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    Companies Push Prices Higher, Protecting Profits but Adding to Inflation

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    Corporate profits have been bolstered by higher prices even as some of the costs of doing business have fallen in recent months.The prices of oil, transportation, food ingredients and other raw materials have fallen in recent months as the shocks stemming from the pandemic and the war in Ukraine have faded. Yet many big businesses have continued raising prices at a rapid clip.Some of the world’s biggest companies have said they do not plan to change course and will continue increasing prices or keep them at elevated levels for the foreseeable future.That strategy has cushioned corporate profits. And it could keep inflation robust, contributing to the very pressures used to justify surging prices.As a result, some economists warn, policymakers at the Federal Reserve may feel compelled to keep raising interest rates, or at least not lower them, increasing the likelihood and severity of an economic downturn.“Companies are not just maintaining margins, not just passing on cost increases, they have used it as a cover to expand margins,” Albert Edwards, a global strategist at Société Générale, said, referring to profit margins, a measure of how much businesses earn from every dollar of sales.PepsiCo, the snacks and beverage maker, has become a prime example of how large corporations have countered increased costs, and then some.Hugh Johnston, the company’s chief financial officer, said in February that PepsiCo had raised its prices by enough to buffer further cost pressures in 2023. At the end of April, the company reported that it had raised the average price across its products by 16 percent in the first three months of the year. That added to a similar size price increase in the fourth quarter of 2022 and increased its profit margin.“I don’t think our margins are going to deteriorate at all,” Mr. Johnston said in a recent interview with Bloomberg TV. “In fact, what we’ve said for the year is we’ll be at least even with 2022, and may in fact increase margins during the course of the year.”The bags of Doritos, cartons of Tropicana orange juice and bottles of Gatorade drinks sold by PepsiCo are now substantially pricier. Customers have grumbled, but they have largely kept buying. Shareholders have cheered. PepsiCo declined to comment.PepsiCo is not alone in continuing to raise prices. Other companies that sell consumer goods have also done well.The average company in the S&P 500 stock index increased its net profit margin from the end of last year, according to FactSet, a data and research firm, countering the expectations of Wall Street analysts that profit margins would decline slightly. And while margins are below their peak in 2021, analysts are forecasting that they will keep expanding in the second half of the year.For much of the past two years, most companies “had a perfectly good excuse to go ahead and raise prices,” said Samuel Rines, an economist and the managing director of Corbu, a research firm that serves hedge funds and other investors. “Everybody knew that the war in Ukraine was inflationary, that grain prices were going up, blah, blah, blah. And they just took advantage of that.”But those go-to rationales for elevating prices, he added, are now receding.The Producer Price Index, which measures the prices businesses pay for goods and services before they are sold to consumers, reached a high of 11.7 percent last spring. That rate has plunged to 2.3 percent for the 12 months through April.The Consumer Price Index, which tracks the prices of household expenditures on everything from eggs to rent, has also been falling, but at a much slower rate. In April, it dropped to 4.93 percent, from a high of 9.06 percent in June 2022. The price of carbonated drinks rose nearly 12 percent in April, over the previous 12 months.“Inflation is going to stay much higher than it needs to be, because companies are being greedy,” Mr. Edwards of Société Générale said.But analysts who distrust that explanation said there were other reasons consumer prices remained high. Since inflation spiked in the spring of 2021, some economists have made the case that as households emerged from the pandemic, demand for goods and services — whether garage doors or cruise trips — was left unsated because of lockdowns and constrained supply chains, driving prices higher.David Beckworth, a senior research fellow at the right-leaning Mercatus Center at George Mason University and a former economist for the Treasury Department, said he was skeptical that the rapid pace of price increases was “profit-led.”Corporations had some degree of cover for raising prices as consumers were peppered with news about imbalances in the economy. Yet Mr. Beckworth and others contend that those higher prices wouldn’t have been possible if people weren’t willing or able to spend more. In this analysis, stimulus payments from the government, investment gains, pay raises and the refinancing of mortgages at very low interest rates play a larger role in higher prices than corporate profit seeking.“It seems to me that many telling the profit story forget that households have to actually spend money for the story to hold,” Mr. Beckworth said. “And once you look at the huge surge in spending, it becomes inescapable to me where the causality lies.”Mr. Edwards acknowledged that government stimulus measures during the pandemic had an effect. In his eyes, this aid meant that average consumers weren’t “beaten up enough” financially to resist higher prices that might otherwise make them flinch. And, he added, this dynamic has also put the weight of inflation on poorer households “while richer ones won’t feel it as much.”The top 20 percent of households by income typically account for about 40 percent of total consumer spending. Overall spending on recreational experiences and luxuries appears to have peaked, according to credit card data from large banks, but remains robust enough for firms to keep charging more. Major cruise lines, including Royal Caribbean, have continued lifting prices as demand for cruises has increased going into the summer.Many people who are not at the top of the income bracket have had to trade down to cheaper products. As a result, several companies that cater to a broad customer base have fared better than expected, as well.McDonald’s reported that its sales increased by an average of 12.6 percent per store for the three months through March, compared with the same period last year. About 4.2 percent of that growth has come from increased traffic and 8.4 percent from higher menu prices.The company attributed the recent menu price increases to higher expenses for labor, transportation and meat. Several consumer groups have responded by pointing out that recent upticks in the cost of transportation and labor have eased.A representative for the company said in an email that the company’s strong results were not just a result of price increases but also “strong consumer demand for McDonald’s around the world.”Other corporations have found that fewer sales at higher prices have still helped them earn bigger profits: a dynamic that Mr. Rines of Corbu has coined “price over volume.”Colgate-Palmolive, which in addition to commanding a roughly 40 percent share of the global toothpaste market, also sells kitchen soap and other goods, had a standout first quarter. Its operating profit for the year through March rose 6 percent from the same period a year earlier — the result of a 12 percent increase in prices even as volume declined by 2 percent.The recent bonanza for corporate profits, however, may soon start to fizzle.Research from Glenmede Investment Management indicates there are signs that more consumers are cutting back on pricier purchases. The financial services firm estimates that households in the bottom fourth by income will exhaust whatever is collectively left of their pandemic-era savings sometime this summer.Some companies are beginning to find resistance from more price-sensitive customers. Dollar Tree reported rising sales but falling margins, as lower-income customers who tend to shop there searched for deals. Shares in the company plunged on Thursday as it cut back its profit expectations for the rest of the year. Even PepsiCo and McDonald’s have recently taken hits to their share prices as traders fear that they may not be able to keep increasing their profits.For now, though, investors appear to be relieved that corporations did as well as they did in the first quarter, which has helped keep stock prices from falling broadly.Before large companies began reporting how they did in the first three months of the year, the consensus among analysts was that earnings at companies in the S&P 500 would fall roughly 7 percent compared with the same period in 2022. Instead, according to data from FactSet, earnings are expected to have fallen around 2 percent once all the results are in.Savita Subramanian, the head of U.S. equity and quantitative strategy at Bank of America, wrote in a note that the latest quarterly reports “once again showed corporate America’s ability to preserve margins.” Her team raised overall earnings growth expectations for the rest of the year, and 2024. More

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    What Layoffs? Many Employers Are Eager to Hang On to Workers.

