President Biden’s infrastructure plan has been scrutinized and praised for weeks. Now, tax experts are warning the plan could backfire on the nation and the West as the rise of consumers in India and China shifts sales to Asia. While the US has proposed a minimum tax based on local sales, experts have cautioned Biden that “shrinking influence of the West will mean revenues become concentrated in the developing giants in Asia within decades.” Experts are also watching China and its creation of the yuan. Chinese officials say the digital currency may be used at the Beijing Olympics. Over the weekend, Li Bo, a deputy governor of the People’s Bank of China, said the central bank was focused on how the yuan could be used in the domestic economy, rather than as a way of reducing the country’s reliance on the US dollar.
The Telegraph via Yahoo finance/Tom Rees
Biden warned corporate tax plan could backfire
The Biden administration’s plan for a global minimum corporate tax risks backfiring on the US and West as the rise of consumers in India and China shifts sales to Asia, tax experts have warned.
The US has proposed a minimum tax based on local sales, but the president has been cautioned that the shrinking influence of the West will mean revenues become concentrated in the developing giants in Asia within decades.
Marvin Rust, head of European tax at Alvarez & Marsal, said: “Over time, as the Indians and the Chinese become more wealthy and middle class and their consumption rises, the effect of the policy would be a shift to tax revenues being collected in China and India.
“You can see that the Chinese and Indians are not going to want this reversed once their populations become more prosperous… from a Western world perspective, there needs to be a bit of care about this.”
The White House is attempting to win support for its plan that will seek to level the playing field in tax and clamp down on avoidance.
Many European leaders have also backed the proposals for a global minimum tax on the biggest firms after seeking to clamp down on US tech giants in recent years.
Matt Kilcoyne, deputy director of the Adam Smith Institute, said: “The concern is absolutely right, and it highlights well that Yellen is attempting to uphold a world that is rapidly ceasing to exist. Rising non-western states are not going to automatically accept the hegemony of the USA.”
He added: “Demanding tax harmonisation risks pushing our old friends and countries we currently have issue with into the arms of one another while diminishing the West.”
Read more about what economists expect to happen to the global economy, here.
CNN Business/ Laura He
China’s digital yuan could be used by athletes and visitors at the Beijing Olympics
China is pushing forward with its experiment in creating a digital version of the yuan and may give foreign athletes and visitors a chance to use it at the 2022 Beijing Winter Olympics.
Li Bo, a deputy governor of the People’s Bank of China, said on Sunday that the digital currency pilot was going well following last year’s launch in four cities, plus the venues for the Winter Olympics. The experiment has since been expanded to include 10 cities or provinces covering 100 million people.
Speaking at China’s Boao Forum for Asia, Li said the central bank was focused on how the digital yuan, or renminbi, could be used in the domestic economy, rather than as a way of reducing the country’s reliance on the US dollar.
“For the internationalization of renminbi, we have said many times that it’s a natural process, and our goal is not to replace US dollar or any other international currency,” Li told attendees at the business conference, which was held in China’s Hainan province. “Our goal is to allow the market to choose.”
The rollout is a big deal for China, which could become the first major economy to create an official, digital version of its currency. The European Central Bank is also exploring a digital euro. The UK Treasury and Bank of England said Monday they would look at the possibility of launching a digital currency issued by the central bank for household and business use.
Chinese officials have touted the digital yuan as a futuristic currency that will make buying things more convenient and secure, and help those who don’t have access to bank accounts. But a digital yuan would also give Beijing an unprecedented amount of information about where people are and what they spend their money on, raising concerns about government surveillance.
Read the full story, here.
USA Today/Russ Wiles
New investors beware: The easy money you made in the stock market probably won’t continue
The past year or so has been one of the oddest periods ever for the stock market and economy, with a rare pandemic shutting down businesses and throwing millions of people out of work.
At the same time, the federal government stepped up with unprecedented amounts of stimulus payments, free loans to businesses, eviction moratoriums and other aid — even a delayed deadline for filing income-tax returns.
Things are off-the-charts unusual. Yet for novice investors who stuck a toe in the stock market for the first time over the past year or so, it’s all they know.
And it’s not just a few people, either. Armed with stimulus checks and motivated by boredom perhaps, millions of people took the stock market plunge last year — a whopping 15% of all current stock investors got their start in 2020, according to a new Schwab survey.
Most must be thinking, “This is easy.” Here are some reasons why they should think twice.
Don’t expect the next down cycle to be so kind.
Continue reading, here.