President Biden laid out his ambitious infrastructure plans yesterday to the tune of USD2.25tn, all paid for by increasing taxes. The plan is that the Biden administration will attempt to recuperate the cost of the infrastructure spend over a 15-year period. Biden will reverse the Trump corporate tax cuts passed in 2017, raising corporation tax from 21% to 28%, although still well below the prior level of 35%, set in the early 90’s. Additionally, Biden will impose a global minimum tax of 21% (up from 13%) on overseas income for U.S. companies as well as eliminating loopholes that he believes encourage companies to shift profits to tax haven countries. Likewise, he is proposing reforms to make it harder for companies to merge with an overseas organization to claim the partner's country of residence to achieve a lower tax rate.
He wants other nations around the world to follow suit. Biden wants to stop a ‘race to the bottom’ on corporate taxes. The US administration is trying to seek a worldwide agreement on international taxation of companies and digital commerce through the Organisation for Economic Co-operation and Development (OECD) that it hopes creates a global minimum tax. These views echo those of Yellen, who in January testified that the U.S. could afford a higher corporate tax rate if it coordinates with other economies around the globe.
Tomorrow we have the March Non-farm Payroll numbers. The market estimates are for 650k jobs added, an unemployment rate of 6% and participation rate of 61.5%. As it's Good Friday the stock market will be closed all day and the bond market closes at midday.