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    During the height of the pandemic, hungry and housebound customers clamored for Home Run Inn Pizza’s frozen thin-crust pies. The company did everything to oblige.It kept its machines chugging during lunch breaks and brought on temporary workers to ensure it could produce pizzas at the suddenly breakneck pace.More recently, demand has eased, and Home Run Inn Pizza, based in suburban Chicago, has reversed some of those measures. But it does not plan to lay off any full-time manufacturing employees — even if that means having a few more workers than it needs during its second shift.“We have really good people,” said Nick Perrino, the chief operating officer and a great-grandson of the company’s founder. “And we don’t want to let any of our team members go.”Despite a year of aggressive interest rate increases by the Federal Reserve aimed at taming inflation, and signs that the red-hot labor market is cooling off, most companies have not taken the step of cutting jobs. Outside of some high-profile companies mostly in the tech sector, such as Google’s parent Alphabet, Meta and Microsoft, layoffs in the economy as a whole remain remarkably, even historically, rare.There were fewer layoffs in December than in any month during the two decades before the pandemic, government data show. Filings for unemployment insurance have barely increased. And the unemployment rate, at 3.4 percent, is the lowest since 1969.Layoffs Are Uncommonly Low More

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    F.T.C. Chair Lina Khan Upends Antitrust Standards by Suing Meta

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    Lina Khan may set off a shift in how Washington regulates competition by filing cases in tech areas before they mature. She faces an uphill climb.WASHINGTON — Early in her tenure as chair of the Federal Trade Commission, Lina Khan declared that she would rein in the power of the largest technology companies in a dramatically new way.“We’re trying to be forward looking, anticipating problems and taking fast action,’’ Ms. Khan said in an interview last month. She promised to focus on “next-generation technologies,” and not just on areas where tech behemoths were already well established.This week, Ms. Khan took her first step toward stopping the tech monopolies of the future when she sued to block a small acquisition by Meta, the company formerly known as Facebook, of the virtual-reality fitness start-up Within. The deal was significant for Meta’s development of the so-called metaverse, which is a nascent technology and far from mainstream.In doing so, Ms. Khan upended decades of antitrust standards, potentially setting off a wholesale shift in the way Washington enforces competition across corporate America. At the heart of the F.T.C.’s lawsuit is the idea that regulators can apply antitrust law without waiting for a market to mature to the point where it is clear which companies hold the most power. The F.T.C. said such early action was justified because Meta’s deal would probably eliminate competition in the young virtual-reality market.Since the late 1970s, most federal challenges to mergers have been in large, well-established markets and aim to prevent already clear monopolies. Regulators have mostly rubber-stamped the purchases of start-ups by tech giants, such as Google’s 2006 deal to buy YouTube and Facebook’s 2012 acquisition of Instagram, because those markets were still emerging.As a result, Ms. Khan faces an uphill climb. Regulators have been reluctant to try to stop corporate mergers by relying on the theory that competition and consumers will be harmed in the future. The federal government lost at least two cases that used this strategy in the past decade, including an attempt to block a $1.9 billion merger in 2015 among X-ray sterilization providers that the F.T.C. had predicted would harm future competition in regional markets.The F.T.C.’s lawsuit against Meta in the budding virtual-reality market is a “deliberately experimental case that seeks to extend the boundaries of merger enforcement,” said William Kovacic, a former chair of the agency. “Such cases are certainly harder to win.”The F.T.C.’s action immediately caused a ruckus within antitrust circles and across the tech industry. Silicon Valley tech executives said that moving to block a deal in an embryonic area of technology might stifle innovation and spook technologists from taking bold leaps in new areas.“Regulators predicting future markets is a very, very dangerous precedent and position,” said Aaron Levie, the chief executive of the cloud storage company Box. He warned that venture capitalists and entrepreneurs would become wary of going into new markets if regulators cut off the ability of companies like Meta to buy start-ups.Adam Kovacevich, the president of the trade group Chamber of Progress, which represents Meta, Amazon and Alphabet, also said the lawsuit would have a chilling effect on innovation.Read More on Facebook and MetaA New Name: In 2021, Mark Zuckerberg announced that Facebook would change its name to Meta, as part of a wider strategy shift toward the so-called metaverse that aims at introducing people to shared virtual worlds.Morphing Into Meta: Mr. Zuckerberg is setting a relentless pace as he leads the company into the next phase. But the pivot  is causing internal disruption and uncertainty.Zuckerberg’s No. 2: In June, Sheryl Sandberg, the company’s chief financing officer announced she would step down from Meta, depriving Mr. Zuckerberg of his top deputy.Tough Times Ahead: After years of financial strength, the company is now grappling with upheaval in the global economy, a blow to its advertising business and a Federal Trade Commission lawsuit.“This is such an extreme and unfounded reaction to a small deal that many tech industry leaders are already worrying about what an F.T.C. win would mean for start-ups,” he said.For Ms. Khan, winning the lawsuit may be less of a priority than showing it’s possible to file against a tech deal while it is still early. She has said regulators were too cautious in the past about intervening in mergers for fear of harming innovation, allowing a wave of deals between tech giants and start-ups that eventually cemented their dominance.“What we can see is that inaction after inaction after inaction can have severe costs,” she said in an interview with The New York Times and CNBC in January. “And that’s what we’re really trying to reverse.”Ms. Khan declined requests for an interview for this article, and the F.T.C. declined to comment on Thursday.Mark Zuckerberg, Meta’s chief executive, testifying on Capitol Hill in 2019. He has bet the company on the metaverse, a technology frontier.Pete Marovich for The New York TimesMeta said the F.T.C. was applying antitrust law incorrectly. The lawsuit focuses on how the merger with Within would remove competition, but Meta said the agency was ignoring the large number of companies that also had health and fitness apps.“The F.T.C. has no answer to the most basic question — how could Meta’s acquisition of a single fitness app in a dynamic space with many existing and future players possibly harm competition?” Nikhil Shanbhag, Meta’s vice president and associate general counsel, wrote in a blog post.The company added that it hadn’t decided on whether to challenge the lawsuit, which was filed on Wednesday in U.S. District Court for the Northern District of California.The F.T.C. accused Meta of building a virtual reality “empire,” beginning in 2014 with its purchase of Oculus, the maker of the Quest virtual-reality headset. Since then, Meta has acquired around 10 virtual-reality app makers, such as the maker of a Viking combat game, Asgard’s Wrath, and several first-person shooter and sports games.By buying Within and its Supernatural virtual-reality fitness app, the F.T.C. said, Meta wouldn’t create its own app to compete and would scare potential rivals from trying to create alternative apps. That would hobble competition and consumers, the agency said.“This acquisition poses a reasonable probability of eliminating both present and future competition,” according to the lawsuit. “And Meta would be one step closer to its ultimate goal of owning the entire ‘Metaverse.’”Rebecca Haw Allensworth, a professor of antitrust law at Vanderbilt University, said the F.T.C.’s arguments would face tough scrutiny because Meta and Within did not compete with each other and because the virtual-reality market was fledgling.“The way that merger analysis has stood for at least 40 years is about what kind of head-to-head competition does this merger take out of the picture,” she said.The onus will now be on the agency to convince a judge that its predictions about the metaverse and Meta’s purchase would harm competition.“The burden is on the F.T.C. to show, among other things, reasonable probability that Meta would have entered the V.R.-dedicated fitness apps market, absent its acquisition of Within,” said Diana Moss, president of the American Antitrust Institute.If the court dismisses the case, Ms. Khan may have created a precedent that would make it harder to pursue nascent competition cases, antitrust experts cautioned. That could then embolden tech giants to acquire their way into new lines of businesses.“This is a precedential system which goes both ways — if you win or lose — and sends a signal to the market,” Ms. Allensworth said.The F.T.C. is reviewing other tech deals, including Microsoft’s $70 billion acquisition of the gaming company Activision and Amazon’s $3.9 billion merger with One Medical, a national chain of primary care clinics. In addition, the agency has been investigating Amazon on claims of monopoly abuses in its marketplace of third-party sellers.Ms. Khan appears to be prepared for long legal battles with the tech giants even if the cases do not end up going the F.T.C.’s way.In her earlier interview with The Times and CNBC, she said, “Even if it’s not a slam-dunk case, even if there is a risk you might lose, there can be enormous benefits from taking that risk.” More

