With chatter from Senator Mitch McConnell (R – KY) on President Biden’s second stimulus plan, Treasury Secretary Janet Yellen proposed in her virtual remarks to the Chicago Council on Global Affairs, a creative, perhaps aggressive, plan to adopt a global minimum corporate income tax. Secretary Yellen references the “30-year race to the bottom” during which countries around the globe continually reduced corporate taxes to entice multinational corporations to locate in their respective countries. Secretary Yellen proposed that the Biden administration would work with the Group of 20 advanced economies to set a global corporate minimum tax.
Secretary Yellen stated that “Competitiveness is about more than how U.S.-headquartered companies fare against other companies in global merger and acquisition bids. It is about making sure that governments have stable tax systems that raise sufficient revenue to invest in essential public goods.”
While the global economy is recovering from the COVID-19 pandemic faster than before, that recovery is not evenly distributed but results primarily from the United States’ ramp-up in vaccinations. The International Monetary Fund (IMF) issued a warning on Tuesday that the uneven distribution of vaccines and vaccinations threatens to leave developing countries woefully behind.
Notwithstanding its warning, the IMF stated that it was upgrading its economic global forecast, believing that the expected increase in vaccinations of hundreds of millions of people will “fuel a sharp rebound in economic activity.” With that assessment, the IMF now expects that the global economy will not surpass its last 5.5% increase and reach a 6% global economic expansion.
“Even with high uncertainty about the path of the pandemic, a way out of this health and economic crisis is increasingly visible,” Gita Gopinath, the IMF’s chief economist, said in a statement accompanying the fund’s World Economic Outlook report.
The IMF estimates that the economic fallout from the pandemic could have been three times worse if not for the $16 trillion of worldwide fiscal support. Optimistic projections notwithstanding, without continued ramping up of global vaccinations and economic support from wealthier nations, there remain daunting challenges to a full recovery.
Notwithstanding further quarantines and lockdowns of European Union (EU) countries and its unorganized vaccination drive, the EU said Tuesday it is still on target to reach what it calls “sufficient community immunity” by the end of June.
The European Commission previously stated that it wanted 70% of its population vaccinated by the end of the summer. Having stated that goal, it seems to be counting on an ambitious second quarter vaccination drive to reach that 70% immunity threshold by the end of June.
“We believe that on the basis of this, we will have enough doses of the vaccine to reach our very important target of about 70% of the adult population,” said EU Commission spokesman Stefan De Keersmaecker. De Keersmaecker added that would work if the EU were able to obtain prompt deliveries and distribution of the vaccines and that the 27 EU member states would be able to distribute the vaccines more efficiently than it did during Q1.
“The priority now, more than ever, is to vaccinate without respite,” Prime Minister Pedro Sánchez told a news conference Tuesday. “Vaccinate, vaccinate and vaccinate,” he said.