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What the president’s latest fiscal proposals may mean for investors

Wells Fargo Investment Institute - April 5, 2021

by Paul Christopher, CFA, Head of Global Market Strategy and Gary Schlossberg, Global Strategist

Key takeaways

  • President Joe Biden has proposed an eight-year, $2.25 trillion spending package built around $1.7 trillion investment in infrastructure, physical assets, and research and development. Partial financing comes from a series of proposed corporate tax increases approaching $2 trillion over the next 15 years.
  • At this point, we anticipate that Congress will combine both parts of the spending and tax proposals and run them through the budget reconciliation process.

What it may mean for investors

  • It is too early to conclude what the spending amounts and final tax provisions will ultimately be. We also note our expectation is that the tax provisions are unlikely to be retroactive but will begin as of January 1, 2022. We believe our current tactical portfolio preferences are consistent with additional spending and some of the tax measures that we present below.

As expected, the president has proposed a $2.25 trillion spending package over the next 8 years built around $1.7 trillion investment in infrastructure and other physical assets along with research and development. Partial financing comes from a series of proposed corporate tax increases approaching $2 trillion over the next 15 years.

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