Obama Wins 2012 Election: Why Your Taxes Are Going Up

When President Obama and the new Congress begin to tackle important legislation and federal policy in January, one of the key issues will be how to reform America's byzantine tax code.
Obama campaigned on a platform to raise taxes on the wealthiest Americans, declaring that millionaires and billionaires need to "pay their fair share." The president proposed the highly controversial "Buffett Rule," which would make sure those individuals earning more than $1 million a year would pay at least 30% of their income in federal taxes.
Related: Do the Rich Have a Moral Obligation to Pay Higher Taxes? Gov. Jerry Brown Says 'Yes'
The top individual tax rate is currently 35% but few U.S. households and individuals actually pay that much; various tax deductions and loopholes reduce one's tax burden.
According to the Obama campaign, the richest 400 taxpayers in 2008 (who each made more than $110 million that year) paid an average income tax rate of just 18%. In 2009 over 20,000 U.S. households with more than $1 million in income paid a federal tax rate of less than 15%.
Obama has vowed to raise the top income tax rate for individuals to 39.6% and let the Bush-era tax breaks end for the highest income earners. The majority of Americans — those who are lower to middle class — could also see a 2% tax increase if Congress allows the temporary payroll tax holiday to expire at the end of the year.
Related: Here's Why Your Taxes Are Going Up 2% Next Year: Just Explain It
Nearly half of voters support raising taxes on incomes over $250,000, according to Tuesday night's exit polls.
Len Burman, a professor of public affairs at Syracuse University and a co-founder of the bipartisan Tax Policy Center, believes higher tax rates play just a small role in resolving the nation's budget woes.
"In the long term [Obama] is going to need to raise taxes on more than just the rich," Burman says in an interview with The Daily Ticker. "The budget problem isn't going to be solved without broader-based tax increases, preferably done in the context of tax reform and also serious entitlement reform. We're not going to be able to solve this on the tax side alone."
Burman, who recently co-wrote the new book "Taxes in America: What Everyone Needs to Know," says tax rates do not need to be raised for any income group if Congress and the White House would agree on one simple change: raising the capital gains rate, i.e. the profits from the sale of an investment. Assets, such as stocks, art or real estate, that are held for at least a year are currently taxed at a special 15% rate; Obama wants to raise that to 20%.
"The problem with a low tax rate on capital gains is not that it allows Mitt Romney and Warren Buffett to pay very low taxes but that it creates this huge opportunity for tax sheltering," he notes. "There's a whole industry that's devoted to coming up with these schemes. [Raising capital gains rates] could make the tax system more progressive and allow for lower tax rates" and a reduction in the deficit Burman says.
Obama's tax proposal also targets the Alternative Minimum Tax, the Estate Tax and as well as many personal tax credits and itemized deductions. Obama would make permanent the 2007 AMT patch and index it for inflation. He would raise the estate tax to 45% from 35% on estates worth more than $3.5 million. He would lower the corporate tax rate to 28% from 35% and provide a refundable $3,000 credit per added employee for companies that expand their workforce. He would tax carried interest as ordinary income.
Related: Corporate Tax Loopholes=Corporate Socialism: Pulitzer Prize Winner David Cay Johnston
A divided Congress refused to compromise with Obama during his first term and could very well dismiss the president's tax reforms for the next four years. Republicans are loathe to raise taxes by even a penny and Obama has said he would veto any budget bills that did not include tax increases. Neither party wants to raise taxes in a weak economy. But the options available for reducing the deficit and generating new revenue are few and far between

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Senators Watch ‘Lincoln’ with Steven Spielberg and Daniel Day-Lewis

Grab the popcorn: Its movie night tonight in the Senate.

The Senate has taken an official recess from floor debate for a few hours to screen the movie “Lincoln” in the Capitol Visitors Center within the Capitol complex.

Appearing with director Steven Spielberg and actor Daniel Day-Lewis on Capitol Hill this evening, Senate Majority Leader Harry Reid, D-Nev., said that he hopes the message of the movie with resonate with senators and the American people.

“I hope everybody who shared his anti-political mood will go out there and see Lincoln. The movie portrays a nobility of politics in exactly the right way,” Reid said.

All senators and their spouses were invited to tonight’s special screening. Without mentioning the fight over the fiscal cliff going on within the halls of Congress as the clock clicks closer to a deadline, Reid said tonight’s screening is an opportunity for “bipartisanship,” among the members.

