G7 Minimum Corp. Tax Rate

Exactly how the system of global taxation is explored by Tax Watch UK, here. The proposal suggests taxing only “super profits,” i.e. those arising in excess of a 10% margin. The net result is that the new proposal barely changes the amount of corporation tax that eBay, Amazon, Google & Facebook pay in the UK, but does have the handy side effect of terminating the UK Digital Services Tax (DST). In other words, the much trumpeted G7 agreement is a substantial cut in taxes for the profitable US digital services companies. It’s funny how the FT and, presumably, the rest of the MSM have conveniently omitted to report this.

Wrap

Yields on the 10Y continue to drift down. I don’t really know why this is, but I’m wondering if it is because marginal buyers have decided that most of the big fiscal stimulus bill that has been announced by Joe Biden will never become law. With Clinton era Democratic figures like Larry Summers saying that this is a bad idea, maybe old Joe has lost his nerve, and Karmala has understood that business doesn’t want to see wage costs taking off. Maybe I’m just too cynical.

Predicting politics

Politics for most people is a spectator sport. Each of us has a team, which we want to see win. We think about the arguments for and against a policy, and decide what needs to be done. But this is a very poor way to predict what will happen.

Most people agree, if they are asked, that children are our most precious resource, and that no reasonable expense should be spared in having the state provide a good environment in which they can grown and learn. This clearly includes paying childcare workers a generous wage to ensure that there is enough labour market competition to ensure that only reliable, conscientious and intelligent workers are recruited into this most responsible profession. In practice, this simply doesn’t happen. Why it doesn’t must be something to do with what voters really want.

This podcast explains what the problem is. Voters don’t like free universal childcare, because they think it will disproportionately benefit the poor (and in the US, black women), and also because it will put pressure on more women to work when in the current system they have no alternative but to stay at home and look after their young children: something they actively would prefer to do.

The result, both in the US and the UK, is a poor-quality, short-hours publicly funded system for those who have no option, and a wildly expensive system for that minority women who want to work in professional, high-paying jobs. The result is a mess, but is entirely predictable.

It is also notable that no large corporate interest is behind a reform in state child care provision, which is another block on change.