Janet Yellen wants to overhaul corporate taxes for the whole world – she’s talking to other countries about a minimum rate

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Treasury Secretary Janet Yellen.

  • The Washington Post reports Treasury Secretary Yellen is working on a global minimum tax rate.
  • The nonbinding rate would apply to multinationals, as she seeks to keep them from shopping for the lowest territory.
  • Yellen and Biden want to raise the corporate tax rate but need the rest of the world onboard.
  • See more stories on Insider’s business page.

Treasury Secretary Janet Yellen has been clear since her confirmation hearing and subsequent press appearances that the Biden administration needs to raise new tax revenues. At the same time, she’s warned of the difficulties of implementing a wealth tax, which is favored by the progressive wing of the Democratic Party.

Part of the solution is reforming the corporate tax rate – not just in the US but far beyond its borders.

To that end, Yellen is in active talks with other countries about setting a global minimum rate for corporate taxes, The Washington Post’s Jeff Stein first reported.

The US was long an outlier, with a corporate tax rate of 35% versus the international average of 24%, until former President Donald Trump’s 2017 tax cut slashed the corporate rate to 21%. But even that hasn’t stopped other countries from lowering their rates to attract multinationals. The Post noted that nine countries lowered their corporate tax rate just last year.

Nobel Prize-winning economist Joseph Stiglitz, a mentor of Yellen’s, told the Post that if she is successful in these talks, it would be “a little like the Paris climate accord of taxes.” Yellen is holding talks with more than 140 international counterparts via the Organization for Economic Cooperation and Development (OECD), where countries are looking at global tax issues, with a particular focus on tech.

The goal for now is a nonbinding consensus on a minimum tax rate within the OECD, with the thinking that the US could move off the Trump-era 21% without fear of multinationals leaving to pay taxes at a lower rate somewhere else.

In the background of Yellen’s push for a global minimum is the Biden administration’s current push to find more tax revenue. President Joe Biden is reportedly planning the first major federal tax increase in nearly three decades, according to Bloomberg. One of the proposals on the table is a raise to the corporate tax, something that Biden campaigned on. He’s proposed raising the corporate tax rate to 28%.

The right-leaning Tax Foundation found that, since 1980, the “worldwide average statutory corporate tax rate has consistently decreased,” with the biggest drops coming in the early 2000s. According to the Tax Foundation, “the worldwide average statutory corporate income tax rate” is 23.85%.

Biden also just said this week that Americans earning over $400,000 could see an increase in their taxes, a measure he acknowledged may not win any Republican support.

There could be a complicated path forward for Yellen’s corporate minimum, per the Post. Congress may need to be involved in approving new tax rules, and it could take the countries involved years to enact the tax, if they even choose to adopt it.

As the Post reports, if the complex measure is successful, it would be a huge accomplishment for both Yellen and Biden’s presidency – and maybe the world. It could also help pay for a $2 trillion infrastructure package.

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Treasury says it has issued 90 million direct payments – and Americans can start accessing their stimulus checks

coronavirus relief bill cares act stimulus check
  • The Treasury Department said on Wednesday it’s already issued 90 million direct payments.
  • It means Americans can start accessing stimulus cash, including those with accounts at major banks.
  • Individuals earning up to $75,000 qualify for a full check from the federal government.
  • See more stories on Insider’s business page.

The Treasury Department announced Wednesday it has distributed 90 million direct payments to Americans, and people can start tapping into their federal relief funds.

“The first batch of payments were mostly sent by direct deposit, which some recipients started receiving this past weekend,” the Treasury Department said in a statement. “As of today, all recipients of this first batch of direct deposit payments will have access to their funds.”

The 90 million federal payouts amounted to $242 billion, the Treasury said. It added that the first round of direct payments went to taxpayers who provided deposit information on their 2019 or 2020 tax returns. The federal government has also mailed 150,000 paper checks, the agency said.

The IRS and Treasury started distributing the $1,400 federal payments on Friday evening, only a day after President Joe Biden signed the $1.9 trillion stimulus plan into law.

