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Saturday, October 23, 2021
Stocks & Shares

Major U.S. stock index futures drop on potential tax hikes

tax hikes

The S&P 500 Index settled at 3910.52, down 0.76%, the blue chip Dow Jones Industrial Average ended at 32423.15, down 0.94% and the NASDAQ Composite finished at 13227.70, down 1.12%

The major U.S. stock index futures dropped on Tuesday as investors raised fresh concerns about the cost of infrastructure spending and potential tax hikes to pay for President Joe Biden’s $1.9 trillion relief bill.

According to Reuters, remarks by Treasury Secretary Janet Yellen that the U.S. economy remains in crisis from the pandemic as she defended developing plans for future tax hikes to pay for the new public investments put investors on alert.

In the cash market on Tuesday, the benchmark S&P 500 Index settled at 3910.52, down 30.07 or 0.76%. The blue chip Dow Jones Industrial Average ended at 32423.15, down 308.05 or 0.94% and the technology-driven NASDAQ Composite finished at 13227.70, down 149.84 or 1.12%.

Yellen spoke at a hearing of the House Financial Services Committee after Federal Reserve Chair Jerome Powell addressed the committee.

Treasury Secretary Janet Yellen said on Tuesday the U.S. economy remains in crisis from the pandemic even as she defended developing plans for future tax increases to pay for new public investments, Reuters reported on Tuesday.

Yellen spoke at a hearing of the House Financial Services Committee that was ostensibly to discuss the country’s recovery from the pandemic-triggered recession, but turned instead into a skirmish over priorities far beyond it.

Republican members of the committee challenged Yellen and Fed Chair Jerome Powell on issues such as plans to build climate change into financial regulation, and specifically quizzed Yellen on how the US can simultaneously be in crisis and healthy enough to consider raising taxes.

The immediate hole remains deep, Yellen said, with “a huge problem of joblessness” following the loss of employment due to the pandemic.

But once the economy is strong again President Biden is likely to propose that we engage in long-term plans to address longstanding investment shortfalls – in infrastructure, investment to address climate risk, investments in people, R&D, manufacturing, she said. It is necessary to pay for them.

One possibility is boosting the corporate tax rate back to 28% and fixing a “global race to the bottom” in what companies pay.

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