Ken Fisher Examines the New Global Tax Proposal and What It Means for You

Title screen appears, “Ken Fisher Examines the New Global Tax Proposal and What it Means for you.”

A man appears on the screen Wearing A blue shirt, sitting in an office.

He begins to speak.

A banner identifies him as Ken Fisher, Executive Chairmen and Co-Chief Investment Officer, Fisher Investments.

Ken Fisher doing hand gestures time to time explaining.

Ken Fisher: Lately as we move toward the back part of July, there's a lot of buzz about the proposed global corporate minimum tax of supposedly 15%.

And that raises people having concern that this could be a negative impact to corporate profits, which could then impact the stock market, etc, etc, and should they be worried about such a thing?

Ken Fisher: The simple answer, in my opinion, is no. I've written several pieces in several different places that I've posted on my Twitter feed and

on Real Clear Markets and LinkedIn and various other places that indicate that we've been going

through what I've called President Biden's magical disappearing.

Tax hike process where the original tax hikes of all kinds that he has proposed are slowly just kind of disappearing and sometimes not even so slowly.

Ken Fisher: They just seem to just sort of fade away. And at the rate that he's been going, I've been suggesting that you could get off toward the beginning of the next US. Government fiscal year and he could actually be proposing tax cuts by the time we get to the beginning of 2022.

Ken Fisher: But with this one, the global corporate minimum tax, the thing you have to look for is when is hell going to freeze over?

Because it's shortly after that that

this is going to pass. Now let me take you through why just as I speak.

Three days ago, treasury Secretary Yellen indicated in no uncertain terms that she was having great success with this and she expected to be back trying to get Congress to ratify it in the United States of America after getting lots of other countries to agree to it next spring.

I just want you to think through what that says. I just want you to see the facetiousness in that, the irony of it, because next spring, nothing's

going through Congress of any significance at all.

Ken Fisher: By the time you get to next spring, that biennial congressional redistricting will have frozen several dozen congress people into inaction as they don't even know who their voters will be. In the 2022 midterms, secondarily primary season will be upon so many of these people with some of them primary seasons a little bit later.

Ken Fisher: But the primary season will be launched in flush full, going hard. And as that happens, they'll be sitting there focused on the campaign, not on trying to

do something that might come back to bite them immediately when voters in their district, in

the swing districts don't like it and anything extreme voters in the swing districts don't like.

Ken Fisher: As we see Treasury Secretary Yellen make that announcement, she's effectively making the announcement in a sense so that President Biden doesn't have to note it wasn't President Biden saying these things.

His Treasury Secretary Yellen kicking that it will never happen, can down the road into next year at a time when nothing will happen, but just stopping and thinking about this topic another way.

Ken Fisher: There's an interesting construct. The construct is that all these countries are going to agree to impose a similar minimum tax, such

that if a country goes to a tax haven,

Ireland is often considered a tax haven, but there's the classic ones like the Cayman Islands and Bermuda. But even if you just do a Google search on tax havens, you'll see Singapore and Hong Kong

listed as tax havens, where the tax rates are lower than what they're commonly getting in other countries.

Ken Fisher: The notion of having a broad universe of countries all agree to a tax rate, which of course has never happened before, is a little like trying to create a cartel and cartels blow apart. Why?

Because out of 130 countries in the world, there's too many of them that will see an advantage that if they drop their tax rate below the level that others are agreeing to, corporations will shift their residency to their to try to take advantage of the lower tax rate.

There's provisions in the discussed bill to try to run a tax overlay from the country of origin on top of a

low tax rate that a tax haven might allow for.

Ken Fisher: But mind you, the reality of trying to do that is very, very treacherous.

So, what I'm trying to say to you is between now and as Treasury Secretary Yellen has said, next spring, when she would hope to bring this back to Congress, she's going to

be talking again to try to establish what the terms of this might be with the G 20 coming up here in

the end of July 27 and 28 July, which is why this topic has been surfacing a lot lately.

Ken Fisher: After that, she's got to go to the next set of meetings in October. They don't even have the agreement yet of how you define what revenue is commonly across the countries, how they define how this tax is constructed uniformly in different sectors that don't all do their accounting the same way.

This is going to get broken down into the devil and the details and ultimately shift to where little to

nothing comes of it and gets largely forgotten.

Ken Fisher: And what you just heard Treasury Secretary Yellen do this last

weekend was exactly to tell us that she's kicking the can down the road into the it will never Happen department so that we can forget about it by next year.

Ken Fisher: And that's what I'm telling you as to why you don't have to think about this. If you want it, I'm sorry, it's not going to happen. If you don't want it, feel relieved, because it's not going to happen.

Thank you.

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A Series of disclosures appears on screen: “Investing is Securities involves a risk of loss. Past performance is never a guarantee of future returns. Investing in foreign stock markets involves additional risks, such as the risk of currency fluctuations. The foregoing constitutes the general views of Fisher Investments and should not be regarded as personalized investment advice or a reflection of the performance of fisher investment or its clients. Nothing herein is intended to be a recommendation or a forecast of market conditions. Rather it is intended to illustrate a point. Current and future markets may differ significantly from those illustrated here. Not all past forecasts were, nor future forecasts may be, as accurate as those predicted herein.

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