What does a BIDEN Presidency look like?

[Admiral Yi]

Peace be with you, commie scum.

[Sheilbh]

My favourite was his Good Friday message:


As Matt Zeitlin put it "other than that, Happy Easter!" is up there with "very legal and very cool" and "one of the wettest we've ever seen, from the standpoint of water"

[celedhring]

Baseball All Star game pulled from Atlanta over voting law.

Wasn't aware the MLB leant liberal.

[jimmy olsen]

Baseball All Star game pulled from Atlanta over voting law.

Wasn't aware the MLB leant liberal.

The only reason the MLB is in Atlanta is because Georgia caved to the MLB's demand in 1965 for a desegregated stadium.

[Zanza]

The US seeks global minimum corporate taxes via the OECD. The US also prepares to levy tariffs against Austria, Britain, India, Italy, Spain and Turkey as well as earlier against France over their introduction of a digital tax, targeting digital services revenue. It will be interesting if the Biden administration actually has the diplomatic clout and finesse to achieve its foreign policy goals with Europe. So far, they continue a lot of Trumpian policies and just use nicer words. That alone might not be sufficient. 

[Sheilbh]

Agree on the digital tax. I think the US is open to something on a global level but no-one can do anything until that's agreed which, frankly I'd take the tariffs.

Bot on the global tax I'm a big fan of the plan to increase rate to 28% in the US, tax profits booked by US firms abroad at 21%, country by country and push for strong global minimum tax (with penalties for uncooperative countries). Itwould be great news and it'd wipe out a lot of the rationale for running businesses through tax havens.

[Zanza]

The idea of global corporate tax harmonisation is good and working through the OECD is good, but America does not even participate in OECD initiatives on corporate taxation like Common Reporting Standards. The US normally guards its sovereignty against most international regulation.
https://en.m.wikipedia.org/wiki/Common_Reporting_Standard

And we cannot even pull off harmonized corporate taxes within the European Union, so I doubt that the OECD will now be the right institution to implement and enforce this.

[Sheilbh]

Agreed and I don't think tax harmonisation is likely. In addition a big issue in the US in relation to tax havens is state level laws that allow for a lot of opacity - Delaware and Nevada are especially key.

My guess is what the Americans will want is possibly more like the OECD grey list of tax havens where they basically set out minimum standards including a minimum rate and then publishes an updated grey list. I doubt that'll be effective or enough but it's positive they're at least willing to join the conversation.

I also think that cracking down on tax evasion/off-shore finance centres (or Delaware/Nevada) is actually a huge foreign policy issue for the UK and the US (and to a lesser extent the EU which has more corporate than individual tax havens).

[alfred russel]

I don't know much about Nevada, but most significant US companies are registered in Delaware. I'm not really used to anyone referring to it as a tax haven or an "opaque" location: if it is opaque, then that defines the US as well because of how it dominates.

There are a few states without income taxes. Nevada is one because taxation on casinos and gambling has generally been enough for the state. But states like Washington, Florida and Texas also don't have income taxes (I know for personal, they could for corporate--Tennessee does for corporate but not for personal). I don't think calling the "tax havens" is really fair: corporations in those states pay US taxes of course which are the bulk of taxes in every state. State tax demands are just a lot less than federal.

[Sheilbh]

I don't know much about Nevada, but most significant US companies are registered in Delaware. I'm not really used to anyone referring to it as a tax haven or an "opaque" location: if it is opaque, then that defines the US as well because of how it dominates.

Agreed. The tax and opacity issues are slightly separate. You always see Delaware (and occasionally Nevada) if there's any US presence because they are generally business friendly. The opacity is specifically about the level of information about individuals that you have to provide - especially of directors, officers, owners and ultimate beneficial owners. It's very limited in Delaware especially, but also Nevada. So they are very convenient locations to set up shell companies and pass ill-gotten gains from, say, corruption in some other country into the US where it's safe and hidden. The UK equivalent is off-shore locations like Jersey or Bermuda, in the EU it's probably Cyprus and Malta.

There are a few states without income taxes. Nevada is one because taxation on casinos and gambling has generally been enough for the state. But states like Washington, Florida and Texas also don't have income taxes (I know for personal, they could for corporate--Tennessee does for corporate but not for personal). I don't think calling the "tax havens" is really fair: corporations in those states pay US taxes of course which are the bulk of taxes in every state. State tax demands are just a lot less than federal.

Honestly I'm not sure of the tax advantages. I suspect it's more to do with Delaware - and possibly Nevada - having laws that are more friendly to very complex corporate structures designed to minimise tax often with a BVI company at the top.

[Zanza]

I also think that cracking down on tax evasion/off-shore finance centres (or Delaware/Nevada) is actually a huge foreign policy issue for the UK and the US (and to a lesser extent the EU which has more corporate than individual tax havens).

What is the UK doing towards cracking down on tax havens? They are the facilitators of tax havens like the Cayman islands, Channel islands, etc. When the UK left, the EU could finally start to target these.

[Sheilbh]

What is the UK doing towards cracking down on tax havens? They are the facilitators of tax havens like the Cayman islands, Channel islands, etc. When the UK left, the EU could finally start to target these.

They've never been part of the EU because they're not part of the UK. They all have their own elected legislatures etc. The UK is only responsible for foreign policy and defence. So, for example, weirdly Jersey and Guernsey both have data protection adequacy decisions, I think they've got equivalence in some financial services, have information sharing treaties with several EU countries and are part of the Single Euro Payments Area - all of which doesn't apply to the UK.

