Corporate America fumes over Biden’s economic package

This is an audio transcription of the FT press briefing podcast episode: Corporate America fumes over Biden’s economic package

Marc Filipino
Hello from the Financial Times. Today is Wednesday, August 10, and it’s your FT News Briefing.

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President Joe Biden’s economic package appears to be about to pass, and corporate America isn’t too happy about it. We will have an update on Russia’s invasion of Ukraine. And tennis legend Serena Williams is retiring. We’ll see what’s next for her. I’m Marc Filippino and here’s the news you need to start your day.

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One of Taiwan’s biggest tech companies is stuck amid heightened US-China tensions. Foxconn is a major contract manufacturer for Apple and other tech giants. Now Taiwan officials want to force Foxconn to unwind a big investment it just made in a mainland Chinese chip company. The move comes as Beijing steps up threats against Taiwan, which it considers its own territory. Taipei’s move to unwind Foxconn’s $800 million investment in China is seen as a way to align itself more closely with the United States. Taipei fears that Foxconn’s investment in the mainland company will bolster China’s technology ambitions and give China an advantage over the United States.

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President Joe Biden’s tax and climate package looks set to pass the House of Representatives and become law in just days. This is a huge victory for the president and the Democrats. But the tax part has left America’s biggest companies very unhappy. FT Washington bureau chief James Politi explains.

James Politi
Well, they’re quite upset, mainly because of the tax increases included in the package, which are used, in effect, to pay for some of the spending measures, and also to make sure that the deal will eventually reduce the deficit, which is one of the main claims to sort out the fact that it can lower inflation over time. But the business community is unhappy that the bill sets a minimum tax of 15% on the income of the largest corporations and also introduces a 1% tax on share buybacks. These are the two main characteristics that bother American companies the most.

Marc Filipino
That can’t be a surprise, James, can it? I mean, the Biden administration must have known they were going to anger big business with these tax provisions.

James Politi
Yes, and in fact the Biden administration wanted to go much further on corporate taxation. He actually wanted to raise the corporate tax rate from 21% to 28% and introduce a series of other corporate tax increases and personal tax increases so as they said , to somehow ensure that the rich and the biggest corporations pay their fair share. That in the end, the spending measures were less than the Biden administration actually wanted originally. So there was less to pay. And there was opposition from some, you know, moderate Democrats to some of the more aggressive tax measures. And that’s where we landed.

Marc Filipino
So how much is this going to cut into corporate profits, James?

James Politi
I don’t think that’s a big threat to them. I mean, corporations got a huge tax cut in 2017, which was signed into law by former President Trump with the support of congressional Republicans. They are therefore starting from a very good position in terms of corporate taxation.

Marc Filipino
James Politi is the FT’s Washington bureau chief.

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The United States this week approved $1 billion in additional military aid to Ukraine, as Kyiv prepares for a new offensive in the south of the country. For more on what’s happening on the military front, I’m joined by John Paul Rathbone of the FT. Hi Jean-Paul.

John Paul Rathbone
Hi.

Marc Filipino
So Jean-Paul, a big goal for Ukraine right now, is to regain control of the city of Kherson. Why is Kherson so important?

John Paul Rathbone
Thus, the battle line in Ukraine is somewhat stabilized and there are two main areas. To the east is Donbass, where Russia had a blistering advance, lots of artillery, and they captured additional ground. And now attention has focused on this southern city of Kherson, which was the first city to fall into Russian hands after the invasion. And if the Ukrainians could take it back, it would mean that they are somehow taking back control of the narrative that the war effort still has momentum and that they have something to show for all the military aid that the West brought to them.

Marc Filipino
John Paul, did the United States ever send Ukraine the long-range rockets that Kyiv pushed the Western allies for? And what is the importance of these rockets?

John Paul Rathbone
So you are absolutely right. Ukraine requested long-range weapons and the US, UK and other allies did not send them. But what they sent was these relatively long-range artillery pieces called Himars. This allowed the Ukrainians to sit away from the front lines and fire those very precise rockets that destroyed Russian ammunition dumps and command centers. And that extra rocket load for those Himars was in the last US package, a $1 billion package as you mentioned. Sending hundreds of Himars to Ukraine is a good thing, but is it material enough to make a difference in the fundamental course of the war? No it is not. And actually, both sides kind of got bogged down right now. Neither has enough men or enough materiel to fundamentally change the tide of the war, even if Ukraine manages to take Kherson, which would be a big deal in itself.

Marc Filipino
John Paul Rathbone is the FT’s Defense and Security Correspondent. Thanks, JP.

John Paul Rathbone
Thanks.

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Marc Filipino
She changed tennis. She changed the fashion of tennis. And now Serena Williams plans to change the business world. Yesterday the tennis legend announced that she plans to retire soon. She wants to focus on her family and her financial plans. Here’s Sara Germano from the FT with more details.

Sara Germano
Serena has this venture capital firm called Serena Ventures, which closed its first $111 million funding round earlier this spring. And to date, they’ve made 55 investments, mostly seed-stage investments in, you know, start-ups. And what Serena Williams says she wants to do and is doing with this entity is she’s trying to change the face of women in finance, especially black women in finance, of which there are has very, very few, if any, notable individuals making waves in this direction.

Marc Filipino
And Serena Williams is also incredibly active in sports ownership, isn’t she?

Sara Germano
Yes, I really think we should talk about his influence in sports ownership. You know, she has a minority stake in the Miami Dolphins, which is the NFL team. She is one of the founding co-owners of the new women’s soccer team. It’s football in the United States. In Los Angeles, it’s called Angel City. And she was part of what was ultimately a losing bid for Chelsea Football Club. And so outside of those venture capital investments, we see Serena getting more involved in running and owning sports clubs. And that’s something that’s an area of ​​the industry where there could definitely be more female and especially black influence.

Marc Filipino
Serena is so amazing. She is so unique. Would she be hard to imitate? I guess, how far could people follow in his footsteps?

Sara Germano
That’s an excellent question. And we’ve seen her do that with tennis, haven’t we? Naomi Osaka, who has already surpassed Serena in net worth, has been very vocal and open about how, you know, she got into tennis because of Serena Williams and we are already seeing this next generation coming up and succeeding. She made women who they are and not necessarily conform to what society traditionally expects of women, how they behave, how they celebrate victories, how they express their frustration. There are very few people in her league who have so much demonstrated tangible success, and if she spells out her expectation that she wants to translate all of those skills into the realm of business, you know, people better watch out.

Marc Filipino
Sara Germano is the FT’s sports affairs correspondent in the United States.

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You can read more about all these stories on FT.com. This has been your daily press briefing on FT. Be sure to check back tomorrow for the latest trade news.

This transcript was generated automatically. If by any chance there is an error, please send the details for a correction to: [email protected]. We will do our best to make the change as soon as possible.

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