TAXES

Teamwork Makes the Corporate Tax Dream Work

On Saturday, the finance ministers from G7 nations announced their support for a global corporate minimum tax of 15%, which would require companies to pay at least a 15% rate in each country they operate in. It represents one of the biggest attempts to bring an outdated global tax system from black-and-white into Technicolor.  

The backstory: Multinational companies have been taking advantage of existing tax rules by shuffling money between jurisdictions with super-low rates. The IMF estimates that 40% of all foreign direct investment is “phantom” in nature, meaning it’s money that passes through empty corporate shells, often for the purposes of lowering a company’s tax bill. 

This scheming is not in the best interests of countries that want to collect more taxes from large corporations. The Biden administration estimates a global minimum tax system would lead to $500 billion in additional tax revenue for the US over the next decade. 

But wait, there’s more

In addition to the 15% minimum tax, the agreement by the G7 (which, by the way, is composed of Canada, France, Germany, the US, Italy, Japan, and the UK) calls for an extra tax on profits from the “largest and most profitable multinational enterprises.” 

The provision is meant to address European leaders’ concerns that they can’t sufficiently tax tech giants like Facebook and Google, because while those companies make tons of money in Europe, they are based in the US and pay taxes there.

Now comes the hard part

The G7 ministers will have to sell their plan to other countries, such as Ireland, that oppose the 15% minimum tax. Ireland has managed to attract lots of tech jobs due to its low corporate tax rate of 12.5%, and it won’t want to give up that competitive advantage.  

Zoom out: The teamwork shows that the US and its European allies are putting some of the bad blood of the Trump years behind them. But any new tax system will take years to implement and will surely create headaches of its own.    

CRYPTO

An Important Person Tweeted About Adopting Bitcoin

...and guess what, it wasn’t Elon Musk.

On Saturday, El Salvador’s president, Nayib Bukele, said he’s going to send a bill to the legislature to make bitcoin a legal tender in the country. It’d be the first country to formally adopt the cryptocurrency as part of its economy.  

Why El Salvador? Much of the Central American country already operates outside the bounds of formal finance:

• 70% of the population does not have a bank account.
• 20% of the country’s GDP comes from remittances, which are payments sent by Salvadorans living abroad back to the country.

Bukele said that bitcoin could help streamline those cumbersome cross-border payments, while promoting “financial inclusion” for those left out of the system. 

Zoom out: There aren’t many details yet, and Bukele’s not sweating them. At 39 years old, he’s savvy with social media and extremely popular with his constituents—his approval rating is more than 85%. This bitcoin bill should easily pass. 

+ While we’re here: Bukele’s announcement came in a taped message delivered to the Bitcoin 2021 conference in Miami. Here’s a fun read describing the ridiculousness of the event. 

COVID

Booster Shot FAQ

So you’ve got your vaccination card nicely laminated and hanging on your office wall. Should you make room for another one? Here are some answers to your booster shot questions...

Will I need to get a booster shot for Covid? Probably, but scientists aren’t sure when because we don’t know enough yet about the length of immunity conferred by vaccines. However, Dr. Peter Marks of the FDA told CNN that vaccinated people likely won’t need a booster shot within a year of receiving their initial doses. 

If I got the Moderna vaccine, do I need to get a Moderna booster shot? Likely not, though studies are progressing to make sure vaccine mashups are safe. Experts tell the NYT mix-and-matching vaccines is a “tried and true concept from before Covid.” 

Are any countries giving booster shots right now? Yes, the Mideast nation of Bahrain is administering shots of the Pfizer-BioNTech vaccine to some people who received China’s Sinopharm vaccine. Bahrain is confronting a surge in infections despite having a top-tier immunization rate (important note: The government said 90% of new infections were from people who haven’t been vaccinated at all).

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It’s the Day After National Yo-Yo Day

We assume that you, like us, are on the couch munching greasy food, sucking down electrolyte water, and applying medication to your fingers in an effort to recover from yesterday’s yo-yo-palooza.

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GRAB BAG

Key Performance Indicators

Stat: Sometimes it takes the weekend to find the juiciest numbers from the jobs report released the Friday before. Here’s one: Average hourly earnings for workers in leisure and hospitality rose to $18.09 in May, their highest level ever. But is that enough to attract more employees and alleviate the worker shortage? 

Quote: “It doesn't matter who you are, you can be the pope, the queen of England, the president of the United States, you cannot use our services—and I hope most people would think this is reasonable—to aid, abet, foment, or praise acts of violence.”

On ABC yesterday, Facebook executive Nick Clegg defended the company’s decision to ban former President Trump’s account for at least two years. 

Read: Profiles of NBA stars Russell Westbrook and Kevin Durant from the NYT Magazine.

CALENDAR

The Week Ahead

We’re in what CNBC calls the “void between earnings season and the next Fed meeting.” So if you want to bounce for a vacation and not miss much, now’s a good time...

WWDC: Apple’s big developer conference kicks off today with the keynote address at 1pm ET (you can watch here). Despite being virtual for the second straight year, expect announcements with updates to its operating systems, a hardware drop here and there, and of course some epic hype videos. 

Economic data: Hope you’re not sick of talking about inflation, because the big economic data point of the week will be the consumer price index Thursday. Prices in May are expected to have increased even more than they did in April.

Everything else: Going to genuinely write “Happy Friday” in every correspondence on Friday, because on that day…

• Soccer’s European Championship starts
• The Pulitzer Prize winners are announced
• In the Heights comes to theaters

WHAT ELSE IS BREWING

• Sen. Joe Manchin, a moderate Democrat from West Virginia, said he wouldn’t vote for his party’s big voting rights bill, which in part aims to improve election cybersecurity and change campaign finance rules.
• A private equity group is buying the medical supply maker Medline for more than $30 billion.
• The DOJ said it’ll stop its practice of seizing reporters’ records during leak investigations.
• Cruise, the self-driving company, won approval from California to start testing its driverless taxi service with the public.
• States are flush with cash, despite early concerns they'd collapse due to the economic crisis caused by the pandemic.

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For engineers: “All the best advice I stole from non-technical people.”

Dive back into the week:

• Shallow dive: Joint-rolling, circa 2021
• Medium dive: Simone Biles in super slo-mo
• Deep dive: Joseph Cambell quotes on the hero’s journey
• Cannonball:  The all-devouring pop culture wiki

GAMES

Dude, What's My Car?

Can you name the manufacturers of each of the following cars? 

ANSWER

1. Honda
2. Tesla
3. Mazda
4. Cadillac
5. Mercedes-Benz
6. Infiniti