So absolutely smash them and I hope the UK government does the same - the worst they can do is declare independence. The UK's done some stuff in the area of sanctions (now UK not EU sanctions) because that is foreign policy - so in 2018 they were basically told that they needed to have a publicly available register of ultimate beneficial owners within 5 years and if they didn't have a law by 2020 to implement it by 2023 at the latest then the UK would impose the requirement from UK law.

But there's not much the UK can do about the problematic laws themselves without trampling over their constitutional position. That's why I'd rather sanction them until they change or declare independence.

[Zanza]

Okay, I am not really knowledgeable enough to continue that discussion and I guess it does not fit the Biden Presidency thread anyway.

[Zanza]

What does fit and is also related to Janet Yellens initiative on global corporate taxation is this:

https://www.washingtonpost.com/business/2021/04/05/corporations-federal-taxes/

Dozens of America's biggest businesses paid no federal income tax — again
55 corporations had zero federal tax liability in 2020, including household names like Nike, FedEx and Dish Network, analysis finds

White House press secretary Jen Psaki points to a corporate tax rate chart last week during a news briefing. Last year, 55 of the nation's largest corporations paid no federal income tax on more than $40 billion in profits, research shows.
By
Christopher Ingraham
April 5, 2021 at 12:00 p.m. GMT+2
Fifty-five of the nation's largest corporations paid no federal income tax on more than $40 billion in profits last year, according to an analysis by the Institute on Taxation and Economic Policy, a progressive think tank.

In fact, they received a combined federal rebate of more than $3 billion, for an effective tax rate of about negative 9 percent.

"Their total corporate tax breaks for 2020, including $8.5 billion in tax avoidance and $3.5 billion in rebates, comes to $12 billion," according to the study's authors, Matthew Gardner and Steve Wamhoff.

The findings also underscore the favorable tax environment for big businesses in the wake of the 2017 Trump tax cuts. Twenty-six corporations have paid no federal income taxes since 2017, according to the report, including such household names as Nike, FedEx and Dish Network. Combined, the 26 companies have booked more than $77 billion in profits since 2018, while receiving nearly $5 billion in rebates, for an effective three-year tax rate of negative 6 percent.

A FedEx spokesman shared a statement from the company noting that "FedEx pays all of its taxes owed to local, state, federal, and foreign governments," and that "through the third quarter of fiscal year 2021, FedEx has paid nearly $2 billion in U.S. federal income tax in the last 10 years."

Representatives from Dish Network declined to comment, while Nike did not respond to a request for comment.

"By all appearances, the companies described in this report appear to be using entirely legal means to reduce their tax bills," Gardner, the study's lead author, said via email. But that doesn't mean the companies are "blameless," he added. "Many of the tax provisions these companies are using exist because they themselves have lobbied heavily for their creation."

Those provisions include tax breaks for stock options given to chief executives as part of their pay packages, credits for research and experimentation, and write-offs for renewable energy and capital investments. The 2017 Tax Cuts and Jobs Act's dramatic cut to the corporate income tax rate, from 35 to 21 percent, also plays a role in the limited tax liabilities facing many major corporations.

But Gardner says the generous carve-outs, not the baseline rate itself, are driving much of the phenomenon.

"We all want to see businesses investing more in the U.S., whether it's creating productive capacity or just creating jobs," he said. "Similarly, all Americans want to see businesses engaging in more research and development, and the R&D tax credit is another prominent factor driving the tax avoidance we see here."

But there's little evidence demonstrating that these provisions actually boost investment or R&D, Gardner says. Following the Trump tax cuts, for instance, many businesses opted to send cash to their shareholders and lay off employees rather than make long-term investments.

Speaking last month before the Senate Finance Committee, Kimberly A. Clausing, a deputy assistant secretary for tax analysis at the U.S. Treasury, said the Trump tax cuts roughly halved corporate tax revenue as a share of gross domestic product. While other wealthy nations typically raise roughly 3 percent of GDP through corporate taxes, in the United States that share fell to just 1 percent following the 2017 changes to the tax code.

She also noted that before the pandemic, corporate profits as a share of GDP were running roughly twice as high as in the period from 1980 to 2000.

Nearly 7 in 10 Americans say corporations are paying too little in taxes, according to Gallup polling.

President Biden has called for a higher corporate tax rate to fund his package of infrastructure investments, as well as a higher minimum tax on income earned by American companies overseas. Speaking to reporters Friday, Biden said "we are asking corporate America to pay their fair share."

His proposal "wouldn't directly repeal any tax breaks," Gardner said, "but would reduce the cost of many existing breaks. If this is what's politically doable, it's certainly better than doing nothing at all."

What's in Biden's $2 trillion jobs and infrastructure plan?

Biden's proposal is already generating opposition among business groups. "By significantly increasing taxes on corporations, the proposal would be counterproductive to the goal of increasing economic growth and job creation," said Business Roundtable chief executive Joshua Bolten in a statement.

However, progressive groups have been supportive of the plan. In a statement, a group of left-leaning think tanks wrote that "robust taxation of corporations and the wealthy can directly counter damaging inequality, rebalance power in our economy, and increase the competitiveness of American workers."

Let's see what the current administration can achieve here. As it is, this does not seem to be a credible base for a global tax harmonisation initiative.

[Sheilbh]

Okay, I am not really knowledgeable enough to continue that discussion and I guess it does not fit the Biden Presidency thread anyway.

Yeah sorry - I suppose there is a bit of an analogy with the US situation (or the EU) of ultimately I don't think the Federal government can force Delaware to change its laws, the UK can't force the Cayman Islands to change their laws and the EU can't force the Netherlands or Malta to change their laws. They're for slightly different reasons but broadly similar.

But all of those top-level states can agree to create a set of minimum standards with penalties if you don't comply (not sure how it'd work for the US in fairness) or possibly fines for the companies?