Brenda Vingiello, Sand Hill’s Chief Investment Officer, joined Squawk Box to discuss her thoughts on the latest market trends and market outlook for 2025. This
The American Jobs Plan
Published Date : April 20, 2021
April 20, 2021
President Biden recently introduced The American Jobs Plan, his proposal to address our country’s aging infrastructure, which many could agree is in need of improvement. The bill, estimated to cost around $2 trillion dollars, includes approximately $600 billion for transportation infrastructure upgrades alone, which studies show many Americans support. Additional infrastructure upgrades include:
• Improving drinking water infrastructure
• Expanding broadband access
• Upgrading electric grids
• Building and retrofitting affordable housing
• Constructing and upgrading schools
• Caring for elderly and disabled Americans
• Investing in manufacturing, research and development, and job training efforts
As part of the plan, 40 percent of the work is targeted toward disadvantaged and excluded communities, thus attempting to simultaneously address social justice issues. This has created an early debate about whether the plan is too broad, as well as whether we can afford it and how to pay for it.
The administration estimates that a proposed tax increase on corporations through the Made in America Tax Plan would raise $2.5 trillion over the next fifteen years, thus covering the cost of the plan if both the infrastructure and tax plan were passed side-by-side. Specifically, the proposed tax bill would increase the federal corporate tax rate from 21% to 28%, which may sound like a significant increase, but is still well below the pre-2017 level of 35 percent. Additionally, the bill would aim to close numerous tax loopholes and establish a global minimum tax on U.S. multinational corporations. In a recent article, Forbes reported that at least 55 of the top 500 U.S. companies did not pay income taxes in 2020. Gallup poll research has shown that most Americans favor corporations paying their fair share of taxes.
The proposal to increase taxes is of course in direct conflict with the common belief that reducing taxes spurs economic growth. The argument is that tax cuts boost demand by increasing disposable income and by encouraging businesses to hire and invest more. While this can be true, following the corporate tax rate cuts under President Trump, there was little evidence of companies reinvesting much of the tax savings to expand business, which was one of the primary goals of the tax overhaul.
Whatever your view about the impact of taxes, the data supports that while increases in taxes can have a negative impact on the economy, the impact is more significant when the economy is weak but milder when it is operating near capacity. As the U.S. recovers from the pandemic, our view is that the economy will continue to strengthen going forward. Thus, whether you agree with the broad nature of the Biden infrastructure spending plan or not, now could be a good time to make the investment in the infrastructure for our future.
Sources: The American Rescue Plan, Americans for Tax Fairness, Brookings.edu, Forbes, Institute of Taxation and Economic Policy, NY Times, Pew Research, Tax Policy Institute
Articles and Commentary
Information provided in written articles are for informational purposes only and should not be considered investment advice. There is a risk of loss from investments in securities, including the risk of loss of principal. The information contained herein reflects Sand Hill Global Advisors' (“SHGA”) views as of the date of publication. Such views are subject to change at any time without notice due to changes in market or economic conditions and may not necessarily come to pass. SHGA does not provide tax or legal advice. To the extent that any material herein concerns tax or legal matters, such information is not intended to be solely relied upon nor used for the purpose of making tax and/or legal decisions without first seeking independent advice from a tax and/or legal professional. SHGA has obtained the information provided herein from various third party sources believed to be reliable but such information is not guaranteed. Certain links in this site connect to other websites maintained by third parties over whom SHGA has no control. SHGA makes no representations as to the accuracy or any other aspect of information contained in other Web Sites. Any forward looking statements or forecasts are based on assumptions and actual results are expected to vary from any such statements or forecasts. No reliance should be placed on any such statements or forecasts when making any investment decision. SHGA is not responsible for the consequences of any decisions or actions taken as a result of information provided in this presentation and does not warrant or guarantee the accuracy or completeness of this information. No part of this material may be (i) copied, photocopied, or duplicated in any form, by any means, or (ii) redistributed without the prior written consent of SHGA.
Video Presentations
All video presentations discuss certain investment products and/or securities and are being provided for informational purposes only, and should not be considered, and is not, investment, financial planning, tax or legal advice; nor is it a recommendation to buy or sell any securities. Investing in securities involves varying degrees of risk, and there can be no assurance that any specific investment will be profitable or suitable for a particular client’s financial situation or risk tolerance. Past performance is not a guarantee of future returns. Individual performance results will vary. The opinions expressed in the video reflect Sand Hill Global Advisor’s (“SHGA”) or Brenda Vingiello’s (as applicable) views as of the date of the video. Such views are subject to change at any point without notice. Any comments, opinions, or recommendations made by any host or other guest not affiliated with SHGA in this video do not necessarily reflect the views of SHGA, and non-SHGA persons appearing in this video do not fall under the supervisory purview of SHGA. You should not treat any opinion expressed by SHGA or Ms. Vingiello as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of general opinion. Nothing presented herein is or is intended to constitute investment advice, and no investment decision should be made based solely on any information provided on this video. There is a risk of loss from an investment in securities, including the risk of loss of principal. Neither SHGA nor Ms. Vingiello guarantees any specific outcome or profit. Any forward-looking statements or forecasts contained in the video are based on assumptions and actual results may vary from any such statements or forecasts. SHGA or one of its employees may have a position in the securities discussed and may purchase or sell such securities from time to time. Some of the information in this video has been obtained from third party sources. While SHGA believes such third-party information is reliable, SHGA does not guarantee its accuracy, timeliness or completeness. SHGA encourages you to consult with a professional financial advisor prior to making any investment decision.
Recent Posts
