21.5.25 - 'Global minimum corporate tax' & 'The synchronized recovery is fanning inflation.'

# Bloomberg - the rising power of megacompanies and the push to tax them more effectively

That’s one of the takeaways from a Bloomberg Economics study of the biggest firms around the world, measured by stock-market capitalization, over the past three decades.

• Collective stock market cap surged to 27.6% of global GDP by 2020 from 4.7% in 1990
• Median profit margin fattened to 18.2% from 6.9% over the same period
• Effective tax rate dwindled to 17.4% from 35.5%
• Technology firms make up 21 of the 50, against just three back in 1990
• By 2020, they amassed a cash pile of $1.8 trillion — more than five times their annual spending on business investment 

These data points explain why a long-stalled international effort to establish a global minimum corporate tax has had fresh impetus from a push by the Biden administration, which on Thursday pitched a 15% minimum rate.

 

It’s reminiscent of the era of trust-busting Theodore Roosevelt, when politicians worried that corporate wealth and power had become excessively concentrated. 

 

# Bloomberg -  how the synchronized global recovery is fanning inflation.

The fact major economies are recovering in lockstep may be behind the supply constraints fanning inflation, according to economists at Barclays.

 

“In prior global recessions and recoveries, the staggered cycles of various economies helped smooth this process as the faster recovering economies borrowed from the slower recovering economies.”

 

This time, the synchronized and bigger rebound in demand is straining the ability of savings to meet investment, they said. Prices and interest rates therefore have to likely rise to restrain investment and consumption and boost savings.

 

That leaves three potential outcomes, according to Barclays:

• a short-term interruption to the rebound,
• a longer-term brake on the recovery, or an inflationary shift which forces a response from central banks