“For me, it’s what I work with every day but it’s good the American people have seen or will see what the great Abraham Lincoln did to get things done,” Reid said. “It’s remarkable.”

Spielberg said he was honored to show his movie in the Senate and to be able to see ‘”both sides sitting in the same room watching a president put the people out in front of the abyss.”

Because even senators need snacks, a special waiver was granted by the Senate Rules Committee to allow popcorn in for the screening.

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Videogames under fire, Hollywood lays low after school shooting

LOS ANGELES (Reuters) - The multi-billion-dollar videogame industry came under scrutiny on Wednesday after Hollywood canceled, postponed or played down a slew of movies and TV shows with violent content in the wake of last week's shooting at a Connecticut elementary school.

In Washington, Senator John Rockefeller called for a national study of the impact of violent videogames on children and a review of the rating system.

Although investigators in Newtown, Connecticut, have given no motive for Friday's shooting rampage, some U.S. media have reported that the 20-year-old gunman played popular videogame "Call of Duty" - in which players conduct simulated warfare missions - in the basement of his home.

The gunman, Adam Lanza, killed himself at the scene after gunning down 20 young children, six school employees and his mother.

Rockefeller said he had long been concerned about the impact of violent games and videos on children.

"Major corporations, including the video game industry, make billions on marketing and selling violent content to children. They have a responsibility to protect our children," Rockefeller said in a statement.

The Entertainment Software Association, which represents the $78 billion U.S. videogame industry, on Wednesday offered its "heartfelt prayers and condolences" to the Newtown families.

But it said in a statement that "the search for meaningful solutions must consider the broad range of actual factors that may have contributed to this tragedy.

"Any such study needs to include the years of extensive research that has shown no connection between entertainment and real-life violence," the association said.

NEW 'CALL OF DUTY,' 'HALO' GAMES RAKE IN BILLIONS

Activision Blizzard's latest title in its "Call of Duty" franchise - "Call of Duty: Black Ops II" - hit $1 billion in sales two weeks after its launch last month.

Other popular videogames include Microsoft's "Halo 4," in which players kill evil aliens. The game racked up $220 million in global sales on its launch day in November.

Mike Hickey, an analyst at National Alliance Capital Markets, said backlashes against videogames were not rare, but he was unaware of an instance of games being pulled off store shelves in the past.

When the Columbine school shooting happened in 1999, there was a similar outcry because the two perpetrators were students who played the shooter game "Doom," Hickey told Reuters.

Executives at Hollywood movie studios and TV networks have mostly laid low this week as Americans seek answers to the Newtown slaughter, and discuss how to prevent similar gun violence.

However, content seen as sensitive has been pulled from the airwaves, including an episode of the SyFy TV series "Haven" that contained violent scenes in a high school setting, and the premiere next week of a TLC show called "Best Funeral Ever."

Discovery Channel canceled a third season of its reality series "American Guns" about a family of gun makers. Some radio stations stopped playing pop star Ke$ha's bubbly new single "Die Young" to avoid any potential offense.

Glitzy red carpet premieres for violent upcoming new movies "Jack Reacher," starring Tom Cruise, and "Django Unchained" starring Jamie Foxx, were canceled out of respect for the Newtown victims, but both movies will open in theaters as planned in the next seven days.

INSENSITIVE TODAY, OK TOMORROW?

The Parents TV Council praised the response of the entertainment industry this week, but said it shouldn't be confined to the immediate aftermath of such tragedies.

"If a television network changes its programming because of content that could be insensitive today, why would that same content be appropriate at a later time?," council president Tim Winter said in a statement.

"If producers and performers rightly question whether their industry is complicit in creating a violent media culture that feeds real-life tragedies, why would there be a later time to produce and distribute more of it?," Winter added.

Most major Hollywood stars have remained silent about the potential influence of violent movies on U.S. society. But "Django Unchained" star Foxx was quoted as saying the movie industry should not shirk its responsibility.

"We cannot turn our back and say that violence in films or anything that we do doesn't have a sort of influence," Foxx was quoted as saying while promoting the film in New York.

Director Quentin Tarantino called the Newtown shootings "a horrible tragedy," but in an interview with CNN on Monday he declined to link screen violence with real life events.

"This has gone back all the way down to Shakespeare's days ... when there's violence in the street, the cry becomes 'blame the playmaker.' And you know, I actually think that's a very facile argument to pin on something that's a real life tragedy," Tarantino said.

