As US Democratic Party members brace for a tough political battle to defend President Joe Biden’s $3.5 trillion stimulus, the Washington Post (WaPo) conveyed, “Some House Democrats on Sunday circulated a draft plan that would raise $2.9 trillion in new taxes targeted toward wealthy Americans, corporations and investors, as party lawmakers continued to spar in public over the size and scope of their new tax-and spending package.”
Increasing the top tax rate on Americans earning over $435,000 to 39.6% from 37% and a new corporate tax rate of 26.5%, versus 21% current rate and 28% proposal by President Biden is among the top-tier proposals by the Democrats cited on Sunday, per WaPo.
Additional details suggest a smaller-than-expected capital gains rate paid by investors from 20% to 25%, as well as ‘surtax on high-income individuals’, earning more than $5 million, signaled to raised $127 billion more government revenues.
Key quotes (from Washington Post)
Democrats contended the total slate of proposed tax increases can raise as much as $2.9 trillion, which Democrats cautioned in the document is a preliminary estimate.
Lawmakers believe this means the total $3.5 trillion package is fully paid for since it also relies on a budgetary move known as dynamic scoring that takes into account the economic activity generated by Federal spending.
Market reactions
With a bit of balancing in previously rejected demands for the much-awaited stimulus, as hinted by the news, markets welcomed the news with an uptick in the S&P 500 Futures. However, fears of a bumpy road for the aid package and tax hike concerns tame the bulls.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
USD/JPY jumps above 156.00 on BoJ's steady policy
USD/JPY has come under intense buying pressure, surging past 156.00 after the Bank of Japan kept the key rate unchanged but tweaked its policy statement. The BoJ maintained its fiscal year 2024 and 2025 core inflation forecasts, disappointing the Japanese Yen buyers.
AUD/USD consolidates gains above 0.6500 after Australian PPI data
AUD/USD is consolidating gains above 0.6500 in Asian trading on Friday. The pair capitalizes on an annual increase in Australian PPI data. Meanwhile, a softer US Dollar and improving market mood also underpin the Aussie ahead of the US PCE inflation data.
Gold price flatlines as traders look to US PCE Price Index for some meaningful impetus
Gold price lacks any firm intraday direction and is influenced by a combination of diverging forces. The weaker US GDP print and a rise in US inflation benefit the metal amid subdued USD demand. Hawkish Fed expectations cap the upside as traders await the release of the US PCE Price Index.
Stripe looks to bring back crypto payments as stablecoin market cap hits all-time high
Stripe announced on Thursday that it would add support for USDC stablecoin, as the stablecoin market exploded in March, according to reports by Cryptocompare.
US economy: Slower growth with stronger inflation
The US Dollar strengthened, and stocks fell after statistical data from the US. The focus was on the preliminary estimate of GDP for the first quarter. Annualised quarterly growth came in at just 1.6%, down from the 2.5% and 3.4% previously forecast.