President Biden will present his proposals to enact a tax on the wealthy that would be at least 25% and boost the minimum corporation tax by a staggering 40% during his State of the Union address.
Biden wants to increase the corporate minimum tax to 21% and the corporation tax rate to 28%. Since Biden enacted it earlier in his administration, the minimum corporation tax rate is currently 15%. Additionally, Biden would oppose businesses taking tax deductions for workers earning more than $1 million. “The White House said that the President is proposing to impose a minimum tax of 25 percent on the wealthiest 0.01 percent, those who have fortunes above $100 million.”
According to reports, former President Trump, the likely Republican contender for president in 2024, will keep permanent the tax cuts he put in place during his first term, which lowered corporation taxes from 35% to 21%.
The real gross domestic product increased by more than 3 percent in the four quarters before January 2019 under Trump’s administration, the most since the second term of George W. Bush’s presidency thirteen years earlier.
Joao Gomes, a finance professor at Wharton Business School and recipient of the University of Pennsylvania’s Marshall Blume Prize in 2018, has issued a warning that the country’s enormous $34 trillion debt load may portend an economic collapse in 2025.
“It will be crucial to consider “can we finance that?” when we talk about commitments and “what we’re going to do with tax and programs.” Gomes informed Fortune. It’s a very clear historical turning point for us to decide what to do, what our options are, and who has the superior strategy. That seems to be of no interest to either party, and it can all be ignored.
“We will have to deal with this towards the end of the decade,” he said. To be honest, it may derail the incoming administration. The markets may revolt if they announce plans for significant tax cuts or another significant fiscal boost. There might be an abrupt increase in interest rates, leading to a catastrophe by 2025. It’s quite possible that it will occur. I have every confidence that we will arrive there, one way or another, by the end of the decade.
“The most crucial thing about debt that people should remember is that it requires a buyer. In the past, we could rely on the Fed, China, and Japanese investors to purchase the debt. All those players are truly selling now, and they are progressively disappearing. Whether these people, who have up until now been content to purchase government debt from developed nations, suddenly say, “You know what? I’m not so sure whether this is a smart investment anymore.” “We might have a big accident on our hands,” Gomes said, threatening to seek a higher interest rate in order to get them to hold on.
