right, If they goes above a
certain level, people stop using whatever this good is.
Speaker 4 (36:40):
And I guess we found the point with Doritos.
Speaker 2 (36:43):
Although seven dollars, I don't know, you're not at your
demand destruction.
Speaker 5 (36:47):
Your is not destroyed.
Speaker 3 (36:49):
It might still be worth it.
Speaker 5 (36:53):
It's very cheesy and delicious. I don't know if it's
seven dollars.
Speaker 2 (36:56):
Worth of cheesy and delicious. Seven dollars is a lot,
but This show is produced by Jasmine JT. Green and
Stacy Wong. Magnus Hendrickson is our supervising producer, Sam Roge,
Chandel's Engineering, and Dave forself factchecks. Special thanks to Jeff Muscus,
(37:17):
Julia Rubin, Maria Ling, and Angel Recu. If you have
a minute, please rate and review the show.
Speaker 5 (37:22):
It really means a lot to us.
Speaker 2 (37:23):
And if you have a story that should be our business,
email us at Everybody's at Bloomberg dot net.
Speaker 5 (37:28):
That is, Everybody's with an S at Bloomberg dot net.
Speaker 2 (37:31):
Thank you for listening, See you next week.
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