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Jamie Dimon
The heads of America’s biggest and third largest banks agree on one thing: the international minimum tax proposed by President Joe Biden is a stench.
Biden wants to impose a minimum 15% levy on the foreign income of American companies, to dissuade them from diverting their activities abroad to low-tax countries like Ireland. And he wants other countries to opt for this minimum tax. Ireland charges 12.5%.
“America would be the only country, I think, in the world that would have what we call a global tax rate,” Jamie Dimon, CEO of No. 1 JPMorgan Chase, said during testimony in Congress.
Why is this such a bad plan? “This will boost capital and ultimately brainpower, R&D and investment abroad,” he said at a hearing of the House Financial Service Committee. “And that would be a mistake for America.”
Besides, asked Jane Fraser, the new head of Citigroup No.3, which nations will opt for this plan? She said during the hearing that “it is very difficult to get other countries to join an equivalent program despite a certain optimism”.
“I think it will be extremely difficult,” said Fraser, who took the helm in March, “and as a result, it could put the United States in a less competitive position in the world.”
The administration argues that such a 15% floor would generate more tax revenue in the long run. This plan is indeed a tough sell to countries like Germany and France, let alone Ireland.
The current setup, according to the White House, is pushing other countries to offer lower corporate rates to sue foreign companies, especially American ones.
The president also wants to increase the corporate tax rate in the United States to 28%, from 21%, a level adopted under Donald Trump. The former president had reduced this rate to 35%.
Biden’s push has sparked a lot of concern on Wall Street and US businesses, which fear falling profits and diminishing international competitiveness.
Biden’s idea is to generate as much revenue as possible for his infrastructure building program, as well as his campaign to add scientific innovation and home helpers, as well as create 500,000 stations of recharging of electric vehicles.
The Republican plan is more modest, a $ 928 billion proposal that cuts non-infrastructure spending and focuses on roads, bridges and public transportation.
The White House also wants to put in place another program: $ 1.8 trillion for social programs like paid family leave, free community colleges and free early childhood education.
Overall, Biden’s tax framework would improve the IRS to improve tax collection and increase the tax bill for the wealthy, especially for capital gains.
Dimon is particularly worried about escalating federal spending. In his recent letter to shareholders, the head of the JPM feared that an increase in the interest burden on the federal debt would soon hit the market, which could help fuel inflation that would be “more than temporary”.
But he also expressed optimism that “the US economy is likely to explode”, due to deficit spending, the infrastructure bill, vaccinations and the accumulated savings of consumers looking for a post outlet. -pandemic.
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Tags: capital gain, Citigroup, corporate rate, Donald Trump, economy, House Financial Service Committee, inflation, infrastructure, Jamie Dimon, Jane Fraser, Joe Biden, JPMorgan Chase, taxes
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