Pay Attention to Washington D.C.

While the country starts to open up and the population focuses on vaccine, Janet Yellen, the US Treasury Secretary gave a VERY important speech.  She is calling for a global corporate minimum tax rate.  Essentially, the US will agree to similar corporate tax rates as the rest of the world.  I don’t recall voting for any Europeans in the last election, do you?

Yellen said, “It is about making sure that governments have stable tax systems that raise sufficient revenue to invest in essential public goods.”  Why do I want to worry about (and indirectly pay for) European social programs?  This global tax initiative is yet another example of government entities taking more control.  We will be told this initiative is about “fairness.”  I wish we could ban the word fair from the English language.  It sounds good but is a meaningless word.   Will a government official ever talk about our spending problem?

As if on cue, that great socialist, Amazon founder Jeff Bezos, said he supported higher taxes.  What a great guy.  If I were worth over $150 billion, I would want you to pay higher taxes too.  Higher taxes create barriers to entry.  Even when Amazon made no money, investors projected after tax income as part of their analysis.  Higher tax rates = lower future returns.  Amazon’s start up competitors will face a higher cost of capital.  Brilliant business and public relations move yet again, Mr. Bezos.  Well played.  PS, feel free to donate to the government if you so desire.  You can always pay more than what your taxes are.

It is somewhat ironic that a democrat, Tip O’Neill, is credited with saying, “All politics is local.”  Today’s democrats seem to have forgotten that messages.  Globalism sounds good in an ivory tower.  Remember how good China entering the World Trade Organization was going to be for the US?  Consumers benefited but the US worker got decimated.  Wall Street has done well in China too.   Did NAFTA help the US worker?  Any time a politician says something is good for us, I get nervous.    

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