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    How Joe Manchin Left a Global Tax Deal in Limbo

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    Treasury Secretary Janet L. Yellen’s signature achievement is in jeopardy if the United States cannot ratify the tax agreement that she brokered.WASHINGTON — In June, months after reluctantly signing on to a global tax agreement brokered by the United States, Ireland’s finance minister met privately with Treasury Secretary Janet L. Yellen, seeking reassurances that the Biden administration would hold up its end of the deal.Ms. Yellen assured the minister, Paschal Donohoe, that the administration would be able to secure enough votes in Congress to ensure that the United States was in compliance with the pact, which was aimed at cracking down on companies evading taxes by shifting jobs and profits around the world.It turns out that Ms. Yellen was overly optimistic. Late last week, Senator Joe Manchin III, Democrat of West Virginia, effectively scuttled the Biden administration’s tax agenda in Congress — at least for now — by saying he could not immediately support a climate, energy and tax package he had spent months negotiating with the Democratic leadership. He expressed deep misgivings about the international tax deal, which he had previously indicated he could support, saying it would put American companies at a disadvantage.“I said we’re not going to go down that path overseas right now because the rest of the countries won’t follow, and we’ll put all of our international companies in jeopardy, which harms the American economy,” Mr. Manchin told a West Virginia radio station on Friday. “So we took that off the table.”Mr. Manchin’s reversal, couched in the language used by Republican opponents of the deal, is a blow to Ms. Yellen, who spent months getting more than 130 countries on board. It is also a defeat for President Biden and Democratic leaders in the Senate, who pushed hard to raise tax rates on many multinational corporations in hopes of leading the world in an effort to stop companies from shifting jobs and income to minimize their tax bills.The agreement would have ushered in the most sweeping changes to global taxation in decades, including raising taxes on many large corporations and changing how technology companies are taxed. The two-pronged approach would entail countries enacting a 15 percent minimum tax so that companies pay a rate of at least that much on their global profits no matter where they set up shop. It would also allow governments to tax the world’s largest and most profitable companies based on where their goods and services were sold, not where their headquarters were.Failure to get agreement at home creates a mess both for the Biden administration and for multinational corporations. Many other countries are likely to press ahead to ratify the deal, but some may now be emboldened to hold out, fracturing the coalition and potentially opening the door for some countries to continue marketing themselves as corporate tax havens.For now, the situation will allow for the continued aggressive use of global tax avoidance strategies by companies like the pharmaceutical giant AbbVie. A Senate Finance Committee report this month found that the company made three-quarters of its sales to American customers in 2020, yet reported only 1 percent of its income in the United States for tax purposes — a move that allowed it to slash its effective tax rate to about half of the 21 percent American corporate income tax rate.Not changing international tax laws could also sow new uncertainty for large tech companies, like Google and Amazon, and other businesses that earn money from consumers in countries where they do not have many employees or physical offices. Part of the global agreement was meant to give those companies more certainty on which countries could tax them, and how much they would have to pay.America’s refusal to take part would be a significant setback for Ms. Yellen, whose role in getting the deal done was viewed as her signature diplomatic achievement. For months last year, she lobbied nations around the world, from Ireland to India, on the merits of the tax agreement, only to see her own political party decline to heed her calls to get on board.Treasury Secretary Janet L. Yellen and Finance Minister Paschal Donohoe of Ireland met in Washington last month.Andrew Harnik/Associated PressAfter Mr. Manchin’s comments, the Treasury Department said it was not giving up on the agreement.“The United States remains committed to finalizing a global minimum tax,” Michael Kikukawa, a Treasury spokesman, said in a statement. “It’s too important for our economic strength and competitiveness to not finalize this agreement, and we’ll continue to look at every avenue possible to get it done.”Jared Bernstein, a member of Mr. Biden’s Council of Economic Advisers, told reporters at the White House on Monday that Mr. Biden “remains fully committed” to participating in a global tax agreement.Understand What Happened to Biden’s Domestic AgendaCard 1 of 6‘Build Back Better.’ More

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    Democrats Blast Corporate Profits as Inflation Surges

