‘All Companies Are JVs’: Biden Tax Policy Replaces COVID As Top Concern For Some Goldman Clients

Joe Biden may have promised that "nothing will fundamentally change" if he's elected, but the Trump tax cuts will be revisited after November in the event of Democratic gains. This isn't just a political issue anymore. Just ask Gary Cohn, the architect of Trump's tax overhaul. "[Congress] needs to look at our budget — how we spend money — and in addition to that, I think they need to look at our tax system and they have to think of ways we raise revenue", Cohn told Fareed Zakaria late last
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15 thoughts on “‘All Companies Are JVs’: Biden Tax Policy Replaces COVID As Top Concern For Some Goldman Clients

  1. Would be great to use those revenues toward R&D and investments in AI, biotechnology, the electrical grid, and investmentes back into our country. I’ll tell you, after all the looting (by elites, not recent protestors) the last 40 years, the place is looking run down. An industrical policy for once would in thte last 40 years would probably be a really good thing right about now.

    We’re lucky to get back to 1.2% real growth any time….well, any time again ever now it seems. Demographics are kind of ok but not, but need to get productivity up. Innovation is one thing we do well in this country. Need and in strategic areas.

    Of course the spoils would be fought over and the oligarchs would stand the chance of the lions share given the current playing field. Going to be an interesting next few years.

  2. “To be sure, this matters — a lot. Over the past three decades, half of the increase in corporate profit margins and a quarter of total S&P 500 earnings growth is attributable to falling effective tax rates.” I could come down on the side of maintaining the cuts if something positive had happened but employee real incomes were flat, research and innovation were nothing to write home about, GDP growth was lackluster for the most part. So where did the money go? Buybacks of course. Big whoop. If the greedy companies can’t figure out how to make their egregious windfall accomplish more than it did then taking half of it back is not unreasonable. Moreover, I’m retired and my damn taxes went up.

    How about this? Devise a plan whereby firms can earn their tax cut. Set up a sliding scale so that the more money employees make, the less taxes companies pay. After all, higher salaries mean more individual taxes paid. And the more the companies pay their employees the lower their taxes are. Let’s get smart here. I’m tired of hearing about non-existent “trickle down.” Instead of letting the big guys spend all their dough on buybacks, let’s ensure that trickle down and watch GDP grow for a change.

  3. This is a great post H….because it lays out the rationale for what was effectively a large part of the upward trajectory of equity prices over the last 4 years.. It also showcases where market performance has become the end all in Economic decisions as well as the basis for sentiment..
    I can’t help but feel a veiled threat however , that if Bozo is not the next president everyone’s 401 K’s will retreat to traditional levels . You could ask (which Bozo ? )

  4. Chance of corporate welfare subsidies being eliminated by either party is oh how about less then zero.

    Too important to the DC parasites campaign fund raising.

  5. This note by GS is exactly why it’s so hard to defend American-style capitalism. The tax cuts flew in the face of any notion of fairness or economic stewardship. When shareholders advocate for policies that harm the broad swath of America that aren’t shareholders, the oligarch class needs to cut it out with the disingenuous hand-wringing and expect–rather than fear–the next Bernie Sanders or Elizabeth Warren. They are creating the need for them!

    I say this as a shareholder and someone who was unlikely to vote for either candidate. When capitalism causes more problems than it solves, it will be changed or abolished. That shouldn’t be a surprise to GS or any other market participant.

  6. Another reason to own recovering cyclicals instead of priced-for-perfection defensives/tech. Many of them will have such large NOLs from 2020, that they will be able to shield 80% of pretax income for years.

    1. I need to be more complete. CARES allows companies to carry back this year’s losses over the past 5 years. So many cyclicals with big losses in 2020 might choose to get refunds of prior years’ taxes instead of offset future years’ taxes. I don’t know if they can tap those refunds in 2020 or have to wait until 2021. So far I haven’t run across any mention of this in the companies I’ve looked at.

  7. A good manager will reduce the impact of taxes on the business. Therefore the dire predictions of Goldman are erroneously playing into the hands of Mitch and Donnie.

  8. Just increase capital gains tax to normal income level and simplify dividend taxes to achieve same. Reduce size of tax code without making it less progressive.

  9. Excellent article. William Goldman:follow the money. 80%of Americans own what % of America’a equity market? Why should they care if the stock market sells off? We’ve had forty years of our wealth migrating upward. Politicians are short term in thier approach, like most of Wall Street. We have the example of private equity, which makes me think of Meyer Lansky. You can buy real estate here without giving up your true identity. I worked on Wall Street a long time, and I think we have the America that the top echelon wants…

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