Personal Wealth Management / Expert Commentary

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

In his latest video, Fisher Investmentsโ€™ founder and Co-Chief Investment Officer Ken Fisher examines how proposals for a global minimum business tax could potentially impact capital markets.

Transcript

0:03
lately as we move toward the back part
0:05
of july there's a lot of buzz about the
0:07
proposed global
0:09
corporate
0:11
minimum tax of supposedly 15 percent
0:15
and that raises people having concern
0:18
that uh this could be a
0:20
a
0:21
negative impact to corporate profits uh
0:23
which could then impact the stock market
0:25
etc etc and should they be worried about
0:27
such a thing
0:29
the uh
0:32
simple answer in my opinion is no
0:35
the
0:36
um
0:37
i've written
0:38
several pieces uh
0:41
on
0:42
in in several different places
0:44
uh that i posted on my twitter feed uh
0:48
and uh
0:49
on real clear markets and linkedin and
0:52
uh
0:53
in
0:54
various other places that
0:57
indicate that
0:59
we've been going through what i've
1:01
called president biden's magical
1:03
disappearing tax hike process
1:07
where the original tax hikes of all
1:10
kinds that he has proposed are
1:14
slowly just kind of disappearing and
1:17
sometimes not even so slowly
1:20
they just
1:21
seem to just sort of fade away and at
1:23
the rate that he's been going i've been
1:25
suggesting that you could get off toward
1:27
the beginning of the next u.s government
1:30
fiscal year and he could actually be
1:31
proposing tax cuts by the time we get to
1:33
the beginning of 2022
1:36
but with this one the global
1:39
corporate
1:40
minimum tax
1:43
the thing you have to look for is when
1:45
is hell going to freeze over because
1:47
it's shortly after that that this is
1:49
going to pass
1:51
now let me take you through why
1:53
just
1:55
as i speak
1:59
three days ago
2:02
treasury secretary yellen
2:05
indicated in no uncertain terms
2:07
that she was having great success with
2:09
this
2:10
and she expected to be back
2:13
trying to get congress to ratify it
2:17
in the united states of america after
2:19
getting lots of other countries to agree
2:21
to it
2:23
next spring
2:25
i just want you to think through what
2:26
that says i just want you to see the
2:28
facetiousness in that the irony of it
2:31
because next spring
2:33
nothing's going through congress of any
2:34
significance at all by the time you get
2:37
to next spring
2:39
that
2:41
biennial
2:43
congressional redistricting
2:46
will have frozen several dozen congress
2:49
people into inaction as they don't even
2:51
know who their voters will be in the
2:53
2020 mid to midterms
2:55
secondarily
2:58
primary season will be upon
3:00
so many of these people but some of them
3:02
primary seasons a little bit later
3:05
but the primary season will be launched
3:07
in flush full going hard
3:10
and as that happens they'll be sitting
3:13
there focused on the campaign not on
3:14
trying to do something that might come
3:16
back to bite them immediately when
3:18
voters in their district in the swing
3:20
districts don't like it and anything
3:22
extreme voters in the swing districts
3:24
don't like
3:27
as we see treasury secretary yellen make
3:31
that announcement she's effectively
3:33
making the announcement in a sense so
3:35
that president biden doesn't have to
3:37
note it wasn't president biden saying
3:38
these things his treasury secretary
3:40
yellen
3:41
kicking that it will never happen can
3:43
down the road into next year at a time
3:45
when nothing will happen
3:48
but
3:50
just stopping and thinking about this
3:52
topic another way
3:54
there's an interesting construct the
3:56
construct is that all these countries
3:58
are going to agree to impose a similar
4:00
minimum tax
4:02
such that
4:06
if a country goes to a tax haven
4:12
ireland is often considered a tax haven
4:15
but you know there's the classic ones
4:17
like the cayman islands and bermuda but
4:19
even if you just do a google search on
4:21
tax havens you'll see singapore and hong
4:23
kong listed as tax havens where the tax
4:25
rates are lower than what they're
4:27
commonly getting in other countries
4:31
the notion of having a broad universe of
4:34
countries
4:36
all agree to a tax rate
4:39
which of course has never happened
4:40
before
4:43
is a little like trying to create a
4:44
cartel
4:46
and cartels blow apart
4:48
why because out of 130 countries in the
4:51
world
4:53
there's too many of them that will see
4:55
an advantage that if they drop their tax
4:58
rate below the level
5:00
that others are agreeing to
5:03
corporations will shift their residency
5:05
to there to try to take advantage of the
5:07
lower tax rate
5:09
there's provisions in the discuss bill
5:12
to try to run a tax overlay
5:15
from the country of origin
5:17
on top of a low tax rate
5:19
that
5:23
tax haven might allow for
5:26
but mind you
5:28
the reality of trying to do that is very
5:30
very treacherous
5:32
so what i'm trying to say to you is
5:36
between now and as treasury secretary
5:39
elena said next spring when she would
5:42
hope to bring this back to congress
5:44
she's going to be talking
5:46
again to try to establish what the terms
5:48
of this might be with the g20
5:51
coming up here in the end of
5:53
july 27th and 28th of july which is why
5:56
this topic has been surfacing a lot
5:58
lately
6:00
after that she's got to go to the next
6:02
set of meetings in october they don't
6:04
even have the agreement yet of how you
6:05
define what revenue is commonly across
6:08
the countries
6:10
uh how they define how this tax is
6:12
constructed uniformly in different
6:15
sectors that don't all do their
6:17
accounting the same way
6:19
this is going to get broken down into
6:22
the devil in the details
6:24
and ultimately
6:25
shift to where
6:27
little to nothing comes of it
6:30
and gets largely forgotten
6:32
and what you just heard treasury
6:34
secretary yellen do
6:36
this last weekend
6:37
was exactly to tell us that she's
6:39
kicking the can and down the road into
6:42
the it will never happen department so
6:44
that we can forget about it by next year
6:47
and that's what i'm telling you as to
6:49
why you don't have to think about this
6:51
if you want it i'm sorry it's not going
6:52
to happen
6:53
if you don't want it feel relieved
6:55
because it's not going to happen thank
6:57
you
6:59
subscribe to the fisher investment
7:01
youtube channel if you like what you've
7:03
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7:05
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7:16
[Music]
7:26
you

 

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