President Biden is receiving criticism after the announcement that he’s reportedly planning to raise the capital gains tax. Representative Kevin Brady (R-Texas) said the new tax hike will punish the economy and will have a negative impact on small businesses and blue-collar workers. While talk of higher taxes looms, experts are taking a deep dive into how hikes would impact the stock market.
Fox Business/Fox Business Staff
Biden’s proposed tax hikes punish the US economy: Rep. Kevin Brady
Rep. Kevin Brady, R-Texas, told FOX Business’ “Mornings with Maria” that President Biden is “punishing the economy” through his proposal to tax capital gains and that these tax hikes will have a negative impact on small businesses and blue-collar workers.
“This is another major economic blunder by President Biden. Look… after the tax cuts and Jobs Act investment surged in America, and as a result, it was blue-collar workers, it was local communities that benefited. When you double that tax, you have the opposite effect. In reality, you wouldn’t… encourage a cure by punishing the most frequent and successful researchers. You don’t rebuild a healthy economy by punishing those who invest in that local in the U.S. economy. And that’s exactly what you have here. So at the end of the day, America, again, American workers are the net loser in President Biden’s capital gains proposal. There is a difference between the parties here, so we do, Republicans do, tax policy so that we can get more growth, more productivity, more investment, and we’re more competitive around the world. Democrats do tax policy by villain. They pick a villain, whether it’s successful people, multinationals, energy companies, and they just punish them for punishment sake and so they can spend those dollars elsewhere…”
Watch the full interview, here.
Yahoo! Finance/Sam Ro
What stock market history tells us about corporate tax hikes: Morning Brief
The prospect for higher taxes continues to be a concern for investors, and it’ll continue to be a source of uncertainty until some form of tax reform is passed.
While a higher corporate tax rate would likely be a hindrance for most companies, it’s far from certain that the implementation of a higher rate would be enough for stocks to sell-off, as discussed in the Morning Brief last week.
But what does history suggest will happen to stocks should higher taxes come to pass?
BMO Capital Markets equity strategist Brian Belski looked into it. And the answer isn’t all bad.
“Tax increases have been far from detrimental to U.S. stock market performance,” Belski wrote in a recent note to clients.
“President Biden’s proposal to raise the U.S. corporate tax rate to 28%, from 21%, would mark the first increase since 1993 and sixth tax hike since 1945,” he continued.
“During the five prior corporate tax rate increases in 1950, 1951, 1952, 1968, and 1993, the S&P 500 index posted an average calendar year gain of 12.9% with positive price returns in each instance. This gain was well above the 4.6% average return registered during the nine annual periods when the tax rate was reduced and also higher than 9% price return for all calendar years going back to 1945.”
Continue reading, here.
CNN Business/Roger Ferguson
Opinion: The pandemic has hurt many Americans’ retirement savings. These policies could help
Retirement may seem like a distant reality for many Americans. Unfortunately, pandemic-related job losses and benefit reductions derailed retirement savings for millions of workers, and many others were forced to take money out of retirement accounts to deal with immediate financial strains. Millions more — including many part-time workers and small business employees — still don’t have access to employer-sponsored retirement accounts, like 401(k) or 403(b) plans, potentially putting them in financial jeopardy come their senior years.
Even for people who haven’t suffered job or income losses during the pandemic, retirement security remains a challenge. About 30% of US adults say they worry every day or almost every day about their ability to save for retirement, according to a recent Pew survey.
And according to a recent survey fielded by the Census Bureau, more than 3.1 million Americans age 55 or older plan to apply for Social Security benefits earlier than they once thought because of the pandemic. This will result in a permanent cut in their lifetime monthly benefits, which is a high price pay to pay for older people who may already be struggling to make ends meet.
Two new bipartisan bills introduced in the last session of Congress, and expected to be reintroduced this year, can help workers attain a more secure retirement.
Read more about those bills, here.