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    Politicians are placing more blame on greedy companies as prices stay high. But booming consumer demand is enabling firms to charge more.Inflation remains rapid as the economy enters 2022, and Democrats have begun pointing to a new culprit for the high and lasting price increases: Greedy corporations.Senator Sherrod Brown of Ohio, Senator Elizabeth Warren of Massachusetts, and the White House spokeswoman, Jen Psaki, have been among those pointing to excessive profits in certain industries as one thing jacking up costs for consumers. They don’t blame overall inflation on price-gouging businesses — but the implication is that higher prices are partly the product of corporate opportunism.The explanation for inflation is the latest in a string Democrats have offered since price gains shot up to uncomfortably high levels last year. It is partly grounded in economic reality, partly in political necessity: Rising prices are burdening and unsettling consumers, making them a liability for a party with a tenuous hold on Congressional control headed into 2022 midterm elections.Prices are increasing at the fastest pace since 1982, and while inflation is broadly expected to fade in the year ahead, the speed and extent of that moderation is uncertain. Even if price gains slow down, they could remain a headache for the Biden administration if they continue to rise more rapidly than was normal before the pandemic — which is what economists increasingly expect. They had hovered around or below 2 percent for years, but Federal Reserve officials think they will reach an average of 2.6 percent by the end of this year.The administration has limited power over prices: It is making tweaks around the edges to help to tamp them down, but keeping a lid on inflation is mostly the job of the Fed, which has signaled it expects to begin raising interest rates this year to help control it.Still, as consumers feel the pinch of higher prices for food, gas and household goods, it’s creating a political messaging problem for Democrats. Lawmakers and the White House had initially argued that fast inflation was a sign that airfares and hotel rates were bouncing back and would fade quickly, but supply chain snarls and booming consumer demand for goods kept them elevated throughout 2021. More recently, price pressures have begun to broaden to service categories, like rent, in which increases tend to be long-lasting — and as wages climb swiftly, it raises the possibility that companies will keep lifting prices to cover their costs.As inflation proves stubbornly sticky, administration officials and prominent lawmakers have refined their message to focus more blame on corporations, especially those in concentrated industries with a handful of powerful firms, like meat processing or gas.Many companies — from car dealerships to beauty stores and beef sellers — are raking in bigger profits as they successfully raise their prices or discount less while still managing to sell as much or more. But economists have pointed out that in many cases, blaming big firms for worsening inflation is overly simplistic. Industries have been relatively concentrated for years, but businesses now have the wherewithal to charge more because consumers are spending strongly. That owes partly to government stimulus checks and other benefits that have put more money in shoppers’ pockets.“It’s what you would fully expect when demand goes up,” said Jason Furman, a Harvard economist and a former chairman of the White House Council of Economic Advisers during the Obama administration.The laws of supply and demand have not stopped many on the political left from calling companies out.What to Know About Inflation in the U.S.Inflation, Explained: What is inflation, why is it up and whom does it hurt? We answered some common questions.The Fed’s Pivot: Jerome Powell’s abrupt change of course moved the central bank into inflation-fighting mode.Fastest Inflation in Decades: The Consumer Price Index rose 6.8 percent in November from a year earlier, its sharpest increase since 1982.Why Washington Is Worried: Policymakers are acknowledging that price increases have been proving more persistent than expected.The Psychology of Inflation: Americans are flush with cash and jobs, but they also think the economy is awful.“Profits at the biggest U.S. companies shot above $3 trillion this year, and the margins keep growing,” Mr. Brown, chairman of the Senate Banking Committee, said during a recent hearing. “Mega corporations would rather pass higher costs on to consumers than cut into their profits.”Ms. Warren has pointed to robust corporate profits as a sign that companies are partly to blame for rising costs.“Corporations are exploiting the pandemic to gouge consumers with higher prices on everyday essentials, from milk to gasoline,” she posted on Twitter on Nov. 26. “American families shouldn’t be bankrolling corporate America’s record-high profits.”And White House economic advisers have pointed to what they have called price gouging behavior in a few specific, concentrated industries. Mr. Biden has publicly encouraged an examination of oil company pricing, and the administration has announced measures to try to combat price fixing in meat processing, pointing out that four large companies control 85 percent of the beef market.“When too few companies control such a large portion of the market, our food supply chains are susceptible to shocks,” the administration said in a Jan. 3 release, repeating an argument administration officials have increasingly highlighted. “Mega corporations would rather pass higher costs on to consumers than cut into their profits,” Senator Sherrod Brown has said.Tom Brenner for The New York Times“I would say there are some areas where we have seen corporations benefit, profit from the pandemic,” Ms. Psaki said at a news conference in December.It is the case that big company profits are surging across many industries, a sign that companies are either selling more goods and services or are managing to eke more profit out of each unit that they are selling thanks to higher prices or better productivity. Based on corporate earnings calls and a spate of data, it’s likely a combination of those factors.Using data reported by Standard & Poor’s, the market analyst Edward Yardeni estimates that 2021 was a year of robust profit margins — the amount companies earn after subtracting their costs. After contracting sharply early in the pandemic, margins jumped to a record-high 13.7 percent in the second quarter before ticking down to 13.6 percent in the third.He thinks that owes partly to efficiency improvements, and partly to the fact that some firms have raised prices by more than their costs have climbed, something that they had previously struggled to do without losing customers.“It kind of became culturally acceptable to raise prices,” Mr. Yardeni said. “Consumers could understand that many corporations are under pressure to pass on their costs.”Inflation F.A.Q.Card 1 of 6What is inflation? More

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    How $2 Trillion in Tax Increases in Biden's Bill Target Companies and the Rich

