The Golden Edge
{Sapientiae & Veritas}
Commentary on economy that effects the markets, that help you generate trade ideas, research and tested strategies, Not fake news just the facts, , Real Time Knowledge To Secure Your Future. Read daily or weekly
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5 Tax Hikes That May Be Coming Under Biden: Strategist
Brian Gardner lists several tax hikes that Congress and the Biden administration may pass in the currently polarized political climate. They include:
1.) Raising the corporate income tax rate to 28% from 21%.
2.) Doubling the global intangible low-taxed income rate to 21% from 10.5%.
3.) Lifting the top tax rate to 39.6% from 37% for individuals making over $400,000.
4.) Taxing capital gains as ordinary income (at a top tax rate of 39.6%) for those earning more than $1 million a year.
5.) Hiking the estate tax rate to 45% from 40% for assets worth more than $1 million.
Interestingly, the market appears to be betting tax hikes of any kind are unlikely to happen, or that they will happen so far off into the distance that riding optimism on the pandemic recovery makes better sense.
Doing so may also delay the post-pandemic economic recovery.
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What America Can Learn From China About Infrastructure Investment
Thirty years ago, the road from Beijing to Hong Kong was an unimportant corridor for Chinese economic growth. Most of the goods produced near Beijing were transported by rail; delays increased costs making Chinese products less competitive globally. Today, the Jinggang’ao Expressway, stretching 1,400 miles from Beijing to Macau, is one of the most significant freight corridors in the world.
Beijing understood that for China to become a global economic power, it needed world-class infrastructure. China engaged in a multidecade investment project to develop thousands of miles of roads and railways. From 1992 to 2011, China spent an average of 8.5% of GDP per year, investing in transport and social and digital infrastructure. It is no surprise that this period of infrastructure expansion coincided with rapid national growth and laid the foundation for Chinese economic power for years to come.
The United States now finds itself in the unenviable position of having some of the worst-quality infrastructures in the developed world. The American Society of Civil Engineers’ 2021 Report Card for America’s Infrastructure rated the U.S. at a C- overall, with 11 of 17 categories in the D range. Internet and cellphone services can be poor in rural parts of the country, and patchy in urban areas. And, as made infamous by Flint, Mich., some parts of the country’s drinking-water supply contain dangerous levels of lead. Yet federal infrastructure investment has dropped to the lowest level in 40 years measured relative to GDP and as a share of federal spending, despite a funding gap that the ASCE puts at nearly $2.6 trillion.
The drag on economic growth this underinvestment creates is not trivial. Estimates suggest U.S. households could lose out on as much as $3,300 per year from 2020 to 2039 if infrastructure is not revitalized. The declining state of American infrastructure exacerbates secular stagnation and leads to a lower growth trajectory.
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First, China developed infrastructure as a part of its industrial policy drive. This meant building the arteries and veins of an export system was its priority, lifting its trade capacity. In China, most goods are transported by rail; in the U.S., some 60% of freight is transported by road. To enhance U.S. productive capacity, fixing damaged roads and bridges is a vital start; looking forward, supporting growing industries will involve both investing in those industries and strengthening conditions around them. As a developing country, China invested in industrial zones and transport networks; as a developed country, the U.S. must center infrastructure within its own industrial policy.
Second, infrastructure is not limited to transport. Beyond roads and bridges, China has successfully developed digital infrastructure, particularly broadband and digital payment systems, and municipal infrastructure like sewage and water.
During the pandemic, students, and businesses in areas with poor internet have fallen further behind the rest of the country; a competitive economy requires strong digital infrastructure. To tackle social inequalities, the U.S. must provide clean, safe drinking water to every citizen, a necessity to which almost 30 million Americans lack reliable access.
Most important, the next wave of infrastructure development must integrate green principles. As the Chinese government has discovered the hard way, the negative spillovers from infrastructure can create social unrest and limit economic growth. Greening buildings and developing carbon-neutral infrastructure can ensure longevity and create much-needed jobs. And as the recent energy catastrophe in Texas shows, building-climate resilient infrastructure is not optional as extreme weather events become more frequent. In addition, for the U.S., greening is critical since carbon emissions from transportation are a plurality of all carbon emissions in the country. And, as the Chinese experience demonstrates, modernizing infrastructure includes greener new builds, and adapting prior assets to become greener.
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The Infrastructure Deal May Be Bigger if Democrats Decide To Go It Alone
Sen. Ben Cardin (D., Md.), who is involved in infrastructure negotiations, was overheard during an event Monday saying Democrats will “most likely have to use reconciliation” to get the deal done. “The Republicans will be with you to a point, and then..," Cardin said before trailing off.
Jared Bernstein, one of President Biden's economic advisers, told Yahoo Finance the president wants a bipartisan deal, but if Republicans won’t work with him to fulfill his campaign promises, “he will push ahead.”
“He is absolutely devoted to making sure the American people get the kind of investments that he believes they put him there for,” Bernstein said.
How a reconciliation bill could be different
Republican lawmakers have already painted the just-enacted economic relief plan as a "liberal wish list" and would surely do the same about an infrastructure bill passed solely by Democrats.
But an infrastructure deal via reconciliation won’t just impact the politics surrounding it, it would likely change the makeup of any legislation.
During an event on Monday former Republican Congressman Bill Shuster – who once chaired the House Transportation and Infrastructure Committee – predicted a bipartisan deal could end up in the $1 trillion range. But he noted that if Democrats go for reconciliation, “I think you’ll see a package bigger than that,” in the range of $1.5 trillion to $1.7 trillion.
