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Would Biden’s Tax Plan Help or Hurt a Weak Economy?

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At a drive-in campaign rally last week at a union hall in Toledo, Ohio, Joseph R. Biden Jr. asked those in the audience to beep their car horns if they earned more than $400,000 a year. “You’re going to get a tax raise,” he declared as some cars honked.

Mr. Biden, the Democratic presidential nominee, has proposed sweeping tax increases on high earners and large corporations, which various independent forecasting models project would raise around $2.5 trillion or more in revenue over a decade. In a rare case of agreement, both Mr. Biden and his incumbent opponent, President Trump, have sought to elevate those tax plans in the closing weeks of the campaign.

The competing strategies reflect diverging views of how voters respond to tax increases — and of how those increases will affect a fragile economic recovery in the years to come.

Mr. Biden and his advisers say tax increases now would accelerate growth by funding a stream of spending proposals that would help the economy, like infrastructure improvement and investments in clean energy. At least one independent study supports those claims, finding that Mr. Biden’s full suite of plans would bolster economic growth. Researchers at some conservative think tanks project that his tax increases would exert only a modest drag on the economy.

Mr. Trump and congressional Republicans say otherwise, arguing that tax increases of any kind threaten to derail the rebound from recession. “If he comes along and raises rates, all those companies that are coming in, they will leave the U.S. so fast your head will spin,” the president said on Thursday during an NBC town hall event. “We can’t let that happen.”

A group of Mr. Trump’s former economic advisers released a study last week projecting steep losses in employment, wage and economic growth from the enactment of Mr. Biden’s agenda, including significant damage from a tax proposal that has drawn relatively little scrutiny in the campaign: Mr. Biden’s plan to lift the cap on wages subject to the payroll tax that funds Social Security. That move will raise money from high earners, but two of Mr. Trump’s former economic advisers say it will punish small-business owners and reduce hiring.

Polls show Americans largely support raising taxes on the rich. But Mr. Biden has faced mounting questions about whether, given the pandemic, he would delay his tax increases, which also include raising the corporate rate to 28 percent from 21 percent and increasing the rate on investment and labor income for high earners.

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The questions have come largely from Republican critics, but also arose during an ABC town hall event on Thursday. Asked if it was wise to raise taxes on the wealthy and corporations now, in the middle of a weak economy, Mr. Biden replied, “Absolutely.”

Republicans have long asserted that any Democratic proposals to raise taxes would hurt the economy, regardless of whether it was booming or ailing. In recent years, including in the Democratic presidential primaries this year, Democrats and liberal economists have more forcefully argued the opposite: that raising taxes on the rich to fund government spending that bolsters the productivity of the United States economy will accelerate economic growth.

Economists advising Mr. Biden’s campaign from the outside say that they remain confident that his agenda will promote growth — and that Mr. Biden should not wait, if elected, to raise taxes on corporations and the rich.

“This has been a hugely unequal recession. And the high-income people, and big corporations, many of them have not had a recession at all,” said Austan D. Goolsbee, a former chief of the White House Council of Economic Advisers under President Barack Obama who is now a professor at the Chicago Booth School of Business and an outside adviser to Mr. Biden.

If you raise taxes on those groups as Mr. Biden has proposed, Mr. Goolsbee said, “and use the money for the things Joe Biden is talking about, that doesn’t decrease growth. That increases growth.”

ImageSupporters of Mr. Biden at his rally in Toledo. On the campaign trail, Mr. Biden makes a point to note his pledge not to raise taxes on people earning less than $400,000 a year.
Credit…Emily Elconin for The New York Times

Several independent tax modelers have analyzed Mr. Biden’s plans in recent weeks, estimating how much tax revenue they could generate and whether they would help or hurt the economy. Some analyze Mr. Biden’s tax and spending proposals together. Others focus only on taxes.

The most bullish of those analyses for Mr. Biden comes from Moody’s Analytics, which reported recently that if Mr. Biden wins and Democrats control both the House and Senate, the nation’s real gross domestic product would be $960 billion larger at the end of his term than it would be at the end of a second Trump term with Republicans controlling both houses. The gains from Mr. Biden’s spending programs would outweigh the drag from his tax increases, Moody’s determined.

