The Biden administration is seeking a global minimum tax rate. On Thursday, the Treasury Department said corporations around the world should pay at least a 15% tax on their earnings; however, the final rate could go even higher. Experts say G7 officials are likely to back the proposal, adding that it could help firm alliances on geopolitical issues in the coming years.
Biden wants to set a global minimum tax. The G7 could provide a crucial boost
The Biden administration’s ambitious plan to overhaul the global tax system is about to face a crucial test.
Treasury Secretary Janet Yellen heads to a meeting of Group of Seven finance ministers in London on Friday and Saturday looking to build support from many of the world’s top economies — an important step in the administration’s efforts to rewrite international tax rules and discourage American companies from booking earnings abroad.
G7 finance ministers are expected to back the US plan during the summit, according to a Reuters report citing a US Treasury official. Washington’s proposal will likely get a full endorsement when G7 leaders including President Joe Biden gather in the United Kingdom next week, the news agency reported.
Last month, the US Treasury proposed a global minimum tax of at least 15%, aiming to tackle an unwieldy international system rife with loopholes. Establishing a minimum rate could help discourage companies from shifting their profits to countries where they would pay less tax.
“With the global corporate minimum tax functionally set at zero today, there has been a race to the bottom on corporate taxes, undermining the United States’ and other countries’ ability to raise the revenue needed to make critical investments,” the US Treasury said in a statement on May 20.
Yellen is likely to find willing negotiating partners this week. On Friday, the finance ministers of France, Germany, Italy and Spain wrote in a letter to the Guardian newspaper that the US proposal was a “promising start.”
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Reuters via CNBC/Sumita Layek
Gold slides over 2% as strong U.S. data bolsters Fed taper bets
Gold slid as much as 2.3% on Thursday as better-than-expected U.S. employment and service sector data propelled the dollar higher and boosted expectations that the strong economic readings may reignite taper talk from the Federal Reserve.
Bullion’s retreat also spilled into other precious metals, with silver slipping as much as 4.3% and platinum shedding 3.7%.
Spot gold was down 1.9% at $1,871.91 per ounce by 1:43 p.m. EDT (1743 GMT), after falling to its lowest level since May 20 at $1,864.39. U.S. gold futures settled down 1.9% at $1,873.30.
“We’re coming out of the woods here, the data is getting better, there are some inflation issues that could put a damper on things, but we have turned the corner,” Bob Haberkorn, senior market strategist at RJO Futures, said.
“The better-than-expected data has put traders on the defense. They’re preparing for possible statements from the Federal Reserve on tapering or higher rates, although not immediately.”
The dollar index jumped 0.7%, making gold expensive for other currency holders, while the U.S. yields also ticked up.
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Cryptocurrency explosion has financial planners recalibrating
Bitcoin 2021 Miami, which has been described as the largest Bitcoin event in history, kicks off at a time when financial advisers say more of their clients are showing interest in digital currencies, Fox Business reports.
Around 14% of advisers are using or recommending cryptocurrencies to their clients, according to a recent survey conducted by the Journal of Financial Planning and the Financial Planning Association, which is up from 1.4% in 2018 and less than 1% in 2019 and 2020.
About half of advisers said their clients had asked about investing in cryptocurrencies in the past six months, up from 17% last year.
“It is clear from these results that we’ve reached an inflection point in the wealth management space,” Tyrone Ross, CEO of Onramp Invest, said in a statement. “Advisers are now faced with a client base that demands knowledge, access, and advice from their adviser on crypto assets.”
Thirty-four percent of advisers said their clients bought shares of GameStop as it gained popularity on social media platforms like Reddit when retail investors caused the beaten-down stock to soar earlier this year.
Bitcoin made recent headlines after Tesla CEO Elon Musk raised environmental concerns about mining the digital currency. The public debate led to a meeting including Musk and miners, where the latter committed to forming a council to accelerate sustainability efforts.
As previously reported by FOX Business, Musk said last month that Tesla would stop accepting Bitcoin for vehicle purchases due to his environmental concerns.
Bitcoin Miami is a multiday event that will feature speakers ranging from former congressman Ron Paul to skateboard pro Tony Hawk and Twitter chief Jack Dorsey.