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'Homeland' star Claire Danes gives birth to first child

LOS ANGELES (Reuters) - Emmy-winning actress Claire Danes has given birth to her first child, a boy, the publicist for the "Homeland" star said on Wednesday.

Cyrus Michael Christopher Dancy was born on Monday to Danes, 33, and her husband, British actor Hugh Dancy.

Danes' performance as CIA operative Carrie Matheson on Showtime's "Homeland" series scored her an Emmy win in September, while the psychological thriller won the TV industry's highest honor of best drama series.

Danes is nominated for her second Golden Globe award in the role at the Hollywood awards show in January. She also has won multiple awards for her past work on 2010 TV film "Temple Grandin," and as a 15-year-old on the 1990s coming-of-age television drama "My So-Called Life."

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'Lincoln' at the Capitol draws director and star

WASHINGTON (AP) — Today's lawmakers might be excused for thinking they've seen this movie: A recently re-elected president spars with a quarrelsome Congress over an issue that roils the nation.

The so-called fiscal cliff wasn't at the core of the film screened Wednesday in the Capitol for lawmakers. The movie "Lincoln" explores the political machinations involving President Abraham Lincoln and Congress in 1865 as they considered the 13th Amendment, which abolished slavery.

On hand before the evening screening at the U.S. Capitol Visitors Center were the movie's director, Steven Spielberg, and its star, Daniel Day-Lewis, who portrays Lincoln. Both also met privately with Senate Majority Leader Harry Reid.

Earlier Wednesday, reporters and congressional staff members filled a Senate corridor to get a view of Day-Lewis, considered a top contender for an Oscar.

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Book Talk: The sin of envy on a small Greek island

TOKYO (Reuters) - After a Greek bride is abandoned at the altar and her prospective bridegroom is found blinded from an acid attack, local villagers are baffled until Hermes Diaktoras, a portly man in white tennis shoes, arrives to help.

So begins "The Doctor of Thessaly," the third in a series of detective stories by British-born author Anne Zouroudi that feature Hermes, who even as he works to unravel the crime has more than a hint of mystery about himself.

Zouroudi, who married a Greek fisherman and lived for a while in the remote Greek islands, spoke with Reuters about the origins of her sleuth and the themes that underpin her series.

Q: What started the series?

A: "When I came back to England with my tail between my legs and a failed marriage and a small child in tow, I wrote the first book in the series, 'The Messenger of Athens' kind of to get the issues out for myself, to understand for myself what had gone wrong and why it hadn't been this idyll. I was expecting to live the rest of my life there. So I think 'The Messenger of Athens' is quite a bleak book, really, sort of explaining to myself and to the world what I found in a very isolated and very tiny Greek community.

"But the lead character in that book is obviously slightly worldly and I based him on my interest in Jungian archetypes, actually. The idea of this figure of justice had immense appeal to me and I think he really appealed to readers as well. So when the first book was published, Bloomsbury really liked that character and said, come on, we can do more with him.

"So because the first book was based around lust and love, and there were very blurred lines between lust and love, I thought, you know, lust is supposed to be a sin so we could go through the seven deadly sins. That's how the series was born."

Q: You said you were working through issues, why choose the detective story form?

A: "Because I wanted to write something that I would like to read, and I love to read crime ... When I travel, I like to read books that are about the place that I'm visiting, and yet I could find very few novels of any description based in Greece.

"It seemed to be a market where there was a bit of a dearth, actually. So I really wrote originally a book that I would like to read, and happily other readers seemed to like them too."

Q: You said Hermes was kind of a Jungian archetype - how else did you come up with him?

A: "The story of his appearance is actually quite an interesting one. In the Greek islands in winter, there isn't very much to do. One Sunday afternoon, my ex-husband and I took a walk to the local cemetery because where else are you going to go? When we got there, there was another couple there, and one of them was a man I didn't know. I hadn't seen him before, which once again is very unusual in small Greek islands in winter.

"He was a very elegant man. He was wearing a suit and a raincoat, and he had owlish glasses and a quite distinctive hairstyle, distinctive longish gray curls. He was standing on the cemetery wall and looking down onto the sea. He was such a striking character that when I came to think of a description of Hermes he immediately came to mind. But rather unglamorously, he turned to out to be the new manager of the bank of the island where I was living ... I should say, though, that the bank manager was not wearing the white tennis shoes, they were another quirky detail that came from childhood."

Q: So then he gradually developed?