However, customers at major banks like Wells Fargo had to wait for the government cash to be released on March 17 before being able to tap into the money.

Singles earning up to $75,000 in adjusted gross income qualify for the full amount, along with couples making up to $150,000. Each adult dependent is eligible for a check as well. But the stimulus payments diminish in size much more quickly. Individuals earning above $80,000 and couples making above $160,000 will receive zero.

People can track the status of their relief checks using the “Get my Payment” portal. The Treasury said that 35 million Americans had accessed the service for more information.

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Americans can start tracking the status of their $1,400 stimulus checks on Monday

stimulus check eligibility
  • The IRS said people can begin tracking the status of their payments on Monday.
  • The initial batch of $1,400 checks has started landing into people’s bank accounts.
  • The IRS is moving swiftly to send out the checks as part of Biden’s stimulus law.
  • See more stories on Insider’s business page.

Americans are starting to see $1,400 stimulus checks land in their bank accounts this weekend under President Joe Biden’s stimulus law. But people who don’t get a direct payment right away won’t be left unaware of its arrival for much longer.

The IRS said on Friday that people can begin tracking the status of their checks using the “Get my Payment” portal on Monday. The agency also said it expects to issue more direct deposits and send payments as a check or debit card over the coming weeks.

The IRS also said a payment date will be announced for beneficiaries of Social Security and other safety net programs.

Singles earning up to $75,000 in adjusted gross income qualify for the full amount, along with couples making up to $150,000. Each adult dependent is eligible for a check, a change from the first two rounds of stimulus payments.

People earning above those thresholds can still receive a smaller direct payment. But eligibility is capped for individuals earning more than $80,000 and joint filers making above $160,000. They’ll get zero.

The swift arrival of the federal payments underscore the IRS’s improving ability to get cash out the door quickly, especially for people with direct deposit information in their systems.

Last year, Congress and former President Donald Trump approved $1,200 stimulus checks for most taxpayers. Those government payouts started going out in two weeks.

Then in December, $600 checks started going out within days of Trump signing an earlier pandemic relief package. It took around a month and a half for the IRS to distribute 147 million payments.

Biden touted the direct payments during his first primetime address on Thursday evening, timed to the first anniversary of the nation’s pandemic lockdowns. He said a family of four earning $110,000 can expect to receive $5,600 in cash benefits.

The federal government estimates this batch of direct payments will cost $411 billion.

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10-year Treasury yield climbs past key threshold, pulling tech stocks lower as investors reposition to sectors ‘better suited’ for economic reopening

Traders work on the floor of the New York Stock Exchange (NYSE) on December 07, 2018 in New York City
Traders work on the floor of the New York Stock Exchange (NYSE) on December 07, 2018 in New York City

  • The 10-year yield rose beyond 1.6% following a sharp rise in the number of jobs added in the US in February. 
  • The 10-year yield’s rise reflects that the US is preparing to exit a “horrible time in our economy,” says one analyst. 
  • The Nasdaq lost more ground Friday after Thursday’s selloff. 
  • Visit the Business section of Insider for more stories.

Borrowing costs as implied by the 10-year Treasury note’s yield rose Friday following a strong February jobs report, with the increase putting further pressure on technology stocks that have leapt in value during the COVID-19 health crisis.

The 10-year yield ran up to 1.614% after the Bureau of Labor Statistics said US businesses added 379,000 payrolls last month, smashing through expectations for the addition of 200,000 payrolls.

The yield has strengthened this week, with a move beyond 1.5% on Thursday sparking a selloff in equities. The Nasdaq on Friday dropped 1.3% during the session, with electric vehicle maker Tesla down 6%, Apple off by 1.4% and Amazon lower by 1.2%.

The Nasdaq on Thursday erased gains for the year from its February 12 record close. 