Reconciliation is a process that has been used more than 20 times in recent decades as a way to speed up consideration of certain types of legislation. Lawmakers could attempt to use the process for a second time this year to get an infrastructure bill done, but they'd be barred from including certain provisions that would otherwise be included in a bipartisan bill.
A Democratic effort to raise the minimum wage was stripped out of the economic relief package because of reconciliation rules, and Shuster says similar “policy changes” could fall by the wayside in an infrastructure bill. He said he hopes Republicans and Democrats would be able to work together, which might lead to a deal that includes far-reaching changes in areas like rural broadband, pandemic preparation, or the electrical grid.
In a Yahoo Finance interview last month, Cardin also said he was hopeful for bipartisan support in order to “deal not only with transportation, but to deal with water infrastructure, to deal with broadband, to deal with our schools, deal with our energy issues.”
Bernstein, who currently serves on the President’s Council of Economic Advisors and previously was the Chief Economist to then Vice President Biden, is also focused on making any infrastructure bill long-lasting.
“I can tell you, not just from an economic standpoint but from a political economy standpoint, that if you want to sustain a lasting program in this country, paying for it is often an important way to help that occur,” he said.
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Inflation may not be “as frightening as an armed robber,” as Ronald Reagan once said, but its likely return to financial markets, after more than a decade of steady-to-declining prices, may come as a bit of a surprise. |
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Fed minutes show a willingness to steer past coming jump in inflation |
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In discussions that ranged from the public’s perceptions of inflation to the vagaries of Robinhood-type retail stock trading platforms, Fed officials said they were still prepared to keep their easy monetary policy on track to help heal a job market still ailing from the impact of the coronavirus pandemic.
With a jump in some prices expected this spring, “many participants stressed the importance of distinguishing between such one-time changes in relative prices and changes in the underlying trend for inflation,” according to the minutes, which were released on Wednesday.
“A number of participants said they saw such price increases on the horizon for goods 'whose production has been subject to supply chain constraints', or soon could be; others anticipated that a possibly abrupt return to normal levels of activity could result in one-time increases in certain prices,” the minutes stated as Fed officials wrestled with how to prepare for a post-pandemic reopening of the economy.
The United States remains under siege from the health crisis, but with new vaccines being distributed and inoculations running at more than 1.5 million each day, the economy is expected to run hotter this year.
Major food producers said this week that they were mulling possible price hikes, and data on Wednesday showed the producer price index for final demand jumped last month by the most in more than a decade.
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Welcome to the inflatocracy-our new form of government of, by, and for inflation-in which deliberately debasing our money has become a tool of social engineering, mind manipulation, wealth redistribution, and secret taxation. Inflation empowers Washington inflatocrats to pick the pockets not only of Americans but also of Germans, Chinese, Brazilians, and South Africans, imposing a hidden tax on people around the world who trust paper US dollars as their reserve currency-a worldwide tax that exports our inflation, all to feed our politicians' power-mad addiction to stratospheric spending. The inflatocracy, and the huge welfare state it makes possible, have brought America to the brink of bankruptcy. In The Inflation Deception, monetary expert Craig R. Smith, the chairman of Swiss America Trading Corporation and former think tank futurist Lowell Ponte explain how the inflatocracy took over our government.
They offer three political and three financial ways to restore a free and prosperous America.
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World Is Changing
How Do We Protect The Innocent?
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Are your kids remote learning? They could be the target of identity theft
One day, a 12-year-old receives a notice from the IRS informing her that she hasn’t paid her income taxes for last year. Meanwhile, in the next town over, a 2-year-old is being hounded by debt collectors for an outstanding credit card balance of $15,000.
No, it’s not the setup for a new episode of ‘The Twilight Zone.’ These scenarios—and worse—happen in real life all the time. More than one million children were victims of identity theft in 2017, according to a report by Javelin Strategy & Research. Cleaning up this kind of mess isn’t easy, either: Child identity theft cost parents about $540 million in out-of-pocket expenses that year.
“Most parents don't add their young children to their credit cards. Most kids aren't going for loans when they're 10 years old,” said Levin. “So that means no one's checking to see if there's a credit file, much less to see whether the child’s score took a precipitous drop.”
All a scammer needs is a kid’s social security number to open bank and credit card accounts, apply for loans or utilities, or even rent an apartment, according to the FTC. Of the kids tracked in the Carnegie Mellon study, 10 percent had social security numbers that were being used by someone else. “There is nothing more delicious to scammers than the social security number of a child,” says Levin.
In most cases, no one knows a child’s identity has been stolen until they grow up and apply for a student loan or their first apartment. Imagine the rude awakening of learning at age 18 that you already have a 10-year credit history—and your score is in the tank
Now imagine an even worse-case scenario. The perpetrator of your identity theft was someone you trust most in the world: your own parent.
Think about how easy it is for a desperate parent who’s deep in debt or struggling with a poor credit score to steal their own child’s identity to apply for loans, utilities, or credit cards. As despicable as it sounds, it happens. How often is unknown, mainly because this familial crime is such a delicate topic.
“When it occurs within a family unit, there’s a very high likelihood that no one is going to rat out their parent,” says Levin. He told Yahoo Life he’s known of people who’ve chosen to file bankruptcy rather than turn their relatives in for identity theft.
Levin also told a story of a grown child whose father had stolen his identity and racked up $30,000 in credit card debt. “He went to his father and said, ‘You’ve got to make this right,’” Levin recalls. “The father said, ‘I can't afford to make it right. What are you going to do to me? I'm your father.’”
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This disclaimer informs readers that the views, thoughts, and opinions expressed in the text belong solely to the author, and not necessarily to the author's employer, organization, committee or other group or individual.
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