SINGAPORE (July 21): Despite investors fearing tax hikes from a Biden presidency, OCBC economist Wellian Wiranto does not foresee any drastic market correction should the Democrats retake the White House in November. Higher taxes would help balance the US budget deficit at a time of greater fiscal need and stabilise US foreign policy behaviour. 

In line with the Democratic Party’s pro-redistribution economic stance, Joe Biden is keen on increasing corporate income tax rates from 21% to 28% following Trump’s tax cuts in 2017. He also intends to raise the top income tax rate from 37% to 39.5% and  push for a US$15/hour ($20.86) minimum wage for American workers. 

“From the market perspective, in and of its own, the tax hike might be deemed as a red flag. For specific sectors that operate diametrically opposite from the green initiative – such as coal, oil and gas, etc. – Biden’s win might be deemed less favourable too,” admits Wiranto. 

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