Yellen's Seeks a Global Minimum Tax to Support Biden's Massive Spending Plans

Mish

Treasury Secretary Janet Yellen has her eyes on your pocketbook and the pocketbook of corporations too.

Tax Some, Spend More

To support president Biden’s $2.3 trillion infrastructure proposal, Yellen Pushes for Global Minimum Tax Rate on Multinational Corporations.

Treasury Secretary Janet Yellen argued for a global minimum corporate tax rate Monday, seeking international cooperation that is crucial to funding the administration’s $2.3 trillion infrastructure proposal.

President Biden’s proposal to raise the corporate tax rate to 28% from 21% would push the U.S. from the middle of the pack among major economies to near the top. The Biden plan would also impose a 21% minimum tax on U.S. companies’ foreign income, remove an export incentive and raise taxes on some foreign companies’ U.S. operations.

Under the Biden plan without a global minimum tax, a U.S. address becomes a potential disadvantage, meaning that foreign-owned businesses operating overseas could be significantly more profitable than competitors owned by U.S. companies.

Democrats’ changes would also decrease the benefits of having profits abroad as opposed to profits in the U.S., but they would make a U.S. corporate headquarters more of a liability.

Who Really Pays Corporate Taxes?

I side with economists who allege corporations don't really pay taxes.

In response to corporate tax hikes, companies raise prices or reduce wages and benefits. 

Ultimately, corporate tax hikes are a hidden tax on consumers. 

America First or America Alone?

Janet Yellen says ‘America first must never mean America alone.’

In regards to taxation, there is a large group of countries that benefit from low taxes. Hopefully, they will politely (or better yet impolitely) tell Yellen where to stuff it. 

Meanwhile, I 100% endorse the notion of not going things alone.

For starters, I suggest the immediate end to all sanctions that the US has unilaterally placed.

Sanctions, weapons sales, and our counterproductive drone killing maneuvers provide ample places for Yellen's newly proposed policy.

Finally, minding our own business in general should be the ultimate goal.

Mish 

Comments (41)
No. 1-17
Sechel
Sechel

Ridiculous. A floor amounts to managed trade

Sechel
Sechel

When Republicans lowered the corporate rate they were supposed to remove deductions. Funny how that worked. Might as well raise it back

whirlaway
whirlaway

Tax Revenue by source - https://www.taxpolicycenter.org/sta.../amount-revenue-source

https://www.taxpolicycenter.org/sta.../amount-revenue-source

In 1960, for every $1 that corporations paid in corporate income taxes, individuals like you and I paid $2 in income taxes.

In 1980, it became $1 : $4

In 2000, it became $1 : $5

In 2020, it became $1 : $7

whirlaway
whirlaway

"Hopefully, they will politely (or better yet impolitely) tell Yellen where to stuff it. "

Hopefully (for them) they don't say it! I don't mind us using our awesome military power in such instances to make them toe the line.

Jojo
Jojo

"Ultimately, corporate tax hikes are a hidden tax on consumers. "

Yes, but the same old argument rehashed over and over to no avail.

The point is that our infrastructure continues to deteriorate and needs to be repaired/updated. Congress has been unable to put together a national plan to pay for this repair for at least 30 years. It's always "too expensive" but there always seems to be unlimited money for the military-industrial complex or to cut taxes (mainly for the wealthy).

So what do we do? The job needs to get done and someone is going to have to pay the cost. How do we get to the goal with a plan that could be supported bipartisanly?

bluestone
bluestone

"a global minimum tax would help prevent companies based in other countries from having a significant potential advantage"

Why would any country -not want- to have a significant potential advantage against a country that already takes a tax slice of their own tax base? Why should any country cooperate with the US to make good a fall in investment income?

You could read into this because more to the point, why are tax rises needed if the Fed isn't doing anything likely to cause inflation. hmm Yellen?

Casual_Observer
Casual_Observer

Companies cant raise prices that much to compensate for taxes. Besides we all know companies screw their employees at every turn and reward shareholders first with things like stock buybacks that create nothing and reward executives and board members. The only employees that win are those with large stock options. Companies rarely lower prices on goods if ever and it is only temporary. Even Mish cant the see the err of it. The reason the middle class has struggled is because wages haven't kept up with inflation and es executive compensation has exceeded inflation. Everytime and executive talks about shareholders he is mostly talking about himself.

Casual_Observer
Casual_Observer

By the way those countries that have low taxes have no loopholes. The average company in America pays around 15% after loopholes. The net effect of a tax increase is never the actual rate. Corporate taxes are graduated just like personal income taxes. I'm in the 35% bracket but I only pay 21% on average over the last 10 years. What Yellen is calling for is an AMT. Which is what Biden ran on. This way a company like Amzazon always has to pay some tax. This is a fair solution for those that exploit loopholes to pay no or minimal taxes.

Christopher Moore
Christopher Moore

"I side with economists who allege corporations don't really pay taxes.

In response to corporate tax hikes, companies raise prices or reduce wages and benefits.

Ultimately, corporate tax hikes are a hidden tax on consumers. "

Really Mish, corporations have plenty of money for stock buybacks, lobbying, executive bonuses, but those poor corporations just can't afford to pay any taxes. They will raise prices, they do that already, they will reduce wages, they do that already, they will lower benefits, they do that already. Why do I pay taxes, because I live in America, I drive on the roads, went to a public school for the first 12 years, do I like it, no, but I understand why I pay taxes. I'm not in favor of over taxation, but zero, what good is raising the tax rate from 21% to 28% on a corporation that pays zero, it's still zero. The capital gains tax is another scam, not only do you get to pay a lower rate, you then get to write off the losses against the gains to lower your tax burden even more, yet it is still US dollars, there has been a war on labor for the last 40 year and the elites and corporations will not stop until there is nothing left or as Claus says, you will own nothing and be happy. America needs to stop the capitalism on the way up and socialism on the way down for corporation and the markets.

Johnson1
Johnson1

It looks like inflation protected bonds have rolled over starting in Feb 2021? No inflation LOL

Lance Manly
Lance Manly

When the tax rate is lowered corporate officers are rewarded with bonuses, shareholders (the rich, the top 10% of wealth owns 80% of equities) get stock buybacks. Some of the reasoning here seems to be from a bygone time.

njbr
njbr

Corporations are funny, they are like a person for purposes of political speech, but should not be taxed like a person. They should be deferred to on issues such as pollution, but are to be excoriated for speaking out on voter rights.

LawrenceBird
LawrenceBird

I challenge anyone to show that corporate tax cuts of the past 25 years have done anything to add to gdp growth. Economy has grown at far higher rates with both corporate and personal tax rates signficantly higher.

The best thing they could do is eliminate all loopholes/exemptions, go back to making stock buybacks either illegal or taxed same as dividends, and have a flat corporate tax of 25%.

John Murray
John Murray

A better solution would be to allow corporations to deduct dividends. It would equalize the treatment of debt and capital. Many of the dividends would be taxed at higher rates because they would be paid to the better off members of society. It would also protect jobs that are lost bankruptcy of thinly capitalized corporations.

Sechel
Sechel

A global corporate tax deal would make it harder for corporations to shift assets around the world in an effort to engage in tax avoidance. That's one thing in favor

Captain Ahab
Captain Ahab

Has voters' remorse set in yet?


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