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    The proposal to fund the president’s sprawling spending plan mostly turns up the dial on more conventional tax policies, while trying to curb maneuvers that allow tax avoidance.WASHINGTON — President Biden’s new plan to pay for his climate change and social policy package includes nearly $2 trillion in tax increases on corporations and the rich. But many of the more contentious and untested proposals that Democrats have been considering in recent weeks were left on the cutting-room floor.The latest proposal reflects the reality that moderate Democrats are unwilling to back certain ideas aimed at raising money, including taxing the unrealized capital gains of billionaires and giving the Internal Revenue Service more insight into the finances of taxpayers. Ultimately, the package of tax increases mostly turns up the dial on more conventional tax policies, while adding some new wrinkles to curb maneuvers that allow tax avoidance.“I think in terms of who they’re targeting, they did decide to target the larger population of very rich people and not just get the money from a very small group of superrich people,” said Howard Gleckman, a senior fellow at the Urban-Brookings Tax Policy Center.Here’s a look at what’s in the new tax plan:Taxing the rich.Instead of a wealth tax or a special tax on billionaires, Mr. Biden rolled out a new “surtax” on income for multimillionaires and billionaires. It would effectively raise the top tax rate on ordinary income to 45 percent for the highest earners.Those with adjusted gross income of more than $10 million would face an additional 5 percent tax on top of the 37 percent marginal tax rate they already pay. Those making more than $25 million would face an extra 3 percent surtax.The Biden administration estimates that these tax increases would hit the top .02 percent of taxpayers and raise $230 billion of tax revenue over a decade.The plan also aims to ensure that people making more than $400,000 are not able to use loopholes to avoid paying a 3.8 percent Medicare tax. The White House estimates that provision alone will generate $250 billion in tax revenue over the next 10 years.Making corporations pay more.Borrowing a page from his campaign playbook, Mr. Biden wants to impose a 15 percent minimum tax on profitable companies that have little to no federal tax liability. Many profitable companies are able to reduce or eliminate their tax liability through the use of tax credits, deductions and previous losses that can carry over. The new tax would apply to companies with more than $1 billion in so-called book income — profits that firms report to their shareholders but not to the I.R.S.The plan is meant to ensure that the approximately 200 companies that pay no corporate income tax will have to pay some money to the federal government.The White House estimates the provision, which was also included in a plan presented by Senate Democrats, will raise an additional $325 billion in tax revenue over a decade.Chye-Ching Huang, the executive director of the Tax Law Center at New York University, said on Thursday that the proposal could mean that financial statements where book income is reported could become the new “locus for tax avoidance.”A separate proposal would also enact a 1 percent surcharge on corporate stock buybacks. Buybacks have surged along with the stock market, with cash-rich firms like Apple, JPMorgan Chase and Exxon spending billions of dollars each year to buy back, then retire, shares in their own companies. That can help drive up the company’s stock price, enriching both shareholders and corporate executives whose compensation is often tied to their firm’s stock performance.The provision is projected to raise $125 billion over 10 years.Ending the tax race to the bottom.Mr. Biden’s framework would raise the tax that companies pay on foreign earnings to 15 percent, putting the United States in line with a global minimum tax that is being completed at the Group of 20 summit in Rome this week.The Biden administration initially wanted to double the current rate to 21 percent from 10.5 percent. In settling on 15 percent, the U.S. rate would match what was agreed to by the 136 countries participating in the global deal and could blunt criticism that American companies will face a competitive disadvantage.The global agreement is meant to end corporate tax havens and stop what Treasury Secretary Janet L. Yellen describes as the “race to the bottom” of declining corporate tax rates around the world.To deter companies from finding ways to avoid the tax, the plan would impose a penalty rate on foreign corporations based in countries that are not part of the agreement.The Biden administration projects the international plans would raise $350 billion over a decade.Narrowing the tax gap.White House and Treasury Department officials have spent months pushing a proposal to narrow the $7 trillion gap in taxes that are owed by individuals and businesses but not collected. The administration initially wanted to invest $80 billion in additional enforcement staffing at the I.R.S. and require banks to hand over more information about the finances of their customers.Under the new proposal, the I.R.S. would get more money to ramp up audits of people making more than $400,000. However, the new bank reporting proposal — which the Treasury has called critical to its ability to hunt down hidden revenue — was conspicuously absent. A lobbying campaign from banks prompted huge blowback from lawmakers, including Senator Joe Manchin III, a West Virginia Democrat whose vote is critical to passing the overall package.Treasury officials and a group of Senate Democrats are continuing to negotiate with Mr. Manchin on narrowing the proposal in a way that he could support.As it stands, the plan to bolster I.R.S. enforcement is projected to raise $400 billion over a decade, down from the $700 billion in the original proposal.Reducing the deficit, maybe.Mr. Biden said on Thursday that his plans were “fiscally responsible” and claimed that the proposals, if enacted, would reduce the country’s budget deficit.The $2 trillion of proposed tax increases would more than offset the $1.85 trillion in spending on housing, child care and climate initiatives. However, nonpartisan scorekeepers such as the Congressional Budget Office have in the past offered less rosy projections of what Biden administration proposals might actually raise in revenue.Additional I.R.S. enforcement personnel will take years to get up to speed, and audits could be less effective without the additional bank information the Treasury Department is seeking.Some Democratic lawmakers are also still fighting for the inclusion of provisions that could actually cost money, including a partial or temporary restoration of SALT, the state and local tax deduction that Republicans capped in 2017. Last-minute additions such as that could add to the cost of the overall package. More

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    As Western Oil Giants Cut Production, State-Owned Companies Step Up

