Rising Interest Rates Threaten Mutual Fund Returns

The stock market’s rally during the pandemic has been nothing short of amazing. But rising interest rates are raising the question of how long this bull market can last.

In the 12 months through March, the average general stock mutual fund tracked by Morningstar returned nearly 66 percent — a remarkable rebound after a three-month loss of nearly 22 percent at the start of last year.

The turnaround came after the Federal Reserve stepped in with support for financial markets and the economy, fueling much of the stock market’s exuberance with low interest rates.

But with the economy taking off, rates have begun to rise. At the start of a new quarter, it is a propitious moment to ask, how long can these strangely prosperous times last?

My crystal ball is no clearer now than it has ever been, alas, and I can’t time the market’s movements any better than anyone else. But this certainly a good time to assess whether you are well positioned for a possible downward shift.

As always, the best approach for long-term investors is to set up a portfolio with a reasonable, diversified asset allocation of stocks and bonds and then live with it, come what may.

Our quarterly report on investing is intended to help. If you haven’t been an investor before, we’ve included tips on how to get started. Here you will find broad coverage of recent trends, guidance for the future and reflections on personal finance in a challenging era.

It’s been a long, fine run for the stock market but a great deal of the upswing has depended on low interest rates, and in the bond market rates have been rising. Investment strategists are taking a wide array of approaches to deal with this difficult problem. For now, the bull market rides on.

Bonds provide ballast in diversified portfolios, damping the swings of the stock market and sometimes providing solid returns. Because bond yields have been rising — and yields and prices move in opposite directions — bond returns have been suffering lately. But adding a diversified selection of international bonds to domestic holdings can reduce the risk in the bond side of your investments.

Yes, the markets and the economy are complicated. That often puts people off, and stops them from taking action that can help them and their families immeasurably: investing.

But investing need not be complicated. A succinct article gives pointers on how to get started, and on how to navigate the markets for the long haul.

After a piece of virtual art known as a nonfungible token — an NFT — sold at auction for $70 million recently, NFTs have suddenly became an asset that you can invest in. Our columnist prefers real dollars.

Short-term demand for oil and gas is rising, but if climate change is to be reversed, consumption of fossil fuels will have to diminish. This leaves investors in a tough spot.

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Biden Details $1.52 Trillion Spending Proposal to Fund Discretionary Priorities

WASHINGTON — President Biden outlined a vast expansion of federal spending on Friday, calling for a 16 percent increase in domestic programs as he tries to harness the government’s power to reverse what officials called a decade of underinvestment in the nation’s most pressing issues.

The proposed $1.52 trillion in spending on discretionary programs would significantly bolster education, health research and fighting climate change. It comes on top of Mr. Biden’s $1.9 trillion stimulus package and a separate plan to spend $2.3 trillion on the nation’s infrastructure.

Mr. Biden’s first spending proposal to Congress showcases his belief that expanding, not shrinking, the federal government is crucial to economic growth and prosperity. It would direct billions of dollars toward reducing inequities in housing and education, as well as making sure every government agency puts climate change at the front of its agenda.

It does not include tax proposals, economic projections or so-called mandatory programs like Social Security, which will all be included in a formal budget document the White House will release this spring. And it does not reflect the spending called for in Mr. Biden’s infrastructure plan or other efforts he has yet to roll out, which are aimed at workers and families.

Trump administration’s efforts to gut domestic programs.

But Mr. Biden’s plan, while incomplete as a budget, could provide a blueprint for Democrats who narrowly control the House and Senate and are anxious to reassert their spending priorities after four years of a Republican White House.

Democratic leaders in Congress hailed the plan on Friday and suggested they would incorporate it into government spending bills for the 2022 fiscal year. The plan “proposes long overdue and historic investments in jobs, worker training, schools, food security, infrastructure and housing,” said Senator Patrick J. Leahy of Vermont, the chairman of the Appropriations Committee.

Shalanda D. Young, who is serving as Mr. Biden’s acting budget director, told congressional leaders that the discretionary spending process would be an “important opportunity to continue laying a stronger foundation for the future and reversing a legacy of chronic disinvestment in crucial priorities.”

The administration is focusing on education spending in particular, seeing that as a way to help children escape poverty. Mr. Biden asked Congress to bolster funding to high-poverty schools by $20 billion, which it describes as the largest year-over-year increase to the Title I program since its inception under President Lyndon B. Johnson. The program provides funding for schools that have high numbers of students from low-income families, most often by providing remedial programs and support staff.

