October 13, 2021
President Joe Biden has tried to move the country beyond the partisanship of the current Republican Party by focusing on making government work so that people forget their differences and direct their attention to rebuilding the country. It is not an easy task, especially when the Republicans illustrate, as they did with their votes on raising the debt ceiling, that they would happily tank the country if it means regaining power.
But Biden’s push forward is bearing fruit.
Last Friday, October 8, 130 nations agreed to a minimum global tax of 15% on companies with an annual income higher than about $866 million, stopping what is called a “race to the bottom” as different countries try to attract businesses by cutting tax rates lower and lower. The deal should immediately raise about $150 billion around the world. It also requires companies to pay taxes in countries where their goods are sold, even if their plants are elsewhere, a requirement that should move about $125 billion around the world.
This agreement, hammered out by the Organisation for Economic Co-operation and Development (OECD), a group of 38 high-income democracies, has been about six years in the making. Biden helped to revive the process when he took office, knowing that his own push to restore U.S. corporate taxes to a level closer to what they were when the Republicans under Trump cut them in 2017 depends on making sure that American companies won’t simply relocate to other countries.
But he was not alone in a desire to cut back on tax havens. In November 2020, a report from the OECD showed that countries were losing about $427 billion a year as corporations and wealthy individuals hid their money in tax havens. The U.S. alone is losing about $90 billion, although the losses hit poorer companies harder because they are losing a greater proportion of their revenue. Corporations are hiding about $1.38 trillion in profits, costing their home countries about $245 billion, while wealthy individuals using tax havens cost their home countries about $182 billion a year.
In December 2020, Congress rolled into a defense spending bill a law that requires shell companies to disclose their actual owners, cutting down on money laundering. “It is absurd that the U.S. allows criminals to launder their money here. We’re the only advanced country in the world that doesn’t already require disclosure” of company ownership,” said Representative Carolyn B. Maloney (D-NY), who sponsored the measure.
The Pandora Papers, an exposé published last week by the Washington Post and the International Consortium of Investigative Journalists, explored who is using tax havens and how they are constructed. It revealed that some of them have sprung up here in the U.S., notably in South Dakota. Lawmakers of both parties say they want to pass a law requiring investigations of foreign clients moving money or assets into the U.S. financial system.
Kenya, Nigeria, Pakistan, and Sri Lanka have not joined the global minimum tax agreement.
Today, OECD sent the deal to the finance ministers of the Group of Twenty, commonly known as the G20, consisting of 19 countries and the European Union which together make up about 90% of the gross world product, about 75–80% of international trade, and about two thirds of the world’s population. Those finance leaders are meeting today in Washington, D.C.
At the end of the month, it will go before the G20 leaders, who are meeting then in Rome. “Today’s agreement will make our international tax arrangements fairer and work better,” OECD Secretary-General Mathias Cormann said. “This is a major victory for effective and balanced multilateralism. It is a far-reaching agreement which ensures our international tax system is fit for purpose in a digitalized and globalized world economy.” If it is signed in 2022, it will take effect in 2023.
In the U.S., Republicans immediately opposed the deal and said they would stop it, but on Sunday, Treasury Secretary Janet Yellen said she expects the measure to be put into the so-called reconciliation bill currently being hashed out in Congress.
Biden also announced today a deal among a number of different players to try to relieve the supply chain slowdowns that have built up as people turned to online shopping during the pandemic. Those slowdowns threaten the delivery of packages for the holidays, and Biden has pulled together government officials, labor unions, and company ownership to solve the backup.
The Port of Los Angeles, which handles 40% of the container traffic coming into the U.S., has had container ships stuck offshore for weeks. In June, Biden put together a Supply Chain Disruption Task Force, which has hammered out a deal. The port is going to begin operating around the clock, seven days a week. The International Longshore and Warehouse Union has agreed to fill extra shifts. And major retailers, including Walmart, FedEx, UPS, Samsung, Home Depot, and Target, have agreed to move quickly to clear their goods out of the dock areas, speeding up operations to do it and committing to putting teams to work extra hours.
“The supply chain is essentially in the hands of the private sector,” a White House official told Donna Littlejohn of the Los Angeles Daily News, “so we need the private sector...to help solve these problems.” But Biden has brokered a deal among the different stakeholders to end what was becoming a crisis.
Finally, data reveals that for all the oxygen anti–vaccine mandate people are consuming, Biden’s vaccine mandates (which in many cases allow for frequent testing rather than the vaccine) work. Since last month, when requirements went into effect, vaccination rates have jumped by 20 percentage points, reaching more than 90% in many of the health care companies, schools, and other affected organizations. The rate for Americans aged 18 to 64 not covered by mandates is only 63%. The same period has seen the rate of unvaccinated Americans cut by one third. In late July, when the President announced the first vaccination requirement for the federal government, from 95 million eligible Americans to 67 million.
As the number of people getting a first shot has jumped to about a million a day, cases of infection are declining, and deaths have dropped to about 1,690 a day, still a shocking number but one that is finally moving in the right direction.
This afternoon, the Biden administration lifted the restrictions on travelers crossing the Canadian and Mexican borders, allowing vaccinated individuals into the country. The president and chief executive of the U.S. Travel Association, Roger Dow, told the New York Times: “After months of closure, the reopening of U.S. land borders to vaccinated visitors will bring a welcome surge in travel from our two top source markets of inbound travel, Canada and Mexico.”
Biden is trying to move the country past the partisan battles of the past several years. He is also trying to show Americans that the government is often not the problem, but rather a solution to one.