InvestorQ : With Joe Biden taking over as President this week, how do you see the impact on corporate tax cuts and fracking for oil on Federal lands?
Deepa Salunkhe made post

With Joe Biden taking over as President this week, how do you see the impact on corporate tax cuts and fracking for oil on Federal lands?

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Arya Nanda answered.
4 months ago
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As of now it is too early to say whether there will be a change in stance how different it would be. But one thing I can tell you from past observation is that in politics and business; the more things change, the more they stay the same. Democrats may try to impeach Trump but it is very likely that not much may change with respect to American policy.

Let me talk about the corporate tax cuts offered by the Trump government. One concern expressed by the financial markets across the world is that with a majority in the Senate, Biden may unwind the tax cuts implemented by Trump. While that fear had let to a correction in the markets, it is now reconciled that such an about turn is impractical.

What we need to understand and appreciate is that billions of dollars in the form of tax benefits have already been distributed to US corporations and that is one of the major reasons for the stratospheric levels of the Dow and NASDAQ. Any reversal at this point could lead to virtual implosion in market value. Biden will prefer to leave the tax cuts as it is.

There is the second worry on fracking on Federal lands. Biden has long been a strong opponent of fracking for shale oil in Federal lands whereas Trump was willing to prospect for oil anywhere. Will Biden put brakes on fracking? Joe Biden may not be a big shale bull like Trump but he realizes that there is a lot of money at stake in the US shale industry.

The stakes are in the form of millions of jobs and downstream businesses that shale has created. In addition, there is billions of dollars in debt. Above all, thanks to shale, the US has emerged as the swing producer of oil. If Biden puts curbs on fracking, it would mean the US becomes a price follower than a price setter. Biden will not want to concede that mantle either to Saudi Arabia or to Russia.

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