The 10-year yield, which influences a range of lending programs, has quickly climbed from about 1% at the start of 2021, which appears to reflect a faster-than-expected availability of COVID-19 vaccines to the public, Jamie Cox, managing partner for Harris Financial Group, told Insider.

“This time last year, a lot of people rotated out of sectors which were going to be most harmed by the pandemic and bought technology because technology was the one sector that was probably considered to be defensive for the first time ever,” said Cox. “So it makes perfect sense that you would see a selloff in technology to restore positions back in places that are going to be a little bit better suited now that the pandemic is largely behind us.”

The US economy is moving further toward fully reopening and that “should continue to push Treasury yields higher and will present a headwind to those sectors that did so well last year like Technology, Communication Services and, to a lesser extent, Consumer Discretionary (particularly because of Amazon),” wrote Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, in a Friday note.

“I regard the rise in yields not as some pretense of hyperinflation,” said Cox. “It’s just a recognition that we’re getting ready to exit a very horrible time in our economy and interest rates should reflect that,” he said, adding that he expects the 10-year yield to begin to moderate by May and not move much beyond where it is currently.

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Janet Yellen says using bitcoin is an ‘extremely inefficient’ way to transact

Janet Yellen
Federal Reserve Chairman Janet Yellen waits for a hearing of the Joint Economic Committee on Capitol Hill, November 29, 2017.

Treasury Secretary Janet Yellen on Monday expressed doubts about the utility of bitcoin as payment method and warned investors of the risks involved in using the world’s most famous cryptocurrency.

“I don’t think that bitcoin is widely used as a transaction mechanism,” Yellen told the DealBook DC Policy Project. “It’s an extremely inefficient way of conducting transactions and the amount of energy that’s consumed in processing those transactions is staggering.”

Bitcoin mining has been known to consume high amounts of energy, with total worldwide electricity consumption higher than that of Argentina, the Netherlands, and the United Arab Emirates, and soon to eclipse Norway’s, according to the BBC.

Meanwhile, interest in bitcoin mining is on the rise as the asset rallies, and miners earned a combined $1.1 billion in January, up 62% from December.

Apart from energy concerns, critics have also long said bitcoin is primarily a tool to conduct illegal activities, such as money laundering or drug trafficking, a concern that Yellen echoed in her talk.

“To the extent it is used, I fear it’s often for illicit finance,” Yellen said. “It is a highly speculative asset and you know I think people should be aware it can be extremely volatile and I do worry about potential losses that investors can suffer.”

The comments by the Treasury Secretary come a day after bitcoin hit a new record of $58,042, bringing its year-to-date gain to over 100%. On Friday, the popular cryptocurrency reached a market capitalization of $1 trillion. Despite pulling back on Monday, bitcoin is still trading above the $53,000-level.

Yellen joins a a growing chorus of regulators who have given their thoughts on the cryptocurrency as it climbs to dizzying heights. Some regulators, such as ECB president Christine Lagarde, believe it should be regulated on a global level. 

“I think that there are criminal investigations that have taken place that I’m sure will continue to take place that demonstrate it very clearly,” Lagarde told Reuters in January.

Lagarde said bitcoin is not a currency but is instead a “highly speculative asset which has conducted some funny business and some interesting and totally reprehensible money laundering activity.”

Bitcoin traded at $53,193 at 1:57PM E.T. on Monday.

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Biden Treasury pick Janet Yellen says additional stimulus and expanded unemployment insurance will provide the ‘biggest bang for the buck’

Janet Yellen Speaking at Biden Lecturn December 2020.JPG
Janet Yellen speaks in Wilmington, Delaware, on December 1, 2020.

  • Joe Biden’s Treasury pick Janet Yellen faced lawmakers at a confirmation hearing in the US Senate Tuesday.
  • The former Fed chair said additional stimulus and expanded retirement insurance will have the biggest impact in the immediate term.
  • “They’ll create jobs throughout the economy,” Yellen said of her plans to provide more relief for small businesses.
  • Visit Business Insider’s homepage for more stories.

