Joe Biden’s stint as the US president will commence on January 20th, 2021. We do not know whether the President-elect will live up to expectations of being a hero – as deemed by many, but his plans for the country are ambitious and represents more than just reassurance from Trump’s administration. Here’s a look at the proposed financial policies of Joe Biden and how it may affect America and India.
Crux of the Matter
Biden And The Way Ahead
Experts say, Biden’s prsidency entices a feeling of hope and curiosity among American citizens as well as Indian commentators, but could draw scrutiny from the same. With all that has besieged the US – from the pandemic to the social unrest to the US Capitol Hill siege, citizens are expecting the new president to be a hero. Whether or not the president-elect will live up to such expectations only time can tell, but his plans for the country are still ambitious and represents more than just reassurance from Trump’s administration. Revitalizing the middle class and making it more racially inclusive is a cornerstone of his plans.
Tax Policy And Trade Solution
On the trade front, US and India’s relationship with China bodes well for the relations between both countries. India has had a trade surplus (exports greater than imports) with the US, for almost twenty years.
The US accounts for ~17% of India’s exports, rendering the relationship of the countries very significant, which does not look like changing any time soon.
- Biden wants a progressive and less debilitating tax code.
- His plan is to generate $4 trillion of additional revenue over a decade.
- He wants are raise the top income tax bracket to 39.6% from 37%, tax capital gains, and dividends at ordinary rates for those with annual incomes over $1 million, and increase the corporate tax rate to 28% from 21%.
Experts believe that this tax regime may turn into a boon for India as this may attract more FDI. India had reduced the corporate tax rate to 22% for companies that gave up all exemptions and incentives in September 2019. The effective rate without exemptions would be about 25.17%. However, a 15% rate has been offered to new companies including manufacturing firms. The rates are far more attractive compared to the previous rate of 30%.
Other Notable Policies
- Biden’s climate change measures policy has attracted attention from the people.
- Calling it the “Clean energy revolution”, he aims to invest $2 trillion and create up to 10 million jobs.
- The US has also promised to rejoin the Paris Climate Change Accord which could help India in technical and financial ways but his policies could also spell danger.
- In accordance with these policies, Biden may include carbon adjustment fees on goods imported from countries that are high carbon emitters, and India being a trade partner might be dealt with higher import tariffs.
- Biden has promised to expand the Obama care subsidies to increase reach to more middle-income families on the health care forefront.
- Biden expanded his student debt plan and said he wants to forgive all undergraduate tuition-related federal student debt for those who earn up to $125,000 and attended 2 and 4-year public colleges and universities.
Potential Concerns For India
- Under the Trump administration, US restricted the visa regime due to the ‘America first’ policy, which affected Indian youth significantly – the new President seems inclusive of immigrants.
- US sanctions on Iran impeded India from obtaining crude oil cheaply. Under Biden, India can hope the situation alleviates and lower crude oil price benefits the Indian economy – that has high crude oil consumption – in the long run.
- In July 2020, Biden proposed a $700 billion plan to boost America’s manufacturing and technological strength. This involves government spending of $400 billion on US goods and services and a $300 billion investment in research and development (R&D) on technologies like electric vehicles, lightweight materials, 5G, and artificial intelligence.
- This Made in America policy could also hinder investment in India when it comes to manufacturing.
The economic plans for the country seem promising for American citizens as well as immigrants.
“Will America be great again?” – Only time will tell.
Read More about the presidential elect Joe Biden here:
Summachar brings you this story in collaboration with Finmedium that can be found on Instagram at @finmedium and on the web here.
- Banking, financial services and insurance (BFSI) is an industry term for companies that provide a range of such financial products or services. This term is commonly used by information technology (IT), information technology enabled services (ITES), business process outsourcing (BPO) companies and technical/professional services firms that manage data processing, application testing and software development activities in this domain.
- Joe Biden’s negotiations with congressional Republicans helped pass legislation including the 2010 Tax Relief Act, which resolved a taxation deadlock; the Budget Control Act of 2011, which resolved a debt ceiling crisis; and the American Taxpayer Relief Act of 2012, which addressed the impending “fiscal cliff”.
- The United States fiscal cliff refers to the combined effect of several previously-enacted laws that came into effect simultaneously in January 2013, increasing taxes and decreasing spending. At 12:01 am EST on January 1, 2013, the US “technically” went over the fiscal cliff.
- The Balance – What Are Biden’s Economic Plans and Policies?
- The Economic Times – President-elect Joe Biden’s tax policies could be a boon for India, feel experts
- Financial Express – Joe Biden’s Foreign Policy Priorities And Interests: Implications for India
- Financial Express – Joe Biden’s Victory A Mix Bag For India; Low FDI, High Tariff May Hurt Country’s Economy
- Investopedia – Joe Biden’s Economic Plan