What You Need to Know
- The first priority for the administration will be “a targeted infrastructure package,” strategist Greg Valliere predicts.
- Biden will likely propose tax hikes on estates, corporations and top earners.
- Uncertainty about tax proposals could drive market volatility in the next few months.
President Joe Biden’s anticipated $3 trillion infrastructure and economic plans — and expected tax-hike proposals to finance them — will spark market volatility until “a bill clearly comes into focus by late summer,” according to Greg Valliere, chief U.S. strategist for AGF Investments.
Plans to increase individual and corporate tax rates, as well as the global minimum tax and estate taxes, are expected. It is unknown how much revenue Biden intends to raise through tax hikes.
Will these measures pass? As it stands now, “the final outcome of this saga is unclear; again, the consensus is that Biden can get something but not all that he’s seeking now,” Valliere said Wednesday morning in his Capitol Notes email briefing.
“There will be leaks and deal-cutting and uncertainty for months to come,” which Valliere said is a likely recipe for market volatility.
The likely first priority for the administration will be “a targeted infrastructure package addressing road/bridges/utility repair, clean energy investment, enhanced broadband access, and potentially housing in the $1-1.5 trillion range,” Raymond James analysts noted in an email briefing Wednesday morning.
The “second stage” is likely to target “social infrastructure investments such as universal child care, tuition-free community college, and an extension of the expanded Child Care Tax Credit currently scheduled to expire at the end of this year through 2025,” the Raymond James analysts explained.
As for other tax changes, they’re “coming — but scope remains in flux,” the analysts said.