The leaders are hoping to prevent companies from moving their headquarters to countries with lower tax rates, but their plan will likely face substantial hurdles both internationally and from the U.S. Congress.

Global Tax Minimum

President Joe Biden and other G7 leaders announced on Friday that they are endorsing a global minimum corporate tax rate of 15%. 

Their plan seeks to effectively end company strategies of moving headquarters to countries with cheaper tax rates, even if most of their business is located elsewhere. Coupled with the tax minimum, the leaders have also announced a tax plan that links companies to where they do business rather than where they are headquartered.

Should it become widely adopted, the plan could prove to be a significant threat to the so-called tax-cutting “arms race,” where countries push for lower and lower corporate tax rates to attract businesses; however, the plan will undoubtedly face challenges of its own. For example, Ireland — a country with a 12.5% corporate tax rate — has said such a policy would be detrimental to its economic success. 

The Wall Street Journal has also reported that China is unlikely to support the plan, though it noted that such support isn’t completely off the table. While China already has a higher corporate tax rate of 25%, its special administrative region of Macau has a noticeably lower rate of 12%.

Even England itself, which is backing the global tax rate, is looking to exclude London’s financial services companies from the overhaul. 

As the White House noted in a press release, “This U.S. priority is a critical step towards ending the decades-long race to the bottom that pushes nations to compete over who can offer the lowest tax rate to large corporations at the expense of protecting workers, investing in infrastructure, and growing the middle class.”

The G7, or Group of Seven, is an informal alliance between many of the world’s top economies, composed of the United States, Japan, Germany, France, the United Kingdom, Italy, and Canada. Leaders for each met in person Friday to discuss not only the global tax rate but also issues such as coronavirus aid, climate change, and cybersecurity.

Following this weekend’s summit, the G7 hopes to push its global tax minimum before the G20, which is composed of 19 countries and the European Union. 

Congress Would Need to Sign Off

While only an endorsement, any official implementation of a global tax rate in the U.S. would require congressional approval.

That could prove difficult considering people like Sen. Pat Toomey (R-Pa.) have called the plan “crazy.” 

“Certainly the whole fact that they had to try to persuade all these other countries to make sure they raise their taxes is a confession of the damage we’re doing to our own country,” Toomey added. “They certainly wouldn’t have the votes to approve a treaty of this kind that they’re contemplating.”

Biden’s plan to raise domestic corporate tax rates from 21% to 28% has also faced major opposition from Republican lawmakers. This week, the president indicated that he would be willing to decouple the tax hike from his infrastructure plan, but talks with Republicans have since fallen through.

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The Federal Reserve believes the Consumer Price Index hike is only temporary and related to unique factors brought about by the pandemic.

CPI on the Rise

While the past week marked the sixth straight round of pandemic-era lows for the number of initial unemployment claims, additional data shows that prices on the consumer side are climbing at their fastest rate since the summer of 2008.

Year over year, the Consumer Price Index rose 5% in May. The core CPI, which excludes volatile food and energy costs, also rose at its fastest rate since 1992, jumping 3.8%.

Just looking at the numbers and nothing else, that could be pretty concerning given the fact that last month beat out 13 years worth of data tracking back to just before the U.S. was hit by the 2008 financial crisis.

But the Federal Reserve doesn’t seem all that concerned. In fact, it believes the CPI jump is based on mainly temporary factors related to the pandemic. That includes supply bottlenecks and other shortages brought by the reopening of the economy. 

Economists have also noted that year over year values are currently stilted since so much of the economy was shut down this time last year. By comparison, that yields a large and alarming figure if looked at without context.

Because of that, the Fed said prices will likely come down as the year continues.

Still, that explanation hasn’t completely shaken fears that a high CPI could potentially cause long-term damage if it fails to subside. 

“The stakes are high on both Wall Street and Main Street,” The New York Times reporter Jeanna Smialek said in a Thursday article. “Inflation can erode purchasing power if wages do not keep up. A short-lived burst would be unlikely to cause lasting damage, but an entrenched one could force the Fed to cut its support for the economy, potentially tanking stocks and risking a fresh recession.” 

Sixth Straight Week of Pandemic-Era Low Unemployment Claims

Initial unemployment claims fell to yet another pandemic low, this time dropping to 376,000. 

Meanwhile, continuing claims dipped as well, falling from 3.65 million the previous week to 3.5 million this past week. 

Despite the U.S. currently experiencing an ongoing labor shortage, multiple weeks of continuing declines indicate that the job market is gradually working its way back down to pre-pandemic levels of around 200,000 claims a week.

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Meanwhile, Delta and American Airlines are asking some salaried employees to volunteer for extra, unpaid shifts amid a travel surge.

Job Openings Hit 20-Year High

The end of April saw a record 9.3 million open job listings across the country, according to data released Tuesday from the Labor Department. 

Since the department began keeping track of job listings in 2000, the number of open positions has never been so high. The stat is also notable because it nearly matched the 9.8 million unemployed Americans who indicated that they were actively searching for jobs at the time.

April also saw a record high for the rate at which workers quit their jobs, as well as a record low for lay-offs. Of the 4 million workers who quit their jobs that month, most were in the retail sector.

According to data from Indeed, at the end of May, job postings in food soared past pre-pandemic levels by 25%. 

The Labor Crunch

Over the last several weeks, mass COVID-19 vaccinations have led to revitalization of the U.S. economy, which in turn has led to a serious labor crunch. That’s for a variety of reasons. 

One camp, particularly conservatives, argues that people are avoiding work so they can continue to draw federally-enhanced unemployment benefits, which can amount to higher than what they’d earn working. 

In fact, Republican governors in 25 states, which account for 40% of the workforce, have now made plans to end those federal benefits. The first round of states — Alaska, Iowa, Mississippi, and Missouri — are set to cut off access this Saturday.

Meanwhile, the other camp, largely made up of progressives, argue that many are still worried about a lack of childcare availability and ongoing COVID-19 risks, especially if they or their family members are immunocompromised. They also believe a large portion of workers might be holding off on accepting jobs outside of their career field or below their experience level. 

Airlines Ask Employees To Volunteer for Extra Shifts

Retail isn’t the only sector struggling to find workers. Airports and airlines are also experiencing shortages while trying to keep up with a huge spike in travel.

In recent weeks, the TSA has promised $500 monthly bonuses to screening officers at short-staffed airports, turned part-time positions into full-time positions, and even increased overtime to the point that it required officers to work on their days off. 

Seemingly, that hasn’t been enough. the TSA is also now reportedly asking its office workers to volunteer to assist with airport checkpoints for up to 45 days. 

Delta and American Airlines have similarly asked some of their salaried employees to volunteer at airports amid the travel surge; however, in both cases, those employees won’t be paid for these extra, “volunteer” shifts.

“What are you doing, @AmericanAir??”  vlogger and streamer Meg Turney said on Twitter. “Pay your people or don’t ask them to work. C’mon now.”

“I don’t agree with folding extra shifts into a salaried position and calling it “volunteering,” Turney added after pushback from some. 

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