Others have found relatively small effects on growth from the taxes. The Tax Foundation, which typically forecasts large gains from cutting taxes, predicts the Biden plan would reduce the size of the economy by nearly 1.5 percent over about 30 years. Kyle Pomerleau and Grant M. Seiter of the American Enterprise Institute find the tax plan would shrink the economy by 0.16 percent over a decade.

In an interview, Mr. Pomerleau said the drag was small from the proposals because Mr. Biden was largely taxing savings of high earners, which are not major drivers of economic growth given those Americans have a lot of their wealth saved.

“Some tax increases have larger effects on growth than others,” he said. “Biden has chosen taxes that don’t have a massive effect.”

Kevin Hassett, a former chairman of Mr. Trump’s Council of Economic Advisers now at Stanford University’s Hoover Institution, and Casey B. Mulligan, a former top economist for the council who is a University of Chicago professor, along with their co-authors, Timothy Fitzgerald and Cody Kallen, find much larger damage to growth in an analysis that examines Mr. Biden’s tax, health care and regulatory proposals.

They project that Mr. Biden’s plan to expand subsidies for health insurance under the Affordable Care Act will discourage Americans from working and earning more. And they predict that corporate tax increases will reduce in investment, that new environmental regulations will raise energy costs and that the increased Social Security payroll taxes will discourage hiring for small-business owners whose profits are taxed as individual income. High-earning owners of such businesses would be subject to additional taxes from the lifting of the Social Security wage cap, which the authors contend would reduce the amount of money they have available to hire.

Mr. Hassett said in an interview that the study was meant to show how “implausible” it would be for Mr. Biden to try to carry out his plans at a time when the economy was still struggling. “Jacking up the corporate rate right now seems like a disaster,” he said, “given how close to the edge so many firms are.”

Both Mr. Trump and Mr. Biden have been eager to make their tax plans a campaign issue. Mr. Trump frequently says that Mr. Biden’s plans would destroy the economy and plunge the country into another Great Depression.

On the campaign trail, Mr. Biden makes a point to note his pledge not to raise taxes on people earning less than $400,000 a year. His campaign is also emphasizing that promise in television ads, including one that concludes, “Biden’s plan: Corporations pay more. You benefit.”

Mr. Biden has leaned into the plan in the campaign’s final days. He has also acknowledged the potential political hurdles to enacting it. “So there’s not going to be any delay on the tax increases?” the moderator of the ABC event, George Stephanopoulos, asked Mr. Biden on Thursday.

“No, well, I got to get the votes,” Mr. Biden said. “I got to get the votes.”

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Ant Group Set to Raise $34 Billion in World’s Biggest I.P.O.

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Ant Group, the Chinese financial technology titan, is set to raise around $34 billion when its shares begin trading in Hong Kong and Shanghai in the coming weeks, which would make its initial public offering the largest on record.

The company, the parent of the Alipay mobile payment service, priced its shares around $10.30 apiece, according to documents released on Monday by stock exchanges in the two cities. At that price, the company would be worth around $310 billion, a market value comparable to that of JPMorgan Chase and more than that of many other global banks.

The money Ant raises would surpass the $29.4 billion that Saudi Arabia’s state-run oil company, Saudi Aramco, raised when it went public last year. Ant’s listing would also be larger than that of its sister company, the Chinese e-commerce giant Alibaba, which raised $25 billion when its shares started trading on the New York Stock Exchange in 2014.

For hundreds of millions of people in China, Alipay may as well be a bank. It is their credit card, debit card, mutual fund and even insurance broker — all on a single mobile platform. It is a lender to small businesses, both online and off, that might otherwise be ignored by China’s big state-run banks. Alipay has more than 730 million monthly users, more than twice the population of the United States. By comparison, PayPal has 346 million active accounts.

Like other giant internet companies, Ant says its strength lies in performing a large number of different tasks at once. The more people use Alipay to purchase lattes, for example, the more data it gathers about their spending power. Ant says this information helps it offer loans, investments and insurance policies that suit users’ needs. The data also helps Ant and its partner banks determine who is likely to pay them back.

