In his first speech at a joint meeting of Congress on April 29, US President Biden promised to increase taxes on the wealthy and pay for the trillion-dollar grand plan invested in infrastructure, education and other matters. Bloomberg reported that Biden warned companies and wealthy Americans to “take more of the financial burden for the country’s progress.”
Continuous launch of large-scale stimulus
According to Bloomberg News, in his speech, Biden announced the “American Family Plan,” a package of tax credits and domestic priorities totaling $1.8 trillion, including childcare, paid family visits, and tuition-free communities. Universities, of which about 1.5 trillion will be credited by raising additional taxes, and another 303 billion will be offset by state revenue.
Regarding Biden’s “American Family Plan,” the Wall Street Journal believes that this is the third move in a series of proposals by Biden to reform the US economy. The two previous plans were the Emergency Pandemic Assistance Act known as the “American Rescue Plan” and the Infrastructure Plan. In the past 14 months, the US Congress has successively passed three new crown rescue plans to inject nearly $5 trillion into the economy.
“It’s time for American companies and the richest 1% of Americans to pay their share.” Biden said in his speech that he would reduce the highest personal income tax rate for people with an annual income of more than $600,000 from the current rate. 37% was restored to 39.6%, the capital gains tax levied on people with an annual income of more than $1 million was raised from 20% to 39.6%, and the capital gains tax deduction for estates was ended, and the use of “carried interest” for fund managers was ended. Tax relief. Biden said that some projects funded by tax increases will “create millions of jobs and promote economic growth.”
Who will be the “biggest winner” and “biggest loser” of Biden’s taxation plan? The Forbes website analyzed on the 28th that wealthy people such as property heirs and hedge fund managers may be affected by taxation, and ordinary families and low-income young singles will enjoy tax credits. According to the report, high-income people, heirs of large inheritances, wealthy investors, hedge fund tycoons, high-income real estate investors, and tax evaders will all become the “losers” of Biden’s taxation plan. On the other hand, annual income Taxpayers with less than US$400,000, low- and middle-income families with children, low-income groups without children, dual-career parents, Affordable Care Act beneficiaries, working-class and other law-abiding taxpayers will be the “biggest winners.”
U.S. GDP grew by 6.4% in the first quarter
Data released by the US Department of Commerce on the 29th showed that the annualized growth rate of US gross domestic product in the first quarter was as high as 6.4%. Although slightly lower than the previous estimate by Dow Jones in a survey of economists, it was still the highest since the second quarter of 2003. The annual economic growth rate of the second high is slightly lower than the level when the epidemic lockdown measures were unsealed in the third quarter of last year.
Data show that US government spending and investment increased by 6.3%. The analysis believes that consumption has played an important role in promoting the growth of the US economy, and the large-scale consumer spending is attributed to the latest round of US$1,400 per person in aid issued by the US government. However, the process of US economic recovery also depends on international trade conditions.
According to a Reuters report on the 29th, the US merchandise trade deficit in March expanded by 4.0%, reaching 90.6 billion U.S. dollars, a record high, indicating that trade has caused a drag on economic growth in the first quarter. Data show that US merchandise exports in March increased by 8.7% to US$142 billion, aided by exports of motor vehicles, industrial supplies, consumer goods and food. Imports jumped 6.8% to USD 232.6 billion. Economists predict that the US merchandise trade deficit will remain high at least until the end of the year. After the vaccination program is expanded to all American adults, demand for services such as air travel and dining out will recover.
Pay attention to inflation concerns
As the U.S. economy is recovering rapidly, inflation concerns have always existed. The New York Times reported on the 28th that the United States may face inflation problems in the next few months, but there are still uncertainties about the specific inflation level and duration. Most analysts and the Federal Reserve currently judge that inflation is only temporary. The Fed hopes to keep the annual inflation rate at 2%. However, if the US economy continues to overheat and high inflation continues, the Fed will be caught in a dilemma. On the one hand, it wants to contain price increases, and on the other hand, it is unwilling to increase it before the job market fully recovers. interest rate.
Federal Reserve officials voted unanimously on the 28th to maintain the target range of the federal funds rate between 0 and 0.25% until the economy further recovers from the impact of the new crown.