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    In the Middle East, Africa and Latin America, government-owned energy companies are increasing oil and natural gas production as U.S. and European companies pare supply because of climate concerns.HOUSTON — After years of pumping more oil and gas, Western energy giants like BP, Royal Dutch Shell, Exxon Mobil and Chevron are slowing down production as they switch to renewable energy or cut costs after being bruised by the pandemic.But that doesn’t mean the world will have less oil. That’s because state-owned oil companies in the Middle East, North Africa and Latin America are taking advantage of the cutbacks by investor-owned oil companies by cranking up their production.This massive shift could reverse a decade-long trend of rising domestic oil and gas production that turned the United States into a net exporter of oil, gasoline, natural gas and other petroleum products, and make America more dependent on the Organization of the Petroleum Exporting Countries, authoritarian leaders and politically unstable countries.The push by governments to increase oil and gas production means it could take decades for global fossil fuel supplies to decline unless there is a sharp drop in demand for such fuels. President Biden has effectively accepted the idea that the United States will rely more on foreign oil, at least for the next few years. His administration has been calling on OPEC and its allies to boost production to help bring down rising oil and gasoline prices, even as it seeks to limit the growth of oil and gas production on federal lands and waters.The administration’s approach is a function of two conflicting priorities: Mr. Biden wants to get the world to move away from fossil fuels while protecting Americans from a spike in energy prices. In the short run, it is hard to achieve both goals because most people cannot easily replace internal-combustion engine cars, gas furnaces and other fossil fuel-based products with versions that run on electricity generated from wind turbines, solar panels and other renewable sources of energy.Western oil companies are also under pressure from investors and environmental activists who are demanding a rapid transition to clean energy. Some U.S. producers have said they are reluctant to invest more because they fear oil prices will fall again or because banks and investors are less willing to finance their operations. As a result, some are selling off parts of their fossil fuel empires or are simply spending less on new oil and gas fields.That has created a big opportunity for state-owned oil companies that are not under as much pressure to reduce emissions, though some are also investing in renewable energy. In fact, their political masters often want these oil companies to increase production to help pay down debt, finance government programs and create jobs.Saudi Aramco, the world’s leading oil producer, has announced that it plans to increase oil production capacity by at least a million barrels a day, to 13 million, by the 2030s. Aramco increased its exploration and production investments by $8 billion this year, to $35 billion.“We are capitalizing on the opportunity,” Aramco’s chief executive, Amin H. Nasser, recently told financial analysts. “Of course we are trying to benefit from the lack of investments by major players in the market.”Aramco not only has vast reserves but it can also produce oil much more cheaply than Western companies because its crude is relatively easy to pump out of the ground. So even if demand declines because of a rapid shift to electric cars and trucks, Aramco will most likely be able to pump oil for years or decades longer than many Western energy companies.“The state companies are going their own way,” said René Ortiz, a former OPEC secretary general and a former energy minister in Ecuador. “They don’t care about the political pressure worldwide to control emissions.”State-owned oil companies in Kuwait, the United Arab Emirates, Iraq, Libya, Argentina, Colombia and Brazil are also planning to increase production. Should oil and natural gas prices stay high or rise further, energy experts say, more oil-producing nations will be tempted to crank up supply.The global oil market share of the 23 nations that belong to OPEC Plus, a group dominated by state oil companies in OPEC and allied countries like Russia and Mexico, will grow to 75 percent from 55 percent in 2040, according to Michael C. Lynch, president of Strategic Energy and Economic Research in Amherst, Mass., who is an occasional adviser to OPEC.If that forecast comes to pass, the United States and Europe could become more vulnerable to the political turmoil in those countries and to the whims of their rulers. Some European leaders and analysts have long argued that President Vladimir V. Putin of Russia uses his country’s vast natural gas reserves as a cudgel — a complaint that has been voiced again recently as European gas prices have surged to record highs.A pump jack in Stanton, Texas. American companies have been cautiously holding back exploration and production.Brandon Thibodeaux for The New York TimesOther oil and gas producers like Iraq, Libya and Nigeria are unstable, and their production can rise or fall rapidly depending on who is in power and who is trying to seize power.“By adopting a strategy of producing less oil, Western oil companies will be turning control of supply over to national oil companies in countries that could be less reliable trading partners and have weaker environmental regulations,” Mr. Lynch said.An overreliance on foreign oil can be problematic because it can limit the options American policymakers have when energy prices spike, forcing presidents to effectively beg OPEC to produce more oil. And it gives oil-producing countries greater leverage over the United States.“Today when U.S. shale companies are not going to respond to higher prices with investment for financial reasons, we are depending on OPEC, whether it is willing to release spare production or not,” said David Goldwyn, a senior energy official in the State Department in the Obama administration. He compared the current moment to one in 2000 when the energy secretary, Bill Richardson, “went around the world asking OPEC countries to release spare capacity to relieve price pressure.”This time, state-owned energy companies are not merely looking to produce more oil in their home countries. Many are expanding overseas.In recent months, Qatar Energy invested in several African offshore fields while the Romanian national gas company bought an offshore production block from Exxon Mobil. As Western companies divest polluting reserves such as Canadian oil sands, energy experts say state companies can be expected to step in.“There is a lot of low-hanging fruit state companies can pick up,” said Raoul LeBlanc, an oil analyst at IHS Markit, a consulting and research firm. “It is a huge opportunity for them to become international players.”Kuwait announced last month that it planned to invest more than $6 billion in exploration over the next five years to increase production to four million barrels a day, from 2.4 million now.This month, the United Arab Emirates, a major OPEC member that produces four million barrels of oil a day, became the first Persian Gulf state to pledge to a net zero carbon emissions target by 2050. But just last year ADNOC, the U.A.E.’s national oil company, announced it was investing $122 billion in new oil and gas projects.Iraq, OPEC’s second-largest producer after Saudi Arabia, has invested heavily in recent years to boost oil output, aiming to raise production to eight million barrels a day by 2027, from five million now. The country is suffering from political turmoil, power shortages and inadequate ports, but the government has made several major deals with foreign oil companies to help the state-owned energy company develop new fields and improve production from old ones.Even in Libya, where warring factions have hamstrung the oil industry for years, production is rising. In recent months, it has been churning out 1.3 million barrels a day, a nine-year high. The government aims to increase that total to 2.5 million within six years.National oil companies in Brazil, Colombia and Argentina are also working to produce more oil and gas to raise revenue for their governments before demand for oil falls as richer countries cut fossil fuel use.After years of frustrating disappointments, production in the Vaca Muerta, or Dead Cow, oil and gas field in Argentina has jumped this year. The field had never supplied more than 120,000 barrels of oil in a day but is now expected to end the year at 200,000 a day, according to Rystad Energy, a research and consulting firm. The government, which is considered a climate leader in Latin America, has proposed legislation that would encourage even more production.“Argentina is concerned about climate change, but they don’t see it primarily as their responsibility,” said Lisa Viscidi, an energy expert at the Inter-American Dialogue, a Washington research organization. Describing the Argentine view, she added, “The rest of the world globally needs to reduce oil production, but that doesn’t mean that we in particular need to change our behavior.” More

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    ‘Black Capitalism’ Promised a Better City for Everyone. What Happened?

