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Daniel Werfel, President Joe Biden’s nominee to lead the IRS, answered questions before the Senate Finance Committee this week.
Werfel fielded questions from both sides of the aisle about the agency’s funding, enforcement, transparency and other priorities.  

Senate Finance Committee Chairman Ron Wyden, D-Ore., questions IRS Commissioner Charles Rettig at a Senate Finance Committee hearing.
Tom Williams | Pool | Reuters

President Joe Biden’s nominee to lead the IRS answered questions during a Senate Finance Committee hearing this week, highlighting key issues from lawmakers on both sides of the aisle.
Daniel Werfel, a former budget official and private sector leader, fielded questions Wednesday about the agency’s funding, enforcement, transparency and other priorities.  

“I think there’s quite clearly a respect for Danny Werfel and recognition that he’s going to go through,” said Mark Everson, a former IRS commissioner and current vice chairman at Alliantgroup.

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While there’s still time for questions, Everson expects a full Senate vote and confirmation to come “in a matter of weeks.”
Here are some of the key takeaways from the hearing.

Scrutiny of $80 billion in IRS funding will continue

The nomination comes at a critical time for the beleaguered agency, which is getting $80 billion in funding over the next decade in August as part of the Inflation Reduction Act.  
After months of scrutiny, House Republicans voted to rescind the funding in January, which was largely seen as a political messaging bill without the votes to pass in the Senate or support from the White House.

If I am fortunate enough to be confirmed, the audit and compliance priorities will be focused on enhancing IRS’ capabilities to ensure that America’s highest earners comply with tax laws.

Daniel Werfel
IRS Commissioner nominee

“Just because [Werfel’s hearing] was smooth doesn’t mean there won’t be a fairly charged environment with the House in Republican hands and the election coming,” Everson said.
The agency is expected to deliver the $80 billion funding plan on Friday per Treasury Secretary Janet Yellen’s request.

Audit rate won’t rise for those making under $400,000

Following a directive from Yellen, Werfel vowed not to increase audit rates for small businesses and households making under $400,000, relative to recent years.
“If I am fortunate enough to be confirmed, the audit and compliance priorities will be focused on enhancing IRS’ capabilities to ensure that America’s highest earners comply with tax laws,” Werfel said in his opening statement.

Tax enforcement fairness is a key issue

Senate Finance Committee Chair Ron Wyden, D-Ore., kicked off the hearing by emphasizing the Inflation Reduction Act’s goal of providing resources to achieve fairness in tax enforcement, aiming to “go after tax cheating from the big guys.” 
Wealthy Americans have increasingly seen fewer audits after years of budget cuts. During fiscal 2022, millionaires faced a 1.1% chance of an IRS audit, according to a recent report from Syracuse University’s Transactional Records Access Clearinghouse. 
Meanwhile, the audit rate has declined more slowly for lower earners claiming the earned income tax credit, and Black Americans are roughly three to five times more likely to face an IRS audit than other taxpayers, according to a recent study. 

If poor people are more likely to be audited than the wealthy, Werfel said it “potentially degrades public trust and needs to be addressed within the tax system.”
Angelique Neal, a tax attorney at Dickinson Wright, said Werfel “seems committed” to addressing these audit disparities to ensure fairness and equitable treatment for all taxpayers.
Building trust is “one of the foundations of government,” especially for an agency tasked with collecting the vast majority of revenue, said Neal, who previously served as a senior trial attorney in the office of chief counsel to the IRS. More

Renault CEO Luca de Meo on Thursday questioned the wisdom of price cuts rivals have been implementing in a bid to bolster market share for their electric vehicle fleets.
“In the case of Renault, the last thing I’m going to do is to compromise on the margins, you know, of electric cars,” he told CNBC.
Earlier on Thursday, the company posted record cash flow of 2.1 billion euros and announced a dividend.

Renault CEO Luca de Meo on Thursday questioned the wisdom of price cuts rivals have been implementing in a bid to bolster market share for their electric vehicle fleets.
“We’ve seen competitors moving prices up and down, etc., etc. this is their decision. But I don’t think it’s a very healthy practice in the long term,” he told CNBC.

“As electric cars are ramping up in Europe, we need to have a healthy business, and so, in the case of Renault, the last thing I’m going to do is to compromise on the margins, you know, of electric cars.”
De Meo’s comments follow a string of aggressive price drops announced by automakers Tesla and Ford amid pressure to remain competitive in a burgeoning EV market.
Tesla threw down the gauntlet with its mid-January announcement of price reductions for U.S.-marketed models across the board and for its Model 3 and Model Y within Europe. Ford followed on Jan. 30 with price trims for its electric Mustang Mach-E crossover.
However, De Meo signaled that sales price volatility could erode consumer confidence in EV products.
“Our priority will be to defend the value for the customer,” he said. “Because those kinds of swings are kind of value destroying for the customer, think about residual value, etc.”

Renault’s long-term allies are joining the French automaker’s EV push, with Nissan earlier this month pledging to buy a stake of up to 15% in Renault’s electric unit Ampere as part of a broader overhaul of the companies’ 24-year union. Under the reshaped, previously lopsided alliance, Renault will reduce its shareholdings in Nissan from roughly 43% to 15%.
“My job is to make the Ampere case so interesting for them [Nissan and junior alliance partner Mitsubishi] that they will decide in their capital allocation meetings to put money there and not in an alternative project,” he told CNBC, adding that the investment was not a condition of the restructure.