The plan also seeks billions of dollars in increases to early-childhood education, to programs serving students with disabilities and to efforts to staff schools with nurses, counselors and mental health professionals — described as an attempt to help children recover from the pandemic, but also a longstanding priority for teachers’ unions.

Mr. Biden heralded the education funding in remarks to reporters at the White House. “The data shows that it puts a child from a household that is a lower-income household in a position if they start school — not day care — but school at 3 and 4 years old, there’s overwhelming evidence that they will compete all the way through high school and beyond,” he said.

There is no talk in the plans of tying federal dollars to accountability measures for teachers and schools, as they often were under President Barack Obama.

his vision of having every cabinet chief, whether they are military leaders, diplomats, fiscal regulators or federal housing planners, charged with incorporating climate change into their missions.

The proposal aims to embed climate programs into agencies that are not usually seen as at the forefront of tackling global warming, like the Agriculture and Labor Departments. That money would be in addition to clean energy spending in Mr. Biden’s proposed infrastructure legislation, which would pour about $500 billion on programs such as increasing electric vehicle production and building climate-resilient roads and bridges.

Strategic National Stockpile, the country’s emergency medical reserve, for supplies and efforts to restructure it that began last year. Nearly $7 billion would create an agency meant to research diseases like cancer and diabetes.

Reporting was contributed by Coral Davenport, Zolan Kanno-Youngs, Lisa Friedman, Brad Plumer, Christopher Flavelle, Mark Walker, Dana Goldstein, Mark Walker, Noah Weiland, Margot Sanger-Katz, Lara Jakes, Noam Scheiber, Katie Benner and Emily Cochrane.

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Out of Trump’s Shadow, World Bank President Embraces Climate Fight

Mr. Malpass has ingratiated himself with World Bank staff with his steady, low-key approach and congenial manner. He has also benefited from low expectations. But with three years left to go in his term, some development experts want to see more.

Scott Morris, a senior fellow at the Center for Global Development, a Washington think tank, said it was unfortunate that the World Bank appeared to be leaving the door open for funding fossil fuel projects. He suggested that Mr. Malpass still had yet to lay out a clear strategic vision for the bank, but credited him for embracing climate change.

“It is remarkable to compare his statements today with his positions as a Treasury official in the Trump administration two years ago, when the official position was to strike the word ‘climate’ from any multilateral institution’s documents,” Mr. Morris said. “By that standard, he’s made a remarkable evolution toward being a climate leader.”

He added: “But it is a question of compared to what, and is he up to the task of being the leader of this critical institution for climate finance?”

The bank will accelerate its efforts in the coming months. Mr. Malpass, in a speech last month about “building a green, resilient and inclusive recovery,” said his team was integrating climate into all of the bank’s country strategies and would complete climate and development reports for 25 countries this year.

Mr. Malpass has more recently been working to curry favor with the Biden administration. He speaks regularly to Ms. Yellen and personally invited her to participate in the climate discussion this past week.

Asked what the transition from the Trump administration to the Biden administration had meant for the bank, Mr. Malpass answered carefully. He noted that under Mr. Trump, the United States had approved a capital increase for the bank. He said the new White House team was highly committed to the bank’s goals of reducing poverty, making food accessible and preparing countries for a changing climate.

“The Biden administration policies have been very supportive of that mission,” Mr. Malpass said.

Lisa Friedman contributed reporting.

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A Bleak Forecast for Canada’s 600,000 Energy Industry Workers

We don’t know exactly what Chrystia Freeland, Canada’s deputy prime minister and finance minister, will present when she becomes the country’s first woman to deliver a federal budget later this month. But the Liberal government has made it abundantly clear that economic and employment recovery will be its broad theme.

paints a dire picture for one group of workers whose employment is threatened by much more than the pandemic. It forecasts that as the world grapples with climate change, reduced demand for oil and gas will cause to 50 to 75 percent of 600,000 jobs in Canada’s energy sector to vanish.

Beata Caranci, the bank’s chief economist and the main author of the report, told me that while she anticipates the budget will include something for energy workers, the work to transition them to new jobs in the low carbon world should already be underway.

hollowing out of middle income jobs. Wealth and jobs, in turn, became concentrated in a handful of cities.