A: "The fact is, through the books Hermes never changes because it's the nature of who he is and what he is, not to change. Readers can make of him what they will, but to me, he is an incarnation of the god Hermes. My theory on the gods is this: as we have slowly forgotten about them, the immortals have begun to age, very slowly. So over millennia Hermes has begun to age and become quite portly, he is going a bit gray. My theory is that if we started to remember the old gods -- and I think to an extent that's happening (and) the Greek myths are becoming quite voguish at the moment -- perhaps he might reverse and revert to his original golden youth and become young and dashingly handsome again."

Q: Are you doing books on all the seven deadly sins?

A: "Yes, I've just finished the seventh. It's out next June in the U.K. So we're at a bit of a crossroads with Hermes right now, where should we go next?"

Q: So you're not finished with him?

A: "No, I don't think so, because I have a quite big fan base here in the U.K and abroad. People are just loving the character. They love the idea of this character who just turns up from nowhere, fixes everything and then quietly melts away ... It's at the heart of all crime fiction, really, but I think because Hermes is not a policeman and it's based more on natural justice rather than legal justice, people find that really appealing. But now having done the seven deadly sins, where should he go next? I'm thinking the Ten Commandments, maybe. We're still thinking about it."

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Smoking in pregnancy tied to lower reading scores

NEW YORK (Reuters Health) - Babies exposed to their mother's cigarette smoke in the womb later perform more poorly on reading comprehension tests, according to a new study.

"It's not a little difference - it's a big difference in accuracy and comprehension at a critical time when children are being assessed, and are getting a sense of what it means to be successful," lead author Dr. Jeffrey Gruen of Yale University told Reuters Health.

In the study, researchers found that children born to mothers who smoked more than one pack per day struggled on tests specifically designed to measure how accurately a child reads aloud and if she understands what she read.

On average, children exposed to high levels of nicotine in utero -- defined as the minimum amount in one pack of cigarettes per day -- scored 21 percent lower in these areas than classmates born to non-smoking mothers. The difference remained even when researchers took other factors -- such as if parents read books to their children, worked in lower-paying jobs or were married -- into account.

Put another way, among students who share similar backgrounds and education, a child of a smoking mother will on average be ranked seven places lower in a class of 31 in reading accuracy and comprehension ability, said co-author Jan Frijters of Brock University in Ontario, Canada.

Previous studies have found smoking during pregnancy is linked to lower IQ scores and academic achievement, and more behavioral disorders. The authors found no reports so far that zeroed in on specific reading tasks like accuracy and comprehension in a large population.

The team, which published their results in The Journal of Pediatrics, pulled data from more than 5,000 children involved in the Avon Longitudinal Study of Parents and Children (ALSPC) study that began in the early 1990s in the UK. Only data from children with IQ scores of 76 and higher were used. An IQ score of 70 and below can be the sign of a mental disability.

UK researchers collected questionnaires from mothers before and after giving birth. This helps make the self-reported data more trustworthy, explained Sam Oh of the University of California, San Francisco, who wasn't involved with the work. If mothers knew their child's reading scores beforehand, they might subconsciously report more or less smoking.

"To me, this study suggests that the effects attributed to in utero smoking can in fact be attributed to the intrauterine environment, and not due to environmental differences that the children grow up in," Oh told Reuters Health by email.

Large observational studies like this one call attention to patterns, but do not prove a direct cause-effect relationship between cigarette smoking and low reading scores.

Despite public health initiatives to discourage smoking, as many as one in six pregnant American women still light up, according to national surveys by the Centers for Disease Control and Prevention and the U.S. Department of Health and Human Services.

"That is a lot of children," Dr. Tomáš Paus of the University of Toronto told Reuters Health.

Paus added that the study tied the effects of low test scores to nicotine in cigarettes, which also produce other harmful chemicals and carbon dioxide. Either way, smoking while pregnant seems to put a baby at risk for negative health outcomes.

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Antibiotics in pregnancy tied to asthma in kids

NEW YORK (Reuters Health) - Children whose mothers took antibiotics while they were pregnant were slightly more likely than other kids to develop asthma in a new Danish study.

The results don't prove that antibiotics caused the higher asthma risk, but they support a current theory that the body's own "friendly" bacteria have a role in whether a child develops asthma, and antibiotics can disrupt those beneficial bugs.

"We speculate that mothers' use of antibiotics changes the balance of natural bacteria, which is transmitted to the newborn, and that such unbalanced bacteria in early life impact on the immune maturation in the newborn," said Dr. Hans Bisgaard, one of the authors of the study and a professor at the University of Copenhagen.

