When the gov needs to pay for stuff, it can try collecting more taxes from corporations. Here's what it means for you when big businesses pay more taxes.
The deets that matter for your wallet: Depends on who you're talking to. Some say 'no thanks' to higher corporate tax rates and argue they're bad for the economy. Because the added cost could lead businesses to lower pay for employees and/or raise prices for consumers. Ultimately, that could contribute to slower economic growth and lessen American competitiveness in the global market. Psst...that last concern could be moot if the world approves a proposed global minimum corporate tax rate (hint: that’s if countries agree to charging businesses the same tax rate or higher on any profits earned at home or abroad).
Another potential effect: higher taxes could eat into revenues, which could mean lower returns for investors.
On the flip side, others say corporations (and the rich) paying more taxes can combat income inequality. And help pay for plans that some economists predict will boost economic growth. Think: physical infrastructure, like roads and water pipes, and programs like education and child care. Because the plan to fix highways, rebuild bridges, and upgrade systems across the country has the potential to create a lot of new jobs. And, the White House says, making sure there are enough, up-to-code child care facilities nationwide can help parents, especially moms, in the workforce.
Your move: Put yourself in the best financial position possible, no matter who's right. Some ideas:
Make some wiggle room in your budget. Cut subscriptions you no longer want or need. And negotiate your bills. That way, if corporations raise some prices, you won't be stretched thin.
Diversify your portfolio. While it's possible some stocks could suffer, others could benefit from new spending plans. Example: these stocks may get a boost from infrastructure spending. Making sure you have a good mix of investments means better odds that at least some of your stocks win.
Big businesses paying more taxes might not affect you directly, but your wallet could still feel it. Understanding the different arguments – and making some smart money moves – can help you get ready while the gov debates what to do next.
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Skimm'd by: Ivana Pino, Stacy Rapacon, and Elyse Steinhaus