But in Canada the loss of manufacturing work was offset by well paying jobs in the expanding Canadian energy industry. The rise of fly-in, fly-out work, in which residents of Atlantic Canada and elsewhere commuted to jobs in the oil sands, spread those economic benefits around the country.

visited Canada regularly from 1951, Marilyn Berger writes that he “tried to shepherd into the 20th century a monarchy encrusted with the trappings of the 19th. But as pageantry was upstaged by scandal, as regal weddings were followed by sensational divorces, his mission, as he saw it, changed. Now it was to help preserve the crown itself.” And in Opinion, Tina Brown, author of the forthcoming book “The Palace Papers,” offers her assessment of the Duke of Edinburgh.

  • Canada is among the nations seized by vaccine envy.

  • Robert A. Mundell, the Nobel Prize winning economist who was born in Kingston, Ontario, has died. He championed the idea that low tax rates and easy fiscal policies should be used to spur economies, and that higher interest rates and tight monetary policy were the proper tools to curb inflation. Former President Ronald Reagan embraced Professor Mundell’s ideas. Their effects remain a matter of debate.

  • Vaccine passports might reopen the world. But Prime Minister Justin Trudeau is among those concerned fairness of a two-tier system for haves and have-nots.


  • A native of Windsor, Ontario, Ian Austen was educated in Toronto, lives in Ottawa and has reported about Canada for The New York Times for the past 16 years. Follow him on Twitter at @ianrausten.


    How are we doing?
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    Amazon Union Votes Continue to Be Tallied: Live Updates

    Unofficial Tally of Amazon Warehouse Unionization Votes 1,608 yes votes are needed for the union to win today. The New York Times·As of 7:19 p.m. Hundreds of ballots have been contested, which could delay either side from reaching the threshold. One ballot was marked as void. The ballots were being counted in random order in the National Labor Relations Board’s office in Birmingham, Ala., and the process was broadcast via Zoom to more than 200 journalists, lawyers and other observers.The voting was conducted by mail from early February until the end of last month. A handful of workers from the labor board called out the results of each vote “Yes” for a union or “No” for nearly four hours on Thursday.Amazon and the union had spent more than a week in closed sessions, reviewing the eligibility of each ballot cast with the labor board, the federal agency that conducts union elections. The union said several hundred ballots had been contested, largely by Amazon, and those ballots were set aside to be adjudicated and counted only if they were vital to determining an outcome. If Amazon’s large margin holds steady throughout the count, the contested ballots are likely to be moot.The incomplete tally put Amazon on the cusp of defeating the most serious organized-labor threat in the company’s history. Running a prominent campaign since the fall, the Retail, Wholesale and Department Store Union aimed to establish the first union at an Amazon warehouse in the United States. The result will have major implications not only for Amazon but also for organized labor and its allies.

    Labor organizers have tapped into dissatisfaction with working conditions in the warehouse, saying Amazon’s pursuit of efficiency and profits makes the conditions harsh for workers. The company counters that its starting wage of $15 an hour exceeds what other employers in the area pay, and it has urged workers to vote against unionizing.

    Amazon has always fought against unionizing by its workers. But the vote in Alabama comes at a perilous moment for the company. Lawmakers and regulators — not competitors — are some of its greatest threats, and it has spent significant time and money trying to keep the government away from its business.

    The union drive has had the retailer doing a political balancing act: staying on the good side of Washington’s Democratic leaders while squashing an organizing effort that President Biden has signaled he supported.

    Labor leaders and liberal Democrats have seized on the union drive, saying it shows how Amazon is not as friendly to workers as the company says it is. Some of the company’s critics are also using its resistance to the union push to argue that Amazon should not be trusted on other issues, like climate change and the federal minimum wage.

    Sophia June contributed to this report.

    Revolut’s office in London in 2018. The banking start-up is offering its workers the opportunity to work abroad for up to two months a year.
    Credit…Tom Jamieson for The New York Times

    Before the pandemic, companies used to lure top talent with lavish perks like subsidized massages, Pilates classes and free gourmet meals. Now, the hottest enticement is permission to work not just from home, but from anywhere — even, say, from the French Alps or a Caribbean island.

    Revolut, a banking start-up based in London, said Thursday that it would allow its more than 2,000 employees to work abroad for up to two months a year in response to requests to visit overseas family for longer periods.

    “Our employees asked for flexibility, and that’s what we’re giving them as part of our ongoing focus on employee experience and choice,” said Jim MacDougall, Revolut’s vice president of human resources.