Those effects on the immune system could lead to asthma later on, although it's still not clear how, said Anita Kozyrskyj, a professor at the University of Alberta who also studies the antibiotics-asthma link but wasn't involved in the new study.

Previous research has linked antibiotics taken during infancy to a higher risk of asthma, although some researchers have disputed those findings (see Reuters Health stories of May 17, 2011 and February 3, 2011).

To look for effects starting at an even earlier point in a baby's development, Bisgaard and his colleagues gathered information from a Danish national birth database of more than 30,000 children born between 1997 and 2003 and followed for five years.

They found that about 7,300 of the children, or nearly one quarter, were exposed to antibiotics while their mothers were pregnant. Among them, just over three percent (238 kids) were hospitalized for asthma by age five.

In comparison, about 2.5 percent, or 581 of some 23,000 kids whose mothers didn't take antibiotics were hospitalized for asthma.

After taking into account other asthma risk factors, Bisgaard's team calculated that the children who had been exposed to antibiotics were 17 percent more likely to be hospitalized for asthma.

Similarly, these children were also 18 percent more likely to have been given a prescription for an asthma medication than kids whose mothers did not take antibiotics when they were pregnant, according to findings published in The Journal of Pediatrics.

In an email to Reuters Health, Bisgaard said he expected to see a higher risk of asthma "because the mother is a prime source of early bacterial colonization of the child, and antibiotics may (have) disturbed her normal bacterial flora."

Bisgaard's team also looked at a smaller group of 411 kids who were at higher risk for asthma because their mothers had the condition and found these children were twice as likely as their peers to develop asthma too if their mothers took antibiotics during the third trimester of pregnancy.

Kozyrskyj, who is research chair of the Women and Children's Health Research Institute, said it's also possible that something other than the antibiotics are to blame for the findings in both groups of children - such as the illness that caused the mothers to take antibiotics.

"This study, it doesn't tell us whether it's the antibiotic use or whether it's the infection. That's one thing we can't decipher," she told Reuters Health.

The results don't suggest that women should avoid taking antibiotics to try to reduce their kids' risk of asthma, Kozyrskyj emphasized.

Some infections can be quite dangerous to a fetus, and "there are very good indications for these antibiotics," she added.

Bisgaard agreed that women should be treated, "but we see 1/3 of pregnant women in our region receiving treatments (often for urinary tract infections), which may reflect an uncritical use," he wrote in an email.

Bisgaard said his group is also studying the types of bacteria in pregnant mothers and newborn children to get a better understanding of their role in asthma.

Kozyrskyj said Bisgaard's study suggests that the development of asthma might start before birth, something researchers hadn't studied very closely.

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Exclusive: Google to replace M&A chief

SAN FRANCISCO (Reuters) - Google Inc is replacing the head of its in-house mergers and acquisitions group, David Lawee, with one of its top lawyers, according to a person familiar with the matter.

Don Harrison, a high-ranking lawyer at Google, will replace Lawee as head of the Internet search company's corporate development group, which oversees mergers and acquisitions, said the source, who spoke anonymously because he was not authorized to speak publicly.

Google is also planning to create a new late-stage investment group that Lawee will oversee, the source said.

Google declined to comment. Lawee and Harrison could not immediately be reached for comment.

One of the Internet industry's most prolific acquirers, Google has struck more than 160 deals to acquire companies and assets since 2010, according to regulatory filings. Many of Google's most popular products, including its online maps and Android mobile software, were created by companies or are based on technology that Google acquired.

Harrison, Google's deputy general counsel, will head up the M&A group at a time when the company is still in the process of integrating its largest acquisition, the $12.5 billion purchase of smartphone maker Motorola Mobility, which closed in May.

And he takes over at a time when the Internet search giant faces heightened regulatory scrutiny, with the U.S. Federal Trade Commission and the European Commission conducting antitrust investigations into Google's business practices. Several recent Google acquisitions have undergone months of regulatory review before receiving approval.

As deputy general counsel, Harrison has been deeply involved in the company's regulatory issues and many of its acquisitions. He joined Google more than five years ago and has completed more than 70 deals at the company, according to biographical information on the Google Ventures website.

Harrison is an adviser to Google Ventures, the company's nearly four-year old venture division which provides funding for start-up companies.

While most of Google's acquisitions are small and mid-sized deals that do not meet the threshold for disclosure of financial terms, Google has a massive war chest of $45.7 billion in cash and marketable securities to fund acquisitions.

