As we become older, we tend to see certain changes in the way we choose to live. We usually begin our adult years by living in an apartment, simple and private, and then marriage and children compel many of us to seek bigger places to live, places that can accommodate more people and pets. We also get used to budgets, and if we are lucky, to spending and saving.
We also inevitably become more accustomed to taxes, although many of us from our first payments of income taxes to our payments of property taxes start to feel the increasing resentment that we have as we make out a check that covers the latest property tax payment. We can’t help thinking that the money could’ve been used for a family vacation.
I think of taxation because the Biden administration has won the support of 130 countries for significant changes in the way companies are taxed internationally. Two Wall Street Journal reporters give the following description: “Governments will now seek to pass laws ensuring that companies headquartered in their countries pay a minimum tax rate of at least 15 percent in each of the nations in which they operate, reducing opportunities for tax avoidance.” Currently, annual tax avoidance is no small amount. Some estimates place that amount at up to $240 billion annually.
Not all nations have signed up, of course. Three EU members, Ireland, Hungary and Estonia, have failed to sign, according to Reuters.
Nonetheless, some of the most notorious tax havens have signed on. These include the Cayman Islands, Bermuda and the British Virgin Islands, Reuters reports.
In the midst of this good news for the Biden Administration, more economic good news was offered by the Congressional Budget Office when it increased its forecast for economic growth in the United States this year. It also forecast smaller federal budget deficits and slightly reduced federal debt.
All of this good news will be seen through the reality of increases in inflation in the fourth quarter of 2021 and a projection of slowing of price increases in 2022. A good sign for these changes is that the big technological firms are already viewing these tax changes positively. There will be a careful review of those changes, but if they are generally accepted by big business, they will be more readily accepted by business in general.
Hopes for the continuance of this economic good news will be tempered by the realities of the battle with the coronavirus. The fast increases in the Delta variant of the virus throughout the world worries many. It now exists in 85 countries and is impeding the reopening of economies. Moreover, it is underscoring the differences between those countries that are well inoculated and those that are not. The delay in eradicating lockdowns, the impositions on travel restrictions and the increases in hospitalizations in various nations are grim testimonials to the continued destructive power of the virus. In those nations suffering badly from the Delta variant, such as India, Indonesia and Britain, the eradication of masks will be significantly delayed. It is a bitter irony that while the economic authorities in many nations are finally seeing the possibilities for reopening of their economies, others are making plans to further delay the opening of theirs. Those delays will cause further economic damage.
Those working for health departments in the United States and abroad continue to hope that more people will become vaccinated, since this is the surest protection. The sooner populations become fully vaccinated, the greater the economic benefit for everyone.
Dave Kaplan, author and retired educator, writes from his home in Santa Barbara, Calif.