Democrats in the House of Representatives want to scale back Joe Biden’s proposed tax increases on corporate income and capital gains, as part of $2.9tn in tax rises to pay for the US president’s expansion of the social safety net.
The draft tax plan, obtained by the Financial Times, was circulated on Sunday among members of the House ways and means committee and proposes the US corporate tax rate would rise from its current 21 per cent to 26.5 per cent — short of the 28 per cent level proposed by Biden this year.
House Democrats are also looking to raise the tax paid by investors on capital gains to 25 per cent from the current rate of 20 per cent — significantly below Biden’s planned rate of 39.6 per cent.
However, House Democrats also proposed a 3 per cent surtax on earnings of more than $5m a year, which would target the most affluent US households. Biden has not backed such a surtax.
What do you think of the Democrats’ plan to raise taxes to pay for the expansion of the social safety net? Email me gordon.smith@ft.com and let me know your views. Thanks to all the thoughtful responses to my question last week about Biden’s plans to mandate workplace testing and vaccines. There is more on the return to the office below.
Five more stories in the news
1. Beijing to break up Ant’s Alipay Chinese regulators want to break up Alipay, the 1bn-plus-user super app owned by Jack Ma’s Ant Group and create a separate app for the company’s highly profitable loans business, in the most visible restructuring yet of the fintech giant.
2. Frontrunner to succeed Merkel criticised during TV debate Olaf Scholz, frontrunner in the German election campaign, came under fierce attack in the second televised debate last night, just two weeks before an election that will decide who succeeds Angela Merkel as German chancellor.
Go deeper: Olaf Scholz is odds-on favourite to succeed Angela Merkel as German chancellor, an extraordinary development given that the Social Democrats were languishing at between 14 and 16 per cent in the polls just a few months ago.
3. Horta-Osório tightens his grip at Credit Suisse Credit Suisse’s new chair António Horta-Osório has taken on more executive duties at the Swiss bank in what insiders describe as a power grab that has diluted the authority of chief executive Thomas Gottstein.
4. Ireland fails to enforce EU law against Big Tech Ireland is failing to apply the EU’s privacy laws to US Big Tech companies, according to privacy campaigners. Google, Facebook, Apple, Microsoft and Twitter all have their European headquarters in Dublin, making Ireland’s Data Protection Commissioner the lead EU regulator responsible for holding them to account on privacy issues.
5. Argentina’s ruling Peronists suffer heavy defeat in midterm primaries President Alberto Fernández’s leftist Peronist party suffered a heavy defeat in Argentina’s midterm primaries on Sunday, a result that pointed to the government’s senate majority being at risk in November’s elections.
Coronavirus digest
The failure by the US to bring Covid-19 cases under control is forcing companies to reset plans and revise forecasts. Meanwhile, several Republican governors plan to challenge President Joe Biden’s staff vaccination mandates in court.
The UK has dropped plans to introduce vaccine passports at nightclubs and mass events in England this month. The country has also cancelled a €1.4bn vaccine deal with France’s Valneva, saying the company was in breach of its obligations under the deal.
Economists say Europe is in the “sweet spot” of its bounceback from the record postwar recession, but optimism is tempered as risks gather.
Luxury carmakers Daimler and BMW plan to limit the volume of premium models they ship even once the industry-wide chip shortage eases, in a bid to lock in hefty price increases.
Follow our coronavirus live blog and sign up to our Coronavirus Business Update for a regular briefing on how the pandemic is affecting the global economy.
The day ahead
Earnings Oracle, the company that last year was linked to a purchase of Tik Tok’s US business, reports first-quarter results today.
Hearings US secretary of state Antony Blinken testifies before the House of Representatives Committee on Foreign Affairs, which is holding the first meeting looking at the US withdrawal from Afghanistan.
Prince Andrew court hearing in US sexual assault lawsuit A New York court will hold a pretrial conference today involving Virginia Giuffre, who claims Prince Andrew sexually assaulted her. Guiffre, a victim of the late child sex offender Jeffrey Epstein, is suing the prince in a civil case. The prince denies the allegations.
Norway elections Voting in parliamentary elections officially begins today, although several large cities opened their polls the day before. It is expected to bring the centre-left opposition to power after a race dominated by the future of oil and the climate crisis.
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What else we’re reading
The US needs to make homes more affordable — and available A decade on from the subprime meltdown, housing is still at the centre of the US’s economic bifurcation, writes Rana Foroohar. Just as investors drove the pre-financial crisis housing boom, they have also driven the post-pandemic increase in home prices. Rana argues that we need a housing policy that makes homes what they should be: shelter.
Return to work: the new lessons for managers As employees begin their return to work some trends are emerging as to how companies cope with the shift. “Everybody is still working it out,” says a consultant who helps companies organise flexible working schemes. “I don’t think we are yet at a point where we can say there is one approach that is working well.” Separately, the FT is conducting a back-to-work survey as part of a reporting project. If you want to participate, please fill in this form.
Stimulus fears boost demand for ETF havens Growing anxiety about the possibility of a sharp pick-up in inflation globally is driving some investors to switch into bond-based exchange traded funds designed to offer protection against monetary debasement. This story is part of an ETF special report. You can keep up to date with the latest industry news from our ETF hub.
Investors divided over Chinese markets A clash has erupted between two of the world’s most prominent investors, reflecting a widening divide on Wall Street about putting money to work in China. While fund managers have been cooling on the world’s second-largest economy, BlackRock last week announced it had raised $1bn for its first mutual fund in China.
FT Masters in Management The University of St Gallen in Switzerland has retained top spot in the Financial Times 2021 ranking of masters in management degrees for the 11th year in a row. View the full ranking here.
The battle to control football The plan to hold the World Cup every two years is part of a struggle over whether the big clubs or national teams will be pre-eminent in the football world. At its heart, it is a battle over money and power, with the sport’s governing bodies fighting for dominance. For more on the business of sport, sign up to our weekly Scoreboard newsletter.
Books
The world may not have known it needed a vampire novel couched as a long-form poem, but now it has one in the shape of Baby Teeth (Little Island, £6.99) by Meg Grehan. It is one of a crop of titles featured in our round-up of the best new science fiction books available.
Source: Economy - ft.com