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    ROCHESTER, N.Y. — The Panther Graphics printing plant sits along a row of red brick buildings and empty parking lots on the edge of a circular highway that separates this city’s downtown from a largely Black neighborhood to the north. Nearby, there is a warehouse, a Baptist Church and a billboard that warns “A Shot from A Gun Can’t Be Undone,” a reference to Rochester’s soaring murder rate.Tony Jackson, the owner of Panther Graphics, grew up here, the oldest of six children. His mother died when he was 13 and his father served time in Attica, the nearby state prison. But Mr. Jackson said he always had “ink in his blood” — a helpful trait in a city dominated by the giant film and copying companies Kodak and Xerox — and he found his calling in commercial printing.Mr. Jackson named his company, which produces labels for the grocery chain Wegmans and health care enrollment packets for Blue Cross Blue Shield, after the Black Panther Party. “It represents being Black and being strong,” he said.Today, in Mr. Jackson’s office, there is a photo of his son breaking a tackle as a running back on the Duke University football team and also a large painting of four men — Martin Luther King Jr., Malcolm X, Nelson Mandela and Barack Obama — gathered around a table, smiling.“I have always wanted people in this neighborhood to see what is possible,” he said.But Panther Graphics is the product of a complicated legacy. The company is one of the few sizable, Black-owned employers operating in Rochester, a city of 200,000 people, 40 percent of whom are Black.There was a time, though, when Rochester was on the cutting edge of Black “community capitalism” — an effort to create companies owned, staffed and managed largely by Black people that could lift up the broader community.Just as giant corporations have pledged billions to help combat racism and support Black Americans in the wake of George Floyd’s murder, corporate investments in Black businesses were seen as an antidote to racial unrest in the 1960s, a way to ease the tensions that threatened the reputations of burgeoning corporate hubs like Rochester.Some of those efforts in Rochester were quite bold and innovative at the time. Looking back now though, the long term challenges of achieving those ambitions shows the limits of social activists partnering with big business and how such efforts may not make a substantial dent in the systemic issues of poverty and racism affecting the broader Black community. It is a disheartening case study for the many companies that have made public commitments to promote equity and inclusion this year.Nearly 60 years ago, Xerox teamed up with a Black power group to create a factory that made vacuums and other parts for copying and film processing and was partly owned by its work force.For decades, Kodak and Xerox — both with large operations in Rochester — dominated the city’s business landscape.Recently, Rochester has dealt with a rising murder rate and municipal unrest.That company, which was eventually called Eltrex Industries, provided hundreds of manufacturing jobs to Black residents, including Mr. Jackson, who credits his experience there with providing the skills and connections he needed to start his own business.As part of an effort to promote more racial equity, Xerox also recruited Black engineers and technicians to Rochester, including Ursula Burns, who rose to become the first Black woman to lead a Fortune 500 company as chief executive officer.Eventually, Eltrex shut its doors in 2011. Its challenges were blamed on a mixture of racism and its reliance on winning contracts from Xerox and Kodak, which were fighting for their own survival in a digital age and whose ability to support the venture became more limited.Some community leaders say the company and its corporate sponsors veered from its mission by focusing on profit while shedding its Black activist identity.“With as many corporate entities as Rochester has, you wouldn’t think it would have such a large poor Black population,” said Dennis Bassett, a former executive at Kodak and Bausch + Lomb, who is Black and moved to Rochester in the 1970s.That contrast seems even more stark these days, after a particularly tumultuous time for the city, which is the nation’s third poorest, by one measure, after Detroit and Cleveland.Lovely Warren, the first woman and second African American to be the city’s mayor, was indicted in July on weapons charges after her 10-year-old child was left alone in her home where police found a pistol and rifle. Ms. Warren pleaded not guilty.The city was also roiled last year by the death of a Black man, Daniel Prude, who was handcuffed on a frigid street by Rochester police officers and had a mesh hood put over his head because they said he was having a psychotic episode. Video of the confrontation, which led to Mr. Prude’s death, came out months later, prompting protests in Rochester. In February, the police pepper-sprayed a nine-year-old Black girl at her home, setting off more protests that joined a larger national conversation about race and policing.The widespread protests throughout the country led corporate America to pledge billions of dollars in investments to Black-owned businesses and to ramp up hiring of African Americans.But following through may be a challenge, the way likeit was in Rochester.Tony Jackson owns Panther Graphics, one of the few sizable, Black-owned companies in Rochester.Malik Evans, who won the Democratic nomination for mayor, said the city needs to create more small- and medium-size businesses.Despite decades of investments, Eltrex failed to grow to its fullest potential and spawn a large number of other community-owned companies as many had hoped it would.“This could have been the nation’s first billion dollar Black-owned business and the start of many others,” Mr. Jackson said of Eltrex. “But it failed to adapt.”‘We wanted a factory’When the head of Xerox Joseph Wilson drove up to the headquarters of the organization in 1964, the Rev. Franklin Florence remembers there was still smoke in the air from the protests erupting around Rochester over the lack of affordable housing for Black people.The F.I.G.H.T. organization was an umbrella group made up of Black churches, tenant associations and even book clubs that used their collective strength to organize protests around any issue affecting the membership.Many of Rochester’s corporate leaders were shaken by the protests, but it was Mr. Wilson who took the step in 1964 of reaching out to Mr. Florence, the head of F.I.G.H.T. — short for Freedom, Independence, God, Honor, Today — to ask how Xerox could help.“Joseph Wilson asked what we wanted,” Mr. Florence recalled in an interview. “We told him we wanted a factory.”Mr. Florence had gained national attention during the civil rights movement with his campaign against Eastman Kodak, the city’s largest and most influential company, which had employed relatively few Black residents.He was a polarizing figure in Rochester who led protests at Kodak’s annual shareholder meeting, an embarrassment to the founding Eastman family and a warning to other companies about the power of social activism to disrupt their businesses.Eltrex’s original factory building was torn down a decade ago after a vehicle smashed into the first floor and burst into flames.A photo of the Rev. Franklin Florence at Central Church of Christ. He gained national attention in the early days of the civil rights movement with his campaign against Eastman Kodak.Mr. Wilson of Xerox assigned one of his executives in Europe to set up the plant. The company that would run it would be called Fighton.Some of Fighton’s first products were vacuums and parts for electrical transformers. A portion of the company was owned by the employees and the rest by the F.I.G.H.T. organization which ran a neighborhood housing project called F.I.G.H.T. Village, near the factory. Xerox lent managers to help train the workers.Among the efforts to support Black business amid the unrest of the 1960s, Fighton represented something new.“They wanted to try capitalism, but they wanted it to happen in a socialist way,’’ said Laura Warren Hill, a history professor at Bloomfield College in New Jersey, and the author of “Strike the Hammer: The Black Freedom Struggle in Rochester, NY 1940-1970.” “They wanted it to have a human face and to help the underserved.”The role of the city’s big corporations in this initiative also stood out.“You have Xerox working with a Black power group,” Ms. Hill said, “to shape what Black capitalism is going to look like.”Matt Augustine, Eltrex’s longest serving chief executive, said his approach to hiring was to give employees first and often “second chances.”Changing leadership and a nameOutside of Rochester, though, Fighton was not always so well received. The name seemed to be a big part of its problem.