    Georgia Pacquette-Bramble, a communications manager for Revolut, said she was planning to trade the winter in London for Spain or somewhere in the Caribbean. Other colleagues have talked about spending time with family abroad.

    Revolut has been valued at $5.5 billion, making it one of Europe’s most valuable financial technology firms. It joins a number of companies that will allow more flexible working arrangements to continue after the pandemic ends. JPMorgan Chase, Salesforce, Ford Motor and Target have said they are giving up office space as they expect workers to spend less time in the office, and Spotify has told employees they can work from anywhere.

    Not all companies, however, are shifting away from the office. Tech companies, including Amazon, Facebook, Google and Apple, have added office space in New York over the last year. Amazon told employees it would “return to an office-centric culture as our baseline.”

    Dr. Dan Wang, an associate professor at Columbia Business School, said he did not expect office-centric companies to lose top talent to companies that allow flexible working, in part because many employees prefer to work from the office.

    Furthermore, when employees are not in the same space, there are fewer spontaneous interactions, and spontaneity is critical for developing ideas and collaborating, Dr. Wang said.

    “There is a cost,” he said. “Yes, we can interact via email, via Slack, via Zoom — we’ve all gotten used to that. But part of it is that we’ve lowered our expectations for what social interaction actually entails.”

    Revolut said it studied tax laws and regulations before introducing its policy, and that each request to work from abroad was subject to an internal review and approval process. But for some companies looking to put a similar policy in place, a hefty tax bill, or at least a complicated tax return, could be a drawback.

    A screenshot of a “vax cards” page on Facebook. 

    Online stores offering counterfeit or stolen vaccine cards have mushroomed in recent weeks, according to Saoud Khalifah, the founder of FakeSpot, which offers tools to detect fake listings and reviews online.

    The efforts are far from hidden, with Facebook pages named “vax-cards” and eBay listings with “blank vaccine cards” openly hawking the items, Sheera Frenkel reports for The New York Times.

    Last week, 45 state attorneys general banded together to call on Twitter, Shopify and eBay to stop the sale of false and stolen vaccine cards.

    Facebook, Twitter, eBay, Shopify and Etsy said that the sale of fake vaccine cards violated their rules and that they were removing posts that advertised the items.

    The Centers for Disease Control and Prevention introduced the vaccination cards in December, describing them as the “simplest” way to keep track of Covid-19 shots. By January, sales of false vaccine cards started picking up, Mr. Khalifah said. Many people found the cards were easy to forge from samples available online. Authentic cards were also stolen by pharmacists from their workplaces and put up for sale, he said.

    Many people who bought the cards were opposed to the Covid-19 vaccines, Mr. Khalifah said. In some anti-vaccine groups on Facebook, people have publicly boasted about getting the cards.

    Other buyers want to use the cards to trick pharmacists into giving them a vaccine, Mr. Khalifah said. Because some of the vaccines are two-shot regimens, people can enter a false date for a first inoculation on the card, which makes it appear as if they need a second dose soon. Some pharmacies and state vaccination sites have prioritized people due for their second shots.

    An empty conference room in New York, which is among the cities with the lowest rate of workers returning to offices.
    Credit…George Etheredge for The New York Times

    In only a year, the market value of office towers in Manhattan has plummeted 25 percent, according to city projections released on Wednesday.

    Across the country, the vacancy rate for office buildings in city centers has steadily climbed over the past year to reach 16.4 percent, according to Cushman & Wakefield, the highest in about a decade. That number could climb further if companies keep giving up office space because of hybrid or fully remote work, Peter Eavis and Matthew Haag report for The New York Times.

    So far, landlords like Boston Properties and SL Green have not suffered huge financial losses, having survived the past year by collecting rent from tenants locked into long leases — the average contract for office space runs about seven years.

    But as leases come up for renewal, property owners could be left with scores of empty floors. At the same time, many new office buildings are under construction — 124 million square feet nationwide, or enough for roughly 700,000 workers. Those changes could drive down rents, which were touching new highs before the pandemic. And rents help determine assessments that are the basis for property tax bills.

    Many big employers have already given notice to the owners of some prestigious buildings that they are leaving when their leases end. JPMorgan Chase, Ford Motor, Salesforce, Target and more are giving up expensive office space and others are considering doing so.

