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US pushing to end ‘race to the bottom’ on corporate taxes

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Janet Yellen

Scott Mlyn | CNBC

The U.S. is taking a two-pronged approach toward its goal of implementing a worldwide minimum tax for corporations as it progresses through negotiations with a global consortium, Treasury Secretary Janet Yellen said Tuesday.

Getting countries around the world to implement a bottom level tax that all companies pay has been a goal the White House has set to stop firms from relocating their home operations to countries with cheaper rates.

That objective has taken on greater urgency as the administration seeks to raise taxes on U.S. companies. Yellen said she’s encouraged so far by developments in talks with other countries.

Along with the increase in the U.S. tax, “we propose to raise the global minimum tax and to close tax loopholes that allow American corporations to shift earnings abroad,” she told The Wall Street Journal’s CEO Council Summit.

Yellen said the U.S. has been in talks with member nations in the Organization for Economic Cooperation and Development.

“We are very actively engaged with other countries to end what has been a global corporate tax race to the bottom,” she said. “I fear this race to the bottom globally with respect to corporate taxes is depriving economies of the revenue they really need to invest in infrastructure, education, research and development and other things to spur growth and also impact corporate competitiveness.”

“So we’re asking companies to step up and pay a little bit more to help realize fiscal priorities that are equally important in making them competitive and doing it in a context where we’ll see an increase in global rates as well,” she said.

A few countries have stated publicly that they endorse the global minimum tax idea, though it remains unpopular in some quarters. U.S. companies have long engaged in “offshoring” practices where they establish domiciles in low-tax countries, even though they conduct much of their business domestically.

The Trump administration slashed the corporate tax rate to 21%, which President Joe Biden wants to raise to 28%. In addition, the 2017 tax cuts provided incentives for companies to repatriate profits they had stored overseas.

At an appearance earlier in the day, Yellen said the tax cuts did little to spur investment and instead sparked share buybacks and dividend issuance for investors.

Aside from the negotiations over the tax level, the administration also is seeking agreement on how other countries are taxing American firms. That is actually the first of what Yellen described as two “pillars” of talks it is having with nations in the Organization for Economic Cooperation and Development.

“Pillar two is about global minimum taxes and pillar one is about these taxes that so far have been levied by some individual countries on American firms,” she said. “We’ve made a proposal to broaden the coverage of pillar one so that it’s not just about U.S. tech companies, so that it’s about the most profitable large corporations operation regardless of sector globally, and we’re hopeful we can come to an agreement on both pillars.”

Yellen said the administration is looking for ways to discourage companies from deducting tax payments they make to tax-haven nations.

Ultimately, she said companies will pay more taxes in the U.S., but she said the revenues are necessary to help fund the expansive spending programs on the administration’s agenda.

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Amazon hiring 75,000 more workers in latest job spree

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An Amazon warehouse

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Amazon is hiring 75,000 workers across its warehouse and delivery network in the U.S. and Canada, the company said Thursday. The company will also offer a $100 bonus to new warehouse and transportation hires who show proof of their Covid-19 vaccination.

Amazon said the jobs will offer an average starting pay of $17 per hour, reflecting its recent wage increases, which bumped up pay by between 50 cents and $3 an hour for more than half a million of its U.S. operations employees.

The hiring push comes as businesses are looking for labor in an increasingly tight market. Some businesses say they’ve struggled to find workers as a result of expanded jobless benefits. Critics have argued that employers should consider raising wages to attract workers.

Companies including Chipotle and McDonald’s have announced wage hikes in recent days to attract employees. To that end, Amazon is offering a signing bonus of up to $1,000 in some locations as an additional tool to lure workers.

Amazon has aggressively hired new employees throughout the coronavirus pandemic, bringing on 500,000 workers in 2020 to help it meet a surge in e-commerce demand. At the same time, it has plowed profits back into physical expansion, opening new warehouses, air hubs and other facilities at a breakneck pace.

The new hires will ensure Amazon has enough employees across its expanded footprint, the company said. It’s looking to fill positions in nearly every corner of the country, with the most open roles available in Arizona, California, Kentucky, Michigan, Pennsylvania, Washington and Wisconsin, among other states.

Amazon hasn’t required its front-line workers to get vaccinated, but it has nudged employees to get vaccinated by offering them a bonus of up to $80. New workers will get $100 for showing proof of vaccination. Other companies including Target, McDonald’s and Kroger have also offered incentives to employees who get the Covid-19 shot.

Amazon in March began rolling out on-site vaccination clinics at warehouses in Missouri, Nevada and Kansas. Since then, Amazon said, clinics have rolled out to more than 250 warehouses across the U.S. and Canada, covering more than half a million front-line warehouse and delivery workers.

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Tesla’s Model Y slumps in China sales rankings, data shows

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Zang Yi charges her Tesla car at a charging point in Beijing, China, April 13, 2018.

Thomas Peter | Reuters

BEIJING — Sales of Tesla‘s newest model for the Chinese market lost steam in April, according to data from China’s Passenger Car Association.

The budget Wuling Hongguang Mini EV held onto its rank in April as the best-selling new energy vehicle in China, the association said Wednesday.

Tesla’s Model 3 ranked second, followed by BYD‘s “Han” luxury sedan.

But Tesla’s Model Y, which launched to customers in China in January, fell to sixth place, down from third earlier this year, the data showed.

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Australia will be ‘patient’ in relations with China, says deputy PM

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Australia will be “patient” as it seeks to repair relations with Beijing, said Australian Deputy Prime Minister Michael McCormack.

His country will also be looking for ways to broaden its trade interests, he told CNBC on Thursday.

Last week, China announced it would “indefinitely” suspend economic dialogue with Australia, the latest in the rift between both countries.. Their relations have soured since last year after Canberra supported an international inquiry into China’s handling of the coronavirus pandemic.

Trade in some products has been caught in the fallout. Beijing has for months targeted a growing list of imported products from Down Under — putting tariffs on wine and barley, and suspending beef imports.

When asked on CNBC’s “Squawk Box Asia” what he was willing to do to bring China to the negotiating table following the suspension, McCormack said: “We’ll be patient, we always are.”

On Thursday, China’s Ministry of Commerce spokesperson Gao Feng told reporters in Beijing that Australia needs to halt its “wrong actions” that “interfere” with its trade with China. He also said Australia needs to take steps to promote the healthy development of trade.

Gao did not specify what these measures should be. That’s based on a CNBC translation of his Mandarin-language comments.

China’s overall trade with Australia grew in April, despite the tensions. Chinese imports from Australia rose 49% to $14.87 billion, while exports rose 20% to $5.25 billion, China’s customs agency said earlier this month.

“We understand that we’ve got the world’s best products,” McCormack said. “I know our mining resources are valued right across the world … whether it’s coal, whether it’s iron ore … iron ore prices are very strong at the moment.”

Beijing imports 60% of its iron ore from Australia, and is heavily dependent on the commodity, which it uses to make steel. China is the world’s top producer of steel. The country is also the world’s largest coal consumer and its greatest source of coal imports was Australia.

“Indeed our resources are greatly valued, greatly in demand around the world, and whether it’s China, or any other country, we will work with them always in a friendly and diplomatic and responsible way,” McCormack concluded.

He also separately said that Australia is looking to “broaden” its trade interests.

“China is a big market for us … we also understand there’s a big world out there … our resources are in great demand and we’ll continue to make sure we diversify our markets,” McCormack told CNBC.

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