Is it Time to Fully Embrace Cap and Trade?

Image Source: Climate and Ecosystems Change Adaption

Guest Writer: Teresa Leatherow

Environmental impacts, particularly carbon emissions, have long since been a concern of both government and business. Recent mentioning of possible implementation of a United States cap-and- trade program may be the answer to years of debate on this topic. Economic rationale for a carbon price is stronger than it ever has been for the United States, as one of the country’s most significant global rivals, China, will be imposing a carbon-pricing plan next year (Carbon Tax Center). In addition to maintaining a global competitive advantage, big market players and investors are starting to favor carbon pricing to achieve clarity on carbon emissions. Since there currently is not a single policy in place for carbon emissions, companies are at great risk of making dangerous investments.

The Wall Street Journal’s “Journal Report”, Innovations in Energy, said “companies thrive on transparency and predictability, and they fear that the current state of carbon regulations is too convoluted, making planning difficult and exposing them to risk.” The concept of transparency throughout all company operations has become a very important criterion for business, and many companies see a price on the emission of carbon as a way to resolve this uncertainty. Further, putting a price on carbon would help to reflect the true impact of carbon emissions on the world, which would nudge companies to make more economically efficient decisions regarding their use of fossil fuels.

According to the Environmental Defense Fund, “cap and trade is the most environmentally and economically sensible approach to controlling greenhouse gas emissions, the primary driver of global warming” (Environmental Defense Fund). A carbon price can be achieved best through cap-and-trade, which is a government mandated, market-based approach to controlling emissions. This is done while also providing economic incentives for achieving targeted reductions. The “cap” sets a limit on emissions, which is lowered over time to reduce the amount of pollutants released into the atmosphere; the “trade” creates a market for carbon allowances. These allowances “force” companies to innovate in order to meet or come under their allocated limit, ultimately driving compliance.

What has always been dubbed as “business as usual” has finally caught up with industry and the time to consider the negative environmental impacts that business operations are responsible for is now (Helm, 2015). Embracing a cap-and-trade policy would be instrumental in quantifying the risks associated with emissions more precisely, which would ultimately benefit business, government, and by extension- all of society.


“Home.” Carbon Tax Center. N.p., n.d. Web. 05 Dec. 2016. “How Cap and Trade Works.” Environmental

Defense Fund. N.p., n.d. Web. 6 Nov. 2016.

Helm, Dieter. Natural Capital: Valuing Our Planet. New Haven: Yale UP, 2015. Print.

Jaffe. “The Coming Price on Carbon.” Wall Street Journal 14 Sept. 2016, Journal Report sec.: R1-R2. Print.

Secret Refund for Pitt Students: $52 in 10 Minutes

pitt-sealAs tax time rolls around yet again, most of us either file our own taxes online or hand everything over to our parents and let them deal with the headache. Regardless, there is usually some sort of stress tied to tax season. I’m here to tell you that it’s not as bad as you think and you can actually make some extra cash by using a few secret tricks that I’ve learned over the years. In this article I am only going to focus on Local Services Tax (LST) and how you can get up to $104 back by taking 10 minutes to fill out a form!

Local Service Tax is one of the many perplexing payroll taxes that you might find on your paystub from work. The local tax authority that services your area takes $1 from your pay every week in order to pay for “Administrative Fees”. Your employer already withholds your local tax that you owe, but the local authorities also make $1 per week for every individual working within their jurisdiction, which adds up to a lot. I don’t think they’ll mind if you take your $52 back.