    The stock prices of the big landlords, which are often structured as real estate investment trusts that pass almost all of their profit to investors, trade well below their previous highs. Shares of Boston Properties, one of the largest office landlords, are down 29 percent from the prepandemic high. SL Green, a major New York landlord, is 26 percent lower.

    A closed restaurant and pastry store in Tucson, Ariz. The Fed chair, Jerome Powell, said the economic recovery from the pandemic has been “uneven and incomplete.”
    Credit…Rebecca Noble for The New York Times

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    Why Investing in Fossil Fuels Is So Tricky

    As concerns about climate change push the world economy toward a lower-carbon future, investing in oil may seem a risky bet. For the long term, that may be true.

    Yet for the moment, at least, oil and gas prices appear likely to continue to rise as the economy recovers from the pandemic-driven shutdown of millions of businesses, big and small.

    These countervailing trends — increasing demand now and falling demand at some point, perhaps in the not-too-distant future — create a dilemma for investors.

    The good news is that an array of traditional mutual funds and exchange-traded funds are available to help them navigate these uncertain waters. Some funds focus on slices of the industry, such as extracting crude oil and gas from the ground or delivering refined products to consumers. Others focus on so-called integrated companies that do it all. Some spice their holdings with some exposure to wind, solar or other alternative energy sources.

    International Energy Agency forecast that oil consumption was not likely to return to prepandemic levels in developed economies.

    “World oil markets are rebalancing after the Covid-19 crisis spurred an unprecedented collapse in demand in 2020, but they may never return to ‘normal,’” the I.E.A. said in its “Oil 2021” report. “Rapid changes in behavior from the pandemic and a stronger drive by governments toward a low-carbon future have caused a dramatic downward shift in expectations for oil demand over the next six years.”

    alternative energy funds. Many enable investors to zero in on discrete segments of the industry.

    The biggest holdings of the Invesco WilderHill Clean Energy E.T.F. are producers of raw materials for solar cells and rechargeable batteries or builders and operators of large-scale solar projects. The $2.9 billion fund yields 0.49 percent and has an expense ratio of 0.7 percent.

    The First Trust NASDAQ Clean Edge Green Energy Index Fund focuses on applied green technology. Its biggest holdings are Tesla, the American maker of electric automobiles; NIO, a Chinese rival in that field; and Plug Power, which makes hydrogen fuel cells for vehicles. Also a $2.9 billion fund, it yields 0.24 percent and has an expense ratio of 0.6 percent.

    The First Trust Global Wind Energy E.T.F., as its name suggests, targets wind turbine manufacturers and servicers, led by the Spanish-German joint venture Siemens Gamesa Renewable Energy and Vestas Wind Systems of Denmark, as well as operators such as Northland Power of Canada. This $423 million fund yields 0.92 percent and has an expense ratio of 0.61 percent.


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    Sharon Matola, Who Opened a Zoo in the Jungle of Belize, Dies at 66

    Sharon Matola’s life changed in the summer of 1981, when she got a call from a British filmmaker named Richard Foster. She had recently quit her job as a lion tamer in a Mexican circus and was back home in Florida, where she was poking her way through a master’s degree in mycology, or the study of mushrooms.

    Mr. Foster had heard of her skills with wild animals, and he wanted her to work with him on a nature documentary in Belize, the small, newly independent country on the Caribbean side of Central America, where he lived on a compound about 30 miles inland.

    She arrived in the fall of 1981, but the money for Mr. Foster’s film soon ran out. He moved on to another project, in Borneo, leaving Ms. Matola in charge of a jaguar, two macaws, a 10-foot boa constrictor and 17 other half-tamed animals.

    “I was at a crossroads,” she told The Washington Post in 1995. “I either had to shoot the animals or take care of them, because they couldn’t take care of themselves in the wild.”

    campaign against a hydropower dam planned in western Belize, which she said would destroy animal habitats in the jungle and drive up energy costs.

    The case ended up in British court and drew international support from groups like the Natural Resources Defense Council. Government officials denounced Ms. Matola as an interloper and, as one put it, an “enemy of the state.”

    The dam’s developer won the case, but Ms. Matola was right: Today, energy costs in Belize are higher, and the area around the dam remains polluted. The case earned her awards and invitations to lecture across the United States, particularly after the journalist Bruce Barcott wrote about her in his book “The Last Flight of the Scarlet Macaw: One Woman’s Fight to Save the World’s Most Beautiful Bird” (2008).

