tax deduction

NOTHING IS FREE: HOW THE U.S. GOVERNMENT WILL RECOVER $2 TRILLION

The Biden administration believes that new tax rules for multinational corporations are long overdue, so this week it proposed a new plan to implement them.

What does this mean?

The world’s governments have spent billions to keep their economies running during the pandemic, so it is not surprising that they are keen to replenish their coffers by raising taxes. What is surprising is that the OECD – the economic organization that has been working for years to overhaul the world’s tax system – has finally moved to do just that.

What is OCED?

“The Organisation for Economic Co-operation and Development (OECD) is an international organization whose mission is to design better policies for better lives. Our goal is to promote policies that foster prosperity, equality, opportunity and well-being for all people. We are backed by 60 years of experience and expertise to better prepare tomorrow’s world.

In partnership with governments, policy makers and citizens, we work to set international standards and propose evidence-based solutions to a range of social, economic and environmental challenges. The OECD is a unique forum, a knowledge hub for data collection and analysis, sharing experiences and best practices. We advise on public policy and on setting global standards and norms in areas ranging from improving economic performance and job creation to promoting effective education or combating international tax evasion.”

The news is largely relevant to the United States, which last week submitted plans for a minimum tax rate of 21%, a big jump from the 12.5% that the OECD has long been proposing. The U.S. is reportedly proposing that countries should be able to tax all large multinational companies based on their income. And while that would not necessarily change the amount they would have to pay, it would change who they would have to pay.

The curious fact is the proposal of the United States to establish policies for 166 member countries of the organization based on the importance of the multinational, applying a theory that criticizes companies that do not adhere to certain guidelines of the agenda, such as climate change and other guidelines of the Paris agreement or the World Economic Forum.

More Taxes

The new administration is striving to recover the money printed via taxation while maintaining strict lock-up rules in some states. It was the plan proposed since November although it was not much discussed in the televised debates if they were discussed in social networks recalling the following:

NOTHING IS FREE: HOW THE U.S. GOVERNMENT WILL RECOVER $2 TRILLION

The sudden US enthusiasm for global taxation is not bureaucratic disinterest: a higher global minimum would allow the country to raise its domestic corporate tax rate from 21% to 28% without the risk of other countries undercutting them and luring their companies abroad. The negative effect of this measure is that companies would be forced to look for new ways to expand in the long term while in the short term they would be forced to cut back, the big loser being the middle class worker.

NOTHING IS FREE: HOW THE U.S. GOVERNMENT WILL RECOVER $2 TRILLION

U.S. companies won’t be too happy: analysts estimate that the proposed overhaul would cut their profit growth by as much as 9% next year, and the technology and pharmaceutical sectors risk even bigger losses. Perhaps that’s why taxes are second on the list of things investors are worried about, according to a Royal Bank of Canada survey, just behind central bank policies but ahead of inflation fears in the last quarter.

A topic few discuss: Unemployment

It has been 4 months since the beginning of this administration and they have already injected more than 1.9 Trillion dollars into the economy by way of stimulus and aid to everyone (literally) since most of the money approved goes to the international agenda and other things. Right now we are having a party as the economy is on steroids due to the amount of money circulating in and out of the United States, what worries me? – How strong the hangover will be.

To give you an idea of how serious the situation is for the common citizen, the Fed is introducing a massive amount of cash into the financial markets, which is creating and injecting around 120 billion dollars into the market every month (According to Richard Duncan author of “The Dollar Crisis”), on top of that the treasury department has a bank account with more than 1 trillion dollars in it, and plans to spend it within the next few months. All this liquidity puts pressure on the prices of stocks, property, gold, silver and other types of instruments.

The employment situation is not looking good, with more than 700,000 unemployment claims reported at the beginning of April and already stabilizing from January to February at 6.2% or so. Recalling that the average of the previous administration in pre-pandemic times was 2.5%.

Recommendation

Giving recommendations in this type of situation is difficult since each person has a different challenge to face on a daily basis, neither do I want to be a financial advisor who has a crystal ball with the immediate solution to the economic problems of most citizens, already with this scenario is estimated to come in the coming months while the IMF being optimistic projects an inflation by the end of 2021 of 2. 4%, economists discard this projection model and with everything that happens and does not happen inside and outside the U.S. and the above mentioned situation could be estimated to reach 8% which would be a strong blow to the dollar and purchasing power. At this time it is time to learn about long term safe haven assets to withstand the shock of what is to come in the coming months if the plan is not corrected.

NOTHING IS FREE: HOW THE U.S. GOVERNMENT WILL RECOVER $2 TRILLION

Safe-haven assets: gold, silver, currencies (Swiss Franc) and in this digital age cryptocurrencies.

This article is not intended to recommend any investment operation, as I consider them high risk and you can lose all your money, all this information is written for educational purposes.

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