You are eligible for a refund if you made less than $12,000 or if you worked more than 1 job at a time during 2015. If you did both of these things, then you’re getting an extra bonus refund back! I’m going to assume that most college students qualify for one of these requirements if they held a job in 2015. To figure out how much money you will get back under the “$12,000 exemption”, just add up all the weeks that you worked and that’s how many dollars you will get back. For the “multiple jobs” exception, add up all of the weeks that you worked more than one job at a time and that’s the amount you will get back. You worked hard for you money, or at least showed up to work, but who’s counting anyways. Showing up is the most important part, right? So take back what is yours by following the instructions on how to fill out the refund form.
w-2First, get all of your W-2’s together and tear one copy off. Next, get your last pay stub from you job. If you are paid by direct deposit, go online and print off your last pay statement. Then, go to this link if you work near Pitt’s campus: If you live outside of the city of Pittsburgh, email me and I will send you a different link. Now I know Pitt students are the brightest and most definitely the coolest, so I have faith that you can complete this form, but feel free to send me an email if you want me to double check your work. Expect your refund in a few months, so you’ll want to put you home address on the form if you will move back home for the summer. Last, mail the form to the address given at the bottom. Congratulations! You will now have extra money to spend on pizza, coffee, or a charitable contribution at Hem’s! Optimistically, you could get your refund before finals week, which would definitely lift your spirits in a time where you could need it most. So don’t procrastinate!

My goal is to help my fellow Pitt students, so please share this article with your friends and then you can all go out to dinner on the expense of your beloved local tax authority. Be on the lookout for more college tax tips that will show you how to get more money back!


Arron Groomes

Investors, Square, and “Ratchet” IPOs

Jason Taylor

“Ratchet” may not be a familiar term in business, but it has a dramatic effect on the common stock sold by a company after issuance. A Ratchet IPO “allows an investor to have his or her percentage ownership remain the same as the initial investment” (Full Ratchet).

As such, whenever a company releases their ratchet IPO, complications arise due to the full public release of company shares for purchase. Just think about it; your company is selling set company shares for others to own and investors want to ensure they keep their percentage of ownership.

In most recent news according to the Wall Street Journal, Square, a US mobile-payment company, paid a $93 million penalty to some of its investors in its IPO. The investor funding round of $150 million came with a “ratchet” term which meant that “the investors were guaranteed additional shares if the IPO price didn’t reach a certain level” (Scott). Square’s public offerings were priced well below the promised threshold to investors. Instead of the expected price of $11-$13, the price was priced below at $9 per share.

These investors have financial interests in the ownership of Square because they are shareholders of the company with their ratchet IPOs. The WSJ article addresses the effect of the ratchet IPOs on these investors.

By definition, shareholders have financial interests in the firm, as they are owners of the shares. As such, they do not have the full rights of Square’s ownership, but they are directly affected by the financial decisions of the corporations. This includes the effects of the IPO price because they participated in a $150 million funding round called a “ratchet.” In simple terms, “investors were guaranteed additional shares if the IPO price didn’t reach a certain level” because they take part in the financials of the company (Scott).

Therefore, the board and managers of Square must manage the effects of the “ratchet” investment. It is their obligatory job because the “ratchet” IPOs are in the interest of the firm as a whole. As a result, Square was responsible in making sure the investors got a proper return on their investments. In the end, Square only paid 10.3 million shares to investors, who initially wanted a 20% return on their investment. There was a huge difference in Square’s IPO priced at $9 compared to the IPO price in the ratchet, at $18.56.

President George W. Bush signs off on Sarbanes-Oakley Act

In turn, there has to be new governmental regulations for the price of IPOs instead of only the decisions made by Square management. In addition to Sarbanes-Oxley Act 2002 provisions, there has to be more rules for the corporation so that there are no delays or severe compromises in the release of IPOs from other companies. These governmental regulations need to be continually improved and updated to avoid corporate financial issues. As a result, there will be set standards on the initial price of IPOs and how this affects investors of the corporation. If applied, this will result in a more uniform and financially correct release of IPO.

In turn, “the IPO ‘ratchet’ could become problematic in coming years if those companies can’t price their shares sufficiently high in public markets” (Scott). As per WSJ, Square has a 32% lower valuation of $4.1 billion compared to last year’s valuation of $6 billion. Altogether, IPO “ratchet” is a major problem because it results in the undervaluing of companies, including Square.


Austin, Scott, and Rolfe Winkler. “Square Pays $93 Million Penalty to Some Investors in IPO. Wall Street Journal, 18 Nov. 2015. Web. 20 Nov. 2015.

“Full Ratchet Definition | Investopedia.” Investopedia. Investopedia, LLC, 23 Nov. 2003. Web. 24 Nov. 2015.