Yet the melding of finance and tech is attracting regulators’ interest everywhere, and Ant has not been spared the scrutiny. In recent years, China has clamped down hard on fishy online lending and investing schemes. Regulatory pressures have led Ant to temper its ambitions in certain areas since it was spun off from Alibaba in 2011.

Today, the company emphasizes that Alipay is merely the front door through which its users gain access to financial services. The lending and investing are still mostly done by established institutions — a message that was crystallized when the company, which used to be called Ant Financial, dropped the second word from its English name this year.

Last year, Ant earned $2.7 billion in profit on $18 billion in revenue. It says it handled $17 trillion in digital payments in mainland China during the 12 months that ended in June.

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If You Aren’t Leveraging Email Marketing, This 7-Course Bootcamp Can Show You How

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Yes, email is still the communication channel that most people prefer when connecting with businesses.

Free Book Preview Ultimate Guide to Social Media Marketing

This book takes readers through a 360-degree perspective of social media marketing in businesses.

October 26, 2020 2 min read

Disclosure: Our goal is to feature products and services that we think you’ll find interesting and useful. If you purchase them, Entrepreneur may get a small share of the revenue from the sale from our commerce partners.

Email is still king in the digital marketing world. There are nearly four billion daily email users, many of whom use their email addresses to connect and interact with their favorite brands. Email is still the communication channel that most people prefer when connecting with businesses, which makes it an extremely viable marketing channel.

If you don’t have a strong email marketing strategy for your business, it’s time to check out The Complete Email Marketing Bootcamp.

This seven-course, 13-hour bundle comprises a complete toolset on email copywriting, from professional etiquette to increasing conversions. You’ll learn the crucial initial steps of email marketing: building a list by providing incentives and lead magnets, ensuring that you have something to give customers for joining your email list. From there, you’ll learn how to create an email lead funnel by creating opt-in forms on your website, how to quality control your list to ensure your messages land in your prospects’ inbox, and how to consistently generate new, super-targeted leads for your business.

Then, you’ll get into the brass tacks of writing emails. You’ll get 14 cold call templates to build from and discover proven copywriting tactics. From learning how to write at a high level to develop a bond with your subscribers, you’ll have a clear idea of how to get the most out of your email list. Email marketing is all about engaging with your customers and making them feel comfortable and excited about your brand. But it’s also about sales, and you’ll get a crash course on how to turn your email marketing into a lucrative revenue channel.

Start growing your business through email. The Complete Email Marketing Bootcamp is just $29.99 now.

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Build an Ecommerce Store on Shopify with Help From This Bootcamp

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Ecommerce is booming. Cut your slice of the pie today.

Free Book Preview Ultimate Guide to Social Media Marketing

This book takes readers through a 360-degree perspective of social media marketing in businesses.

October 26, 2020 2 min read

Disclosure: Our goal is to feature products and services that we think you’ll find interesting and useful. If you purchase them, Entrepreneur may get a small share of the revenue from the sale from our commerce partners.

While the Covid-19 pandemic has ravaged the world economy and been especially harmful to small business, one industry has thrived throughout this year. That’s ecommerce, and the opportunities are still abundant for anyone looking to earn a little extra money online. But you can’t just start selling things on the internet and expect to get rich overnight. There’s an art and a science to running an ecommerce business, which The Complete Shopify Bootcamp Bundle will help you understand.

This six-course, 30-hour guide covers some of the most important aspects of selling on one of the world’s largest ecommerce marketplaces, Shopify. In the first course, you’ll learn how to set up and build a Shopify store to start selling private label products using another massive platform, Fulfillment By Amazon (Amazon FBA). You’ll discover how to open up a new sales channel for a variety of private label products and how to design your store to be as attractive and user-friendly as possible.

From there, you’ll explore Shopify search engine optimization (SEO), understanding what it takes to rank higher on Google search results pages and attract more organic traffic. You’ll learn how to improve your domain authority, perform keyword research, and do all the little things you need to grow your store’s brand online.

Finally, you’ll delve into drop-shipping, the practice of selling products directly from the manufacturer to the consumer, without having to hold any inventory. You’ll explore the benefits of this e-commerce practice and learn how to find the right suppliers at the right prices.

Before you know it, you’ll be working on your very own Shopify empire. Right now, you can get The Complete Shopify Bootcamp Bundle for just $29.99.

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