Experts are telling us that Joe Biden’s plan to raise the corporate tax rate will undo most of President Trump’s economy boosting efforts as it will send some American companies offshore, keep others overseas, hobble domestic companies and drive up the unemployment rate, thus damaging the strong economy that President Trump’s policies built in his 1st term.
Joe Biden campaigned on raising the corporate tax rate from 21% to 28% in order to help fund his plans for Green energy, infrastructure projects, and other ambitious, progressive initiatives.
According to the Tax Policy Center, Mr. Biden’s overall tax plan will raise about $2.1-T over 10 yrs, totaling 0.8% of the GDP (gross domestic product).
The Democrats’ narrow control over the House and Senate boosts the odds of Mr. Biden’s tax hikes going into effect.
In my interview Tuesday with renowned international economist Bruce WD Barren he made it abundantly clear that: “Any tax increase would be disastrous to our economic recovery, both on the personal and business side. Why, because on the corporate side which Biden has also stated to increase, it would cause a pass-through to consumer prices and thus act as causing inflation to return.
“When you couple this with a change in our immigration policy, another Biden agenda item, lower income families jobs would be replaced by cheaper immigrant laborers. Thus more stimulus would be required too, deepening our Federal deficit, which is already out of control and soon to surpass our GDP.
“Added to that, an increase in interest rates in order to attract foreign capital to finance our deficits would cause our real estate prices to soften, not good either for a ripple effect would start to undo the Trump recovery. As we all know, real estate growth is a key to our economic recovery as most economist know.
“Then comes the Dow Jones Industrial Average, now standing at 31,000+, which would add to our downward spiral. So, Congress should take a lesson from both Nixon and Reagan for both used tax reductions as a stimulant to economic growth.”
Tuesday, the benchmark US stock market indexes finished at: DJIA +60.00 at 31068.63, NAS Comp +36.00 at 13072.44, S&P 500 1.58 at 3801.19.
The Russell 2000 (+1.7%) extended its January Effect rally and closed at a another record high.
Volume: Trade on the NYSE came in at 1.1-B/shares exchanged.
HeffX-LTN’s overall technical outlook for the major stock market indexes in Bullish to Very Bullish in here.
- Russell 2000 +7.8% YTD
- DJIA +1.5% YTD
- NAS Comp +1.4% YTD
- S&P 500 +1.2% YTD
Looking Ahead: Investors will receive the Consumer Price Index (CPI) for December, the Treasury Budget for December, the Fed’s Beige Book for January, and the weekly MBA Mortgage Applications Index Wednesday.
Have a healthy day, Keep the Faith!