“The people we were trying to do business with would ask ‘What does this Fight mean? Fight who?’” recalled Matthew Augustine, the company’s longest serving chief executive.In 1976, Mr. Augustine was recruited to become C.E.O. by a friend from Harvard Business School who was on the board of Fighton.The F.I.G.H.T. organization had gone through an internal power struggle, with Mr. Florence eventually losing his leadership role. At the time, the factory was not profitable and in danger of shutting down, Mr. Augustine said.The Fighton board wanted Mr. Augustine, a native of Louisiana, to shift the business model to be “more personal profit orientated” and less focused on the community benefit, he said.Residents of F.I.G.H.T. Village, a housing project near where the old Eltrex factory stood.The board agreed to give Mr. Augustine ownership of most of the company and he eventually amassed an 80 percent stake.One of his first moves was changing the company’s name from Fighton, which was seen as too militant in the business community, to Eltrex Industries — a mashup of Electrical, Transformer and Xerox.In addition to manufacturing, the rebranded company started selling office supplies and offering snow removal and mail processing services. Under Mr. Augustine’s watch, Eltrex was meant to be a one-stop shop for companies seeking to fulfill their minority-owned business goals.Mr. Augustine said his approach to hiring was to give many employees first and often “second chances.” Some workers were still incarcerated and came to and from the factory from jail each day.Rochester had other Black-owned businesses but many tended to be restaurants, barbershops and other service-focused enterprises. At its height, Eltrex employed 350 people, mostly Black and Hispanic workers, in “prideful jobs” Mr. Augustine said. It generated $20 million in sales and was profitable.Kodak, which had been initially reluctant to get involved because of its contentious relationship with the F.I.G.H.T. organization, also agreed to do business with Eltrex, Mr. Augustine said.Despite it financial success, Mr. Florence’s son Clifford Florence said Eltrex was straying from its original mission.“They lost sight of the advocacy that they should be doing for the poor and began to look at the money,” he said.Mr. Jackson went to work at Eltrex in the late 1980s. He got the opportunity to supervise employees and to work in sales, where he made valuable connections. He looked enviously at Mr. Augustine’s office, his Mercedes and house in the suburbs. “That’s what inspired me to start my own business,” Mr. Jackson said.In 1993, Mr. Jackson left Eltrex to start Panther Graphics. One of his biggest accounts came from Xerox. In a few years, Mr. Jackson also had a house in the suburbs and a cabin on Lake Ontario with a pontoon boat.Several years ago, Mr. Jackson drove his Porsche to visit a friend in north Rochester and handed him cash to buy them beer. A few minutes later, the police surrounded Mr. Jackson and his sports car. An officer threatened to search him, suggesting that the cash was for a drug deal. The police eventually left, he said, but did not apologize for their mistake.“I am not going to cry about it because what good does that do?” Mr. Jackson said.‘I bit my tongue more than I wish’In her memoir published in June, Ms. Burns describes how the very top executives at Xerox and the longtime board member Vernon Jordan mentored her throughout her career. She praised Mr. Wilson, who is credited with founding Xerox, for taking an “enlightened” approach to diversity.Some community leaders say the Eltrex company and its corporate sponsors veered from their mission by focusing on profit and deliberately shedding its Black activist identity.“Why is it that we have none of these people working here?” Mr. Wilson said, according to Ms. Burns’s book. Mr. Wilson remarked that he could not run a “great company” where Black people and women he saw outside his window were “literally not here.”While Mr. Wilson and other executives set a supportive tone at the top, these efforts by Xerox and the city’s other large companies did not always change attitudes across the broader Rochester community, some local leaders say. Ms. Burns, who is retired from Xerox, declined to comment.Eltrex was regularly recognized with awards for the quality of its products. Yet, Mr. Augustine would hear rumblings from people in the local business community about the need to improve quality control at Eltrex.Eltrex was also paying a higher interest rate than other companies — something Mr. Augustine learned after he was appointed to the board of a local bank.“People ask, ‘Why weren’t you a billion dollar company?,” said Mr. Augustine. “But they don’t understand the environment we were operating in.”“When you hear about the folks burning down Black Wall Street. This stuff is real. There are people who are absolutely threatened by any kinds of success for Black people and they work to keep you from being successful.”Dennis Bassett spent 50 years in corporate America, including at Kodak and Bausch + Lomb. He wishes the companies would have done more to help the city.Dennis Bassett spent 18 years at Kodak and 17 at Bausch + Lomb. He remembers flying with a top Kodak’s executive on the corporate jet, talking about the need for more diversity. Kodak “did a good job putting people of color in executive positions,” Mr. Bassett said.But those hiring initiatives did not always reach down into the company’s middle management, where many key decisions were made, he said.And even as Xerox and Kodak “were printing money,” the city’s poorest Black residents continued to slide further into poverty, he said. Mr. Bassett faults himself for not pushing the companies to do more to help the city.“Back then, I was chasing the brass ring,” said Mr. Bassett, 73. “I was doing the things I needed to be successful for my career and my family.“I look back and say I bit my tongue more than I wish I had bit my tongue,” he added.In a statement, a Xerox spokesperson said the company has spent millions over many decades supporting science programs for Rochester students and organizing mentorships and other volunteer activities to “help close the poverty gap.”“Giving back to communities throughout the world, particularly underserved communities, is ingrained in our company’s values,” the spokesperson said.Kodak did not respond to requests for comment.Mr. Bassett faced some barriers in Rochester that seemed intractable.Mr. Bassett remembers that when he put his five-bedroom house in an upscale Rochester suburb on the market in the 1980s, the realtor recommended that he take down all the family pictures or any artwork that could indicate that a Black family lived there.“The realtor was matter-of-fact,” Mr. Bassett said. “And guess what? We complied. I just wanted to sell my house.”Clifford Florence, a minister at Central Church of Christ in Rochester, has been trying to get Plymouth Avenue, on which his church resides, named after his father, the Rev. Franklin Florence.A new mayorRochester will have a new mayor in January, most likely a City Council member named Malik Evans.Mr. Evans, who defeated Ms. Warren in the Democratic primary this summer, said the city needs to let go of its identity as a company town dominated by Kodak and Xerox, and become a “town of companies.”“We have older African American residents who had graduated from high school and were getting jobs at Bausch + Lomb and Kodak, and then buying property,” said Mr. Evan. “But then that fizzled.”Mr. Evans said the city should focus on creating more small- and medium-size businesses and that corporate commitments cannot fade as the protests against racism recede.“It can’t become just another flavor of the month,’’ he said. “We always look back a few years later and say, ‘Whatever happened to that.’”A statue of Frederick Douglass, who escaped slavery and became a prominent Black abolitionist. He lived in Rochester for 25 years and was buried there.A mural called “I Am Speaking” featuring John Lewis in downtown Rochester. It was painted by local artists and based on a photograph by the Civil Rights era photographer Danny Lyon.Mural painted by Ephraim Gebre, Darius Dennis, Jared Diaz and Dan HarringtonA forgotten legacyToday, there are no grand monuments to Franklin Florence or the company he helped create. Eltrex’s original factory building was damaged in 2010 after a vehicle smashed into the first floor and burst into flames. The vehicle’s occupants were killed in the crash and the building was demolished.“If you walk down the street in Rochester, not many people know who Franklin Florence is, and I think that is a crime,” said Ms. Hill, the historian. “Whether you love or hate him, he is an important figure.”Even today, there is debate about Eltrex’s legacy. Mr. Augustine, the former C.E.O., said he regretted that he was not able to grow the company’s customer base before Xerox and Kodak began to struggle. But he often found that other companies were not sincerely interested in engaging Black-owned businesses, but only looking like they were.Kodak filed for bankruptcy in 2012., while Xerox restructured its business which resulted in a series of large lay offs at its Rochester facilities. Mr. Augustine said some of Eltrex’s assets were sold and its employees transferred to Cannon Industries, a metal fabricator and one of the other large minority-owned businesses in Rochester.“Could we have done more? Yes,” said Mr. Augustine. “But I am proud of what we accomplished.”Mr. Jackson said Eltrex failed to adapt to life beyond Kodak and Xerox and its problems should not be blamed on racism. “I have to reinvent myself every five years or I die,” he said.For his part, Franklin Florence said he had hoped the original concept of Fighton could have been expanded. He urged the protesters who are pushing to end systemic racism today to keep up the pressure.“There were people back then who said we had to get out of the street and into the boardroom,’’ Mr. Florence said. “Our folk went into the boardrooms and we suffered. And that is where we are today.”Malik Evans, a City Council member, said Rochester needs to let go of its identity as a company town dominated by Kodak and Xerox, and become a “town of companies.” More