August 30, 2020

The two presidential candidates have different views regarding the economy in general and of tax policy in particular. The Obama-Biden Administration in their attempt to eliminate the inversion increased the regulatory obstacles., but the attempt was futile. Their actions showed that an indirect solution is always inferior to a direct solution ,such as the one taken by the Trump-Pence administration, The Biden-Harris economic platform promises to raise the corporate tax rate to 28% and to double the tax on foreign earnings. Such a measure would in a static world yield higher tax revenues. However, the world is not static. Profit maximizing corporations respond to incentives. Inversions will become attractive once again. Then there is the issue of valuation. Tracing how much of a dollar worth of pre-tax corporate profits an investor gets to keep under the two alternative plans gives us an idea of their economic plans impact on the economy and the markets.

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