Few businesses can stomach President Biden’s corporate tax plan
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As we reported yesterday, Amazon CEO Jeff Bezos has thrown his support behind President Biden’s infrastructure and tax plan. But don’t expect to see a parade of other big company CEOs following his lead. There are lots willing to support a trillion-dollar-plus infrastructure plan, including hefty green energy subsidies and big increases in R&D spending. And many also could swallow a more modest increase in the corporate tax rate. But few can stomach the full corporate tax plan that goes with this package, which some say might force them to relocate overseas.
The question for the moment is: Does anyone in Washington care? Corporate America seems to have lost its bargaining power in the U.S. political process. President Biden said yesterday: “Debate is welcome. Compromise is inevitable. Changes are certain.” But Republicans seemed determined to oppose the infrastructure package, regardless of business wishes. And Democrats seem to believe they can get the votes they need without negotiating. The only business hope for compromise hangs on West Virginia Senator Joe Manchin, whose vote is needed to pass the bill and who says he opposes the tax proposal. A lot of big companies hope he means it. Stay tuned.
More news below. And don’t miss today’s must-read story by Geoffrey Colvin on the epic clash between Big Pharma and Big Hospitals over who’s to blame for soaring health care costs.
President Joe Biden's Treasury Department has raised the threshold for the 15% minimum tax on large, profitable corporations that will fund the infrastructure proposal. Biden campaigned saying the minimum tax would apply to businesses with income exceeding $100 million, but now the threshold is $2 billion, meaning only 45 companies would pay the tax. Companies would also now get tax credits for research, renewable energy and low-income housing. Wall Street Journal
The Biden administration has also reportedly proposed that multinationals should pay taxes to national governments based on their sales in each country. The proposal, which would be a significant concession on the U.S.'s part, is apparently intended to advance international negotiations over the fight against tax avoidance and profit-shifting. Financial Times
The EU's top drug regulator says AstraZeneca's vaccine is "probably the cause" of very rare but dangerous blood-clotting incidents, and the U.K.'s watchdog says people between the ages of 18 and 30 should be given a different vaccine. All of which brings up a significant question: if a vaccine does turn out to harm some people, who's on the hook? In most cases, it won't be the manufacturer. Fortune
Meanwhile, it turns out the U.K. has secretly sent over 700,000 AZ doses to Australia, marking its first known vaccine exports. As for the U.S., it has now emerged that the Trump administration's contracts with vaccine manufacturers are blocking the country from sharing surplus doses with the rest of the world. Sydney Morning Herald
AROUND THE WATER COOLER
Prosus, the tech-investor spinoff from South African media giant Naspers, has sold a 2% stake of Tencent Holdings for a whopping $14.6 billion, in one of the biggest block trades in history. Prosus still has a 28.9% stake in the Chinese multinational. Reuters
Headhunters say former Trump administration figures such as Elaine Chao are having a tough time finding high-profile new corporate roles. "The feedback was, 'It's too soon,'" one told the Washington Post. Around half of S&P 500 companies have filed their 2021 investor disclosure reports, and none list late Trump cabinet officials as nominated board members—at this stage in 2009, four major firms had nabbed former George W. Bush cabinet members. WaPo
Peter Thiel, who remains a bitcoin fan, nonetheless claims the cryptocurrency should perhaps be seen "in part as a Chinese financial weapon against the U.S." "It threatens fiat money, but it especially threatens the U.S. dollar," he told Richard Nixon Foundation members. "[If] China’s long Bitcoin, perhaps from a geopolitical perspective, the U.S. should be asking some tougher questions about exactly how that works." Bonus story: China's bitcoin mines could undermine its climate neutrality goals. Fortune
The disparity between shareholders' fortunes and those of delivery drivers and shelf-pickers has grown during the pandemic. As Fortune's Matt Heimer writes: "In a capitalist economy, we accept and even encourage disparity of wealth; it’s inextricable from a system that rewards innovation, industriousness, and competitive drive. But when, say, the gulf between the CEO and the delivery driver grows too wide, collective trust erodes. And if that happens, business can suffer the consequences." Fortune
This edition of CEO Daily was edited by David Meyer.