    Ms. Matola announced in 2017 that she was stepping back from her daily roles at the zoo, handing off responsibility to her all-Belizean staff. By then her arms were tattooed with scars from countless bites and scratches, her body worn down by bouts of malaria and screw worms. Not long afterward she developed sepsis in a cut on her leg, which left her hospitalized for long stretches.

    None of that seemed to matter. She did not want to be anywhere else, she often said, and she would insist until her death that she was “one of the happiest people on earth.”

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    Jamie Dimon predicts an economic boom that ‘could easily run into 2023.’

    The annual letter to shareholders by JPMorgan Chase’s chief executive, Jamie Dimon, was published early Wednesday. The letter, which is widely read on Wall Street, is not just an overview of the bank’s business but also covers Mr. Dimon’s thoughts on everything from leadership lessons to public policy prescriptions.

    “The U.S. economy will likely boom.” A combination of excess savings, deficit spending, vaccinations and “euphoria around the end of the pandemic,” Mr. Dimon wrote, may create a boom that “could easily run into 2023.” That could justify high stock valuations, but not the price of U.S. debt, given the “huge supply” soon to hit the market. There is a chance that a rise in inflation will be “more than temporary,” he wrote, forcing the Federal Reserve to raise interest rates aggressively. “Rapidly raising rates to offset an overheating economy is a typical cause of a recession,” he wrote, but he hopes for “the Goldilocks scenario” of fast growth, gently increasing inflation and a measured rise in interest rates.

    “Banks are playing an increasingly smaller role in the financial system.” Mr. Dimon cited competition from an already large shadow banking system and fintech companies, as well as “Amazon, Apple, Facebook, Google and now Walmart.” He argued that those nonbank competitors should be more strictly regulated; their growth has “partially been made possible” by avoiding banking rules, he wrote. And when it comes to tougher regulation of big banks, he wrote, “the cost to the economy of having fail-safe banks may not be worth it.”

    “China’s leaders believe that America is in decline.” The United States has faced tough times before, but today, “the Chinese see an America that is losing ground in technology, infrastructure and education — a nation torn and crippled by politics, as well as racial and income inequality — and a country unable to coordinate government policies (fiscal, monetary, industrial, regulatory) in any coherent way to accomplish national goals,” he wrote. “Unfortunately, recently, there is a lot of truth to this.”

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    President Biden Unveils Plan to Raise Corporate Taxes

    The Biden administration unveiled its plan to overhaul the corporate tax code on Wednesday, offering an array of proposals that would require large companies to pay higher taxes to help fund the White House’s economic agenda.

    The plan, if enacted, would raise $2.5 trillion in revenue over 15 years. It would do so by ushering in major changes for American companies, which have long embraced quirks in the tax code that allowed them to lower or eliminate their tax liability, often by shifting profits overseas. The plan also includes efforts to help combat climate change, proposing to replace fossil fuel subsidies with tax incentives that promote clean energy production.

    Some corporations have expressed a willingness to pay more in taxes, but the overall scope of the proposal is likely to draw backlash from the business community, which has benefited for years from loopholes in the tax code and a relaxed approach to enforcement.

    Treasury Secretary Janet L. Yellen said during a briefing with reporters on Wednesday that the plan would end a global “race to the bottom” of corporate taxation that she said has been destructive for the American economy and its workers.

    global minimum tax to 21 percent and toughening it, to force companies to pay the tax on a wider span of income across countries.

    That, in particular, has raised concerns in the business community, with Joshua Bolten, chief executive of the Business Roundtable, saying in a statement this week that it “threatens to subject the U.S. to a major competitive disadvantage.”

    The plan would also repeal provisions put in place during the Trump administration that the Biden administration says have failed to curb profit shifting and corporate inversions, which involve an American company merging with a foreign firm and becoming its subsidiary, effectively moving its headquarters abroad for tax purposes. It would replace them with tougher anti-inversion rules and stronger penalties for so-called profit stripping.

    The plan is not entirely focused on the international side of the corporate tax code. It tries to crack down on large, profitable companies that pay little or no income taxes yet signal large profits to companies with their “book value.” To cut down on that disparity, companies would have to pay a minimum tax of 15 percent on book income, which businesses report to investors and which are often used to judge shareholder and executive payouts.

    One big beneficiary of the plan would be the Internal Revenue Service, which has seen its budget starved in recent years. The Biden administration’s proposal would beef up the tax collection agency’s budget so that it can step up enforcement and tax collection efforts.

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