Renault Scénic Vision concept car at Brussels Expo on January 13, 2023 in Brussels, Belgium. The Scénic Vision has an electric motor powered by a 40 kWh lithium-ion battery, that can be recharged by a 15 kW hydrogen fuel cell.
Sjoerd Van Der Wal | Getty Images News | Getty Images

Earlier on Thursday, Renault reported that its group operating margin doubled to 5.6% in 2022 from 2.8% a year prior, even as net income swung to a 700 million euro ($748 million) loss. It came after the company in May wrote off a 2.3 billion euro impairment linked to exiting its Russian positions.
Renault posted record cash flow of 2.1 billion euros last year, compared with its guidance of above 1.5 billion euros. Net income from continuing operations increased to 1.6 billion euros, from 549 million euros in 2021, while group revenues inched up to 46.4 billion euros in 2022, from 41.7 billion euros a year prior.
Renault shares were largely steady at 1 p.m. London time, down modestly in intraday trade at 42.96 euros.

Supply chain issues

De Meo said he sees ongoing longevity in the supply and logistical obstacles that have plagued automakers since the onset of the Covid-19 pandemic, especially linked to the yearslong global shortage of semiconductor chips.
“We think that, on the semiconductors, [it] is going to continue to be pretty much of a challenge for another couple of years, especially on the kind of semiconductors that we use in the automotive industry,” De Meo told CNBC, estimating that logistical and component hurdles led Renault to underproduce by 300,000 cars in 2022.
He forecast similar losses in 2023.
“So it’s going to stay there. But I think we are a little bit more prepared. We know how to find the parts and how to organize production to keep doing it. But we have to recognize that this is not going to be, again, a normal year,” De Meo added.
Despite this outlook and a “still challenging environment,” Renault targets a group operating margin at or above 6% in 2022, along with operational free cash flow at or above 2 billion euros.
It also put forward a dividend of 25 euro cents per share for fiscal 2022 — marking the company’s first payout proposal in four years, according to Reuters — due to be paid in May, if approved during the company’s annual general meeting in the same month.
Correction: De Meo forecast similar production losses in 2023. An earlier version misstated the year.

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Paramount Global said it added 9.9 million Paramount+ subscribers during the fourth quarter.
CEO Bob Bakish said to expect price increases for all of its Paramount+ plans in 2023.
The tough advertising market continued to weigh on earnings, as Paramount had warned, with fourth quarter revenue down 7%.

07 December 2022, Berlin: Pam Kaufman, President & CEO Paramount, joins us for the Paramount+ launch event. The Paramount+ streaming service is now available in Germany.
Jörg Carstensen | Picture Alliance | Getty Images

Paramount Global said it saw its streaming business grow during the fourth quarter, and announced plans to increase prices for Paramount+ this year.
Despite adding more streaming customers, Paramount reported its fourth-quarter revenue declined 7%, compared with last year, to roughly $5.9 billion as the weak advertising market weighed on the company.

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Paramount’s stock was down nearly 3% early Thursday.
The company previously warned of the soft advertising market, and on Thursday said ad revenue fell 5% as growth in political advertising was partially offset by the international market. Cord-cutting also played a role, with affiliate and subscription revenue dropping 4%.
Company executives on Thursday estimated the advertising market will bounce back in the second half of 2023.
Meanwhile, the company’s direct-to-consumer streaming business, which also includes free ad-supported streamer Pluto, saw an increase of 4%.
On a call with investors Thursday, Paramount management said 2023 will be its peak investment year for its marquee streaming service. Like its peers, Paramount has been focused on getting its streaming business to profitability in the near-future.

“Paramount+ remains an incredible value proposition for consumers,” CFO Naveen Chopra said Thursday.
The price increases will take effect when Paramount+ and Showtime combine later this year. CFO Naveen Chopra said Thursday the Paramount+ premium tier, which will include Showtime, will increase to $11.99 from $9.99, while its lower-priced tier, without Showtime content, will increase by $1 to $5.99.
The price increases and combination with Showtime will take place in the third quarter.
Paramount+ added 9.9 million subscribers during the fourth quarter, a record since the streamer was rebranded from CBS All Access in 2021. In total, Paramount+ reached nearly 56 million customers during the fourth quarter.
Pluto saw monthly active users grow by 6.5 million during the quarter, and global total viewing hours were up “strong double digits quarter-over-quarter.” Free streaming platforms like Pluto and Fox Corp’s Tubi have been bright spots for media companies.
The jump in Paramount+ subscribers was attributed to the airing of NFL Sunday games, which are simulcast with the company’s CBS broadcast network, as well as the addition of the box office winner “Top Gun: Maverick” in late December. Original programming that stemmed from the “Yellowstone” and “Criminal Minds” franchises also boosted subscriber growth.
CEO Bob Bakish on Thursday looked ahead to more franchise content debuting this year, particularly in theaters, such as the upcoming installments of “Scream,” “Transformers,” and “Mission: Impossible.”
Combining the Showtime and Paramount+ platforms will also help condense content spending, which has become a particular focus for media companies. Warner Bros. Discovery slashed content costs soon after its merger was completed.
Last week Disney said it would cut $5.5 billion in costs, including $3 billion on the content side. Disney’s returning CEO Bob Iger said on CNBC’s “Squawk on the Street” last week that he didn’t view general entertainment as a “differentiator,” particularly on pay-TV and streaming, and the company would lean on its franchise strength.
While Paramount has long talked about its reliance on franchises across both TV and film, Bakish said Thursday the company’s general entertainment assets — the company also owns a portfolio of cable-TV networks like Comedy Central and MTV — were part of its strengths.
“The general entertainment space may not make sense for everyone but it clearly makes sense for us when we look at our asset combination,” Bakish said, noting the company believed in its sports and general entertainment strategy when it first went to market with Paramount+.
Bakish said Thursday the company has long been doing what others in the media space are focusing on at the moment, such as a cheaper tier with commercials of Paramount+, the free ad-supported platform Pluto, and relying on its intellectual property.

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