Lawee, who took over the M&A group in 2008, has had hits and misses during his tenure. Google shut down social media company Slide one year after acquiring it for $179 million, for example.

The planned late-stage investment group has not been finalized, the source said. The fund might operate separately from Google Ventures, according to the source.

"Think of it as a private equity fund inside of Google," the source said.
The company recently said it would increase the cash it allocates to Google Ventures to $300 million a year, up from $200 million, potentially helping it invest in later-stage financing rounds.

Google finished Friday's regular trading session down 1 percent, or $6.92, at $684.21.

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SEC wrestles with Internet age in Netflix case

WASHINGTON (Reuters) - A U.S. regulatory probe of Netflix Inc over disclosures made on its chief executive's Facebook page could prove an important test of whether a rule designed to prevent leaks to analysts can translate to the social media age.

The movie and TV streaming service revealed on Thursday that it may face action from the Securities and Exchange Commission if the agency determines the comments from CEO Reed Hastings violate a rule that requires information to be disclosed to investors at the same time.

Hastings' Facebook page had more than 200,000 subscribers, including reporters and analysts, when he told them on July 3 that the company had hit 1 billion hours viewed in June.

But the case may not hinge on whether or not his page qualifies as a public dissemination.

Instead, it may come down to two other issues.

One, whether the information was material to investors.

And two, if it was material, whether investors knew that Hastings' Facebook page was a venue to release important company news.

As evidence of materiality, the SEC could point to statements Hastings made earlier in the year highlighting milestones, including hours streamed, as metrics investors should watch.

But the company contends the July 3 comments were not material. It says that the company posted a blog entry a few weeks earlier that said the company was approaching that milestone.
Also, Netflix General Counsel David Hyman testified before a U.S. House of Representatives committee on June 27, and said at the beginning of his testimony that Netflix "delivers close to a billion hours of streaming movies and TV shows to its consumers every month."
Such prior disclosure could hurt any SEC case. "Whether what he said is materially different from what the company has already disseminated, that may be a real challenge for the commission to maintain that position in court," said former SEC lawyer Eugene Goldman who is now with McDermott Will & Emery.

But movements of the company's stock price could bolster an SEC case if the agency can prove the stock jumped on the news. Netflix attributed the jump in its stock price to a positive analyst report released the night prior to Hastings' Facebook post.

The stock closed at $67.85 on July 2, and opened one percent higher the next day at $68.49, on a positive report from Citigroup.

The stock closed at $72.04 on July 3, a six percent jump that would be unusual from an analyst report alone.

'LIVING IN THE REAL WORLD'
The second issue of whether Hastings' Facebook page was a known source of material company news goes to the heart of whether the SEC's rules - and its interpretation of them - are outdated.

SEC adopted the rule at issue, Regulation Fair Disclosure, or Reg FD, in 2000 over concerns that companies were meeting with small groups of analysts or institutional investors and disclosing material information to them.

The concern was that "shortly after these types of meetings, trading would take place on the basis of such information," Goldman said. "This seems a lot different from that."

The new potential action raises questions about whether the rule was designed to address disclosures like the one made by Hastings.

"There's a huge divide between CEOs living in the real world and the financial industry, which lives behind regulatory walls. Reg FD is built for the old way of communicating from behind these walls," said Howard Lindzon, a hedge fund manager and founder and CEO of StockTwits, a social network for traders and investors to share real-time ideas and information about stocks.

Reg FD does not delve into the use of social media for disclosing information to investors. But the SEC issued guidance on the subject in August 2008.

That guidance states that companies can use websites to disclose information as long as they are a "recognized channel of distribution."

To determine that threshold, the SEC lists factors companies should weigh, including whether their site is "posted and accessible" and also whether "the company has made investors and the markets aware that it will post important information" on the website.

Netflix may have hurt itself on this point, if the SEC is able to prove that the information was material.

Hastings acknowledged in a blog posting on Thursday that the company does not "use Facebook and other social media to get material information to investors."

The SEC is likely to home in on that comment as it continues its case against the company.

But Elon Musk, the CEO of Tesla Motors who has posted company-related developments on his Twitter feed, said it is hard to believe that the SEC could consider a CEO's Facebook post to be a narrow release. He noted that reporters regularly follow companies' and executives' social media posts.

"To consider a press release to be a more public venue than a Facebook or Twitter account where someone is followed by hundreds of thousands of people, including the press themselves, is simply untrue," Musk said in an email.

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