- Biden Prepares for Major Tax Hike for the First Time Since 1993
- ‘’No Worries About Inflation’’ Message from Yellen
- Iranian Oil Exports to China Expected to Hit Record High
Biden Prepares for Major Tax Hike for the First Time Since 1993
US President Joe Biden is planning to increase federal tax rates for the first time since Bill Clinton era in 1993, by means of supporting payments to be included in the long-term economic program designed similar to the pandemic support program.
Unlike the $1.9 trillion Covid-19 stimulus act, the next initiative, which is expected to be even bigger, won’t rely just on government debt as a funding source.
While it’s been increasingly clear that tax hikes will be a component, Treasury Secretary Janet Yellen has said at least part of the next bill will have to be paid for, and pointed to higher rates – key advisers are now making preparations for a package of measures.
For the Biden administration, the planned changes are an opportunity not just to fund key initiatives like infrastructure, climate and expanded help for poorer Americans, but also to address what Democrats argue are inequities in the tax system itself. The plan will test both Biden’s capacity to woo Republicans and Democrats’ ability to remain unified.
Four sources close to the subject stated that the White House would propose some tax increases, as in Biden’s election campaign.
The following are among proposals currently planned or under consideration: Raising the corporate tax rate to 28% from 21%; Paring back tax preferences for so-called pass-through businesses, such as limited-liability companies or partnerships; Raising the income tax rate on individuals earning more than $400,000; Expanding the estate tax’s reach; A higher capital-gains tax rate for individuals earning at least $1 million annually.
An independent analysis of the Biden campaign tax plan done by the Tax Policy Center estimated it would raise $2.1 trillion over a decade, though the administration’s plan is likely to be smaller. Bianchi earlier this month wrote that congressional Democrats might agree to $500 billion.
The overall program has yet to be unveiled, with analysts penciling in $2 trillion to $4 trillion. No date has yet been set for an announcement, though the White House said the plan would follow the signing of the Covid-19 relief bill.
‘’No Worries About Inflation’’ Message from Yellen
US Treasury Secretary Janet Yellen continued President Joe Biden’s messages that the $1.9 trillion support package would not create inflation. Yellen, who participated in a television show over the weekend, stated that inflation risk is limited and manageable.
US Treasury Secretary Janet Yellen said that at a time when the administration of Biden provided a $1.9 trillion pandemic aid to the economy, the inflation risks of the USA were manageable, and the return to full employment was on the horizon.
“Is there a risk of inflation? There is a small risk and I think this risk is manageable”, Yellen said, adding that with the spread of the Covid-19 outbreak to the USA, some prices recovered, but this was a temporary price movement.
Yellen was reminded of Biden’s promise to “increase infrastructure spending” and asked whether the wealth tax and financing model would come to the fore for this spending, as suggested by Democrat senators Elizabeth Warren and Bernie Sanders. Yellen answered the question, “We haven’t decided yet.” She also added that Biden’s election campaign promises, including corporate tax and capital, dividend earnings, and taxes, would have a similar effect to wealth tax.
US President Joe Biden approved the $1.9 trillion economic support package passed by Congress to combat the effects of the Covid-19 pandemic, signing it on Friday.
In his speech before signing the package, Biden emphasized that this package is supported by many groups in the USA.
Stating that he will make a speech to the Nation tonight, Biden said, “With this historic bill we have approved, we must rebuild the backbone of our country and aim to give the people who created this country a chance to fight.”
Some economists known as Democrats, as well as Republicans, opposed the size of the stimulus package Biden signed on Thursday. “If you put too much water in the tub, it will overflow,” Lawrence Summers, a former Treasury secretary, one of these economists, joined CNN on Sunday. We are trying to add more water than necessary,” he continued his criticism of the package.
On the other hand, Yellen stated that fiscal sustainability views changed during the low interest period and commented, “We will have to control the budget deficits in the long term”.
Iranian Oil Exports to China Expected to Hit Record High
Oil prices rose on Monday, with Brent heading toward $70 a barrel, as data showed China’s economic recovery accelerated at the start of 2021, boosting the energy demand outlook at the world’s largest oil importer.
Brent crude futures for May gained 47 cents, or 0.7%, to $69.69 a barrel by 0438 GMT while U.S. West Texas Intermediate crude for April was at $66.10 a barrel, up 49 cents, or 0.8%.
According to data from China, there was an increase in industrial production and retail sales in the first two months of the year. With the recovery in China, expectations that energy demand will increase also gained strength.
While crude oil made a strong rally in the first months of 2021 with the decision of vaccine developments and OPEC + to cut production, the attack on Saudi Arabia’s oil production facility was effective in reaching $71 per barrel of Brent oil.
‘’The improved demand outlook and production cuts are driving us upward once again. I expect to see higher levels,’’ said Michael McCarthy, Chief Market Strategist at CMC Markets Asia Pacific.
In addition, China appears to be becoming a major importer of Iranian oil, as Iran’s production levels look set to soar thanks to better relations with Biden’s U.S.
Over the last year, China imported an average of 306,000 bpd of crude oil from Iran, totaling 17.8 million tones. Most of these imports, 75 %, came indirectly via Malaysia, Oman, or the United Arab Emirates.
As demand increases, this March, Chinese imports of Iranian oil are expected to reach levels of 856,000 bpd, an increase of 129 % on February. The sudden influx of Iranian oil is reported to have caused congestion in ports as tankers are offloaded.
To be noted, China is drawn to Iranian oil thanks to its low costs, often priced at between $3 to $5 below the Brent benchmark.
India has also begun importing Iranian oil, under the assumption that trade with Iran will resume. This comes as The National Iranian Oil Company (NIOC) attempts to foster new partnerships across Asia, to boost its export potential as it ramps up national production.
A government official in India believes Iranian supplies will return to the market within three to four months. With expectations for developing additional partnerships following Iran’s June elections.