Former Nuveen chief strategist and senior portfolio manager Bob Doll provides insight into future economic growth and how markets respond to more spending.
Treasury Secretary Janet Yellen said Tuesday that President Biden is examining changes to the tax structure to offset the cost of the Democrats’ next big package package for economic spending.
While testifying before the House Financial Services Committee, Yellen said an infrastructure package – which the White House is expected to pursue as its next legislative priority – is likely to be paid for by tax code reforms.
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“We expect to examine tax policy changes, along with programs that will address the years-long problems that have suppressed productivity and labor supply in the United States,” Yellen said. “We will address infrastructure, mitigate risks due to climate change, education, training.”
The specific contours of the infrastructure package and the tax increases it may include are still unclear; However, during the 2020 presidential campaign, Biden has repeatedly promised to raise the corporate tax rate to 28% from 21%, increase the income tax rate on individuals earning more than $ 400,000, expand the estate tax rate, and raise a higher capital gains tax rate for individuals. create. earn at least $ 1 million annually and bring back tax preferences for so-called pass-through businesses.
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According to an analysis of Biden’s tax plan by the Tax Policy Center, it will generate $ 2.1 billion in new revenue over a decade.
Treasury Secretary Janet Yellen speaks during a virtual round table with participants of Black Chambers of Commerce across the country about the U.S. rescue plan on Friday, February 5, 2021 from the South Court Auditorium on the White House comp. ((AP Photo / Jacquelyn Martin))
The bill could cost as much as $ 3 billion, according to The Wall Street Journal, and would form the basis of Biden’s ‘Build Back Better’ plan, a comprehensive infrastructure and job measure that would include climate change policies. as well as ways to revive the manufacturing industry and refurbish housing, education and healthcare. (Yellen said on Tuesday the proposal would have ‘sustainable infrastructure’ and ‘create green jobs’).
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“I think a package that consists of investing in people, investing in infrastructure, will help create good jobs in the U.S. economy,” Yellen said. “Changes to the tax structure will help pay for the programs.”
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Yet top Republicans are already holding out on the prospect of raising taxes, while Senate Minority Leader Mitch McConnell said last week that there would be no dual support for such a move. The Chamber of Commerce also expressed concern about raising the corporate tax rate, warning that it would “make the United States a less attractive place to invest profits and locate a corporate headquarters.”
Yellen defends the government’s expected push for tax increases, saying Biden will not “propose policies that hurt small businesses or Americans.”
“A long-term plan that addresses the economy is likely to be accompanied by an increase in revenue,” she said. “We do need to increase revenue in a fair way to support the spending that this economy needs to be productive and competitive.”