President-elect Joe Biden’s pick for Treasury Secretary, Janet Yellen, says additional stimulus relief for those most in need coupled with expanded unemployment insurance will have the biggest economic impact in the immediate term, giving Americans “the biggest bang for the buck.”

“I think relief that we provide to those who are in the greatest need and to small businesses have the best chance of providing both relief to those who’ve been so badly affected by the pandemic and creating a great deal of spending per dollar spent,” Yellen said during her Senate confirmation hearing Tuesday. “They’ll create jobs throughout the economy.”

Yellen, who chaired the Federal Reserve from 2014 to 2018, said targeting relief for those most in need during the pandemic could help the economy recover in the short term. Among her plans she said additional funding for Supplemental Nutrition Assistant Program (SNAP), extended unemployment insurance, as well as additional stimulus, and relief for small businesses would be key.

Yellen emphasized the extent of the economic and human devastation the virus has inflicted on the US over the past year and warned of another recession without a set of fiscal policies to address the issues those most impacted by the pandemic face everyday.

“We have to relieve the suffering that this pandemic has caused. We need to look at the businesses most at risk,” Yellen said.  “If we don’t do so, that suffering and the loss of spending will cause other people to lose jobs and permanent scarring, that will harm the economy over the longer term.”

Her plans align with Biden’s $1.9 trillion relief proposal, which calls for bigger benefits for Americans struggling with hunger and $400 weekly federal unemployment benefits. Yellen called for the government to “act big” when it comes to providing stimulus, going along with Biden’s $1,400 boost to the $600 stimulus checks.

As treasury secretary, Yellen will play a crucial role in guiding the Biden administration’s negotiations with a divided Congress, as Democrats will have very slim majorities in both chambers.

Yellen requires a full Senate vote to be installed as secretary, though she is expected to win an easy confirmation. She will be the first woman to lead the Treasury in the nation’s history.

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TurboTax and H&R Block say they have fixed the issues that prevented $600 stimulus checks from being paid out

protest stimulus
Protesters rally to demand economic relief during the coronavirus pandemic.

  • TurboTax and H&R Block said they’d fixed issues that were delaying $600 stimulus payments from the Internal Revenue Service.
  • “We have been working tirelessly with the Treasury and IRS to get stimulus payments to our customers. We know how important these funds are for so many Americans and we regret that an IRS error caused a delay,” a TurboTax spokesperson told Insider via email.
  • In a statement, the IRS said: “The IRS and tax industry partners are taking immediate steps to redirect stimulus payments to the correct account for those affected. 
  • Visit Business Insider’s homepage for more stories.

TurboTax and H&R Block said they’d fixed issues that were delaying $600 stimulus payments from the Internal Revenue Service.

“We have been working tirelessly with the Treasury and IRS to get stimulus payments to our customers. We know how important these funds are for so many Americans and we regret that an IRS error caused a delay,” a TurboTax spokesperson told Insider via email.

In the middle of last week, the tax-filing companies said they were experiencing issues with some payments, many of which were being sent to the wrong accounts. Some payments were sent to closed accounts. The issues caused delays for some taxpayers who were seeking relief.

H&R Block on Friday said it had processed “all stimulus payments” to millions of its clients. TurboTax said it began depositing delayed payments on Friday.  

Congress approved the new $600 payments as part of December’s $900 billion stimulus bill. President Donald Trump signed the bill on December 28. The IRS then launched a website to help taxpayers track their new payments. But the system stumbled last week, with H&R Block and TurboTax both saying some would be delayed.  

“It is possible the IRS sent your second stimulus payment to a different place than your first stimulus payment,” said H&R Block in a statement posted on its website. 

The IRS on Thursday said some payments will be sent as prepaid debit cards instead of paper checks. On Friday, it added that 100 million taxpayers had already received their payments. 

The agency said Friday: “The IRS and tax industry partners are taking immediate steps to redirect stimulus payments to the correct account for those affected. The IRS anticipates many additional taxpayers will receive payments following this effort.”

 

 

 

 

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