Corporate tax policy: while Mr Trump’s corporate tax policies are ostensibly more market-friendly, Mr Biden’s plan may be offset by other growth initiatives
- Mr Biden wants to reverse the Trump administration’s 2017 tax cuts, raising the corporate tax rate from 21% to 28% (while keeping it below the pre-2017 rate of 35%) and creating a minimum 15% tax for corporations earning USD 100 million or more. He also plans to double the tax rate for foreign subsidiaries of US firms. These policies would likely hurt earnings for sectors that benefited the most from Mr Trump’s tax cuts (including financials, consumer staples and utilities) as well as large multinational companies with overseas operations (including technology and healthcare). However, Mr Biden does plan to invest in growth areas such as clean energy and 5G technology. Moreover, the US economy is recovering from recession, so Mr Biden may not make tax hikes an immediate priority – and there is no guarantee they will pass, especially if Congress remains divided.
- Mr Trump wants to maintain the status quo. The corporate tax cuts he implemented in 2017 were designed to be permanent, and he also likely wants to turn the temporary tax cuts for individuals into permanent ones. However, much depends on which party controls the US Congress after the elections – a Democratic Congress would be much less receptive to Mr Trump’s tax proposals.