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Medical staff in PPE walk in front of barriers of a Shanghai area under lockdown.
Hard Numbers: Shanghai lockdown, US billionaire tax, Amazonian NFTs, Houthi truce
2,631: Shanghai will go into lockdown after reporting a record 2,631 new asymptomatic COVID infections on Sunday. China’s largest city had been trying to avoid this extreme measure, but authorities ultimately caved to Xi Jinping’s zero-COVID policy.
100 million: On Monday, the Biden administration will propose a 20% minimum income tax on US households worth at least $100 million in order to cut the deficit. This includes taxing unrealized capital gains, which Democrats failed to pass in Congress last year.
150: A Brazilian company that owns some 150 square miles of the Amazon is funding conservation efforts by auctioning off sponsorship of rainforest lots as non-fungible tokens. NFT holders will not own the land itself but rather get access to information about how it is being preserved.
7: On Saturday, Houthi rebels declared a three-day truce with the Saudi-led coalition to mark the seventh anniversary of Yemen’s civil war. The olive branch came a day after the Houthis attacked a Saudi oil plant near the Formula One race track in Jeddah, to which Riyadh responded with airstrikes on rebel-held cities in Yemen.Can Biden's push to tax big corporations go global?
What is Biden pushing for? The White House wants to raise America's domestic corporate tax rate after deductions to 28 percent, up from the 21 percent threshold (just below the Organisation for Economic Co-operation and Development average) implemented when the Trump administration slashed taxes for the wealthy and corporations back in 2017.
US Treasury Secretary Janet Yellen has also called for a global corporate tax rate, a minimum that all corporations would have to meet no matter which country they are filing in. In theory, developed economies would still set their own local corporate tax rates, but if companies pay lower rates abroad, their home states could essentially "top-up" their taxes so that they still pay the full rate. Importantly, Biden's proposal would also eliminate loopholes in the US tax code that have long incentivized corporations to move profits to tax havens like Bermuda and the Cayman Islands.
Why now? There are two main (and interconnected) reasons that Yellen is going hard on this now. First, Biden recently unveiled the most ambitious infrastructure plan in decades, worth a total $2 trillion. To cover the costs of this massive project, his administration has to get the money from somewhere.
Moreover, in order to avoid potential setbacks US firms might face globally as a result of the new domestic corporate tax hike, Biden wants other countries to follow suit, ensuring that US-based tech and pharma giants remain competitive (and dominant).
Domestic pushback. Reaction in the US has been predictable. Business groups and Republicans warn that upping the tax rate will cut jobs and economic growth. Even some moderate Democrats say that a domestic tax rate of 28 percent is too high. And with the Democrats holding only a razor-thin majority in the Senate, Biden can't afford to lose a single Democratic vote.
But progressive Democrats argue that abolishing tax loopholes that have allowed multinational companies to flourish while inequality deepens is precisely the right move. Proponents of the plan point to a recent report that found that at least 55 percent of America's biggest companies paid no federal corporate income taxes during the last fiscal year.
The view(s) from abroad. For years, big European nations frustrated with American behemoths like Starbucks, Amazon, and Google that flood their markets yet pay nothing back to their governments, have been pushing for a similar global corporate tax rate. France, backed by the UK and Germany, has been leading the way, though the Biden proposal well outpaces the 12.5 percent standardized tax rate the OECD had proposed.
While Washington dragged its feet in the past, it is now desperate to get on board. But there's a catch: Germany and France say that the plan must include rules on taxing US tech giants that quash competition in their countries, something that the European Union as a bloc has long defended.
Still, some countries vehemently reject the plan outright. Ireland, with one of the lowest corporate tax rates in the OECD, has greatly benefited from operating as a tax haven for multinationals to stash their profits, acting as what one academic described as a "tax-avoiding funnel between nation-states." Similarly, the Netherlands has attracted the likes of Nike, Google, IKEA, and others by allowing these corporations to negotiate rates with Dutch tax authorities. As such, The Hague is likely quite comfortable with the current arrangement (no matter the pushback from Brussels).
Looking ahead. Major economies across the Atlantic have never coordinated their tax systems in such a significant way before. Yellen says these tax code reforms would end a global "race to the bottom" that has undercut American businesses and their workers for decades. It's clear, however, that those opposed, both in the US and abroad, are going to put up one hell of a fight.