TAXES

With the US Election Just Four Months Away, America’s Next Tax Plan Is Shaping Up

Americans can run, but they can’t hide from politics — and unfortunately, you’re not safe here either because the country’s next election is just 159 days away. And today, we need to talk about one of the country’s most heavily debated topics: taxes.

Whichever party wins Congress and the Presidency will win the power to reshape America’s tax code for the first time since 2017 — and the two parties have vastly different visions for taxes.

Who’s in charge? In 2017, Donald Trump and the Republican party passed the Tax Cuts and Jobs Act (TCJA), temporarily lowering tax rates for individuals, estates, and businesses. While some argue the TCJA provided benefits, it also reduced deductions and tax credits for Americans and small businesses. The TCJA added between $1-2T to the federal debt, making it enormously controversial as its 2025 expiration date approaches.

• Republicans pledge to make the TCJA’s changes permanent if they win in November — a move that would further enrich wealthy Americans and US businesses.

• The Congressional Budget Office says the permanent changes could increase the deficit by $4.6T between 2025 and 2034, exasperating America’s debt problem.

What’s the Alternative?

If Democrats hold the quill come 2025, the sequel to the TCJA could look dramatically different. By the end of 2025, tax rates for most Americans would revert to pre-2018 levels. The Democrat plan would shift the tax burden to wealthy Americans and businesses, potentially costing them nearly $5T, according to PwC.

• A memo circulated by the Biden Admin suggests higher corporate tax rates and new levies targeting billionaires, high executive pay, and Americans making more than $400K a year.

• The Tax Foundation estimates this plan could generate $4.4T in revenue over 11 years — but might impact jobs, GDP, and wages.

And if no one wins? If no party gains a decisive majority, the next tax bill could be a bipartisan effort, combining elements of both parties’ visions. Americans will have to wait until November to see what will replace the TCJA.

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LARGECAP RECAP

💳 Square Embraces Lending for Growth with Small Businesses and Consumer

Americans might still be spending heavily, but payment processor Square ($SQ) faces more competition than ever. Point-of-sale rivals like Toast ($TOST) and Lightspeed ($LSPD) are gaining ground at checkout counters across the country. To find new growth, Square has turned to lending, writing $4.78B in small and midsize business (SMB) loans in 2023, even as competitors pulled back on lending.

• Square’s $1.32B in loans grew 17% year-over-year, surpassing the value of SMB loans written by America’s largest bank, JPMorgan Chase ($JPM).

• In the first quarter alone, Square originated 129K small business loans, structured as advances to be repaid using daily sales.

On the other side: Square isn’t stopping with small businesses. Its $21B acquisition of buy now, pay later company AfterPay has given Square businesses another way to close sales — and has helped it push into consumer lending. Together, these efforts boosted Square’s subscription and services-based revenue by over 23% in the latest quarter, generating a surprising $5.77B profit. Despite this success, $SQ is down 9.5% year-to-date.

14% APY in this market? Yes, it’s possible: The private credit sector has still been targeting attractive returns in this market environment — and with Percent, investors can browse private credit deals with up to 20% potential APY. Earn a welcome bonus of up to $500 with your first investment. Invest in private credit with as little as $500 →*

Markets & Economy

Gen Z is taking summer jobs: Teen employment has been declining for decades, with students being encouraged to focus on studies more than money. This summer, Gen Z is prioritizing the paycheck, with 38% of 16-to-19-year-olds taking jobs. [Read]

Democrats and Republicans face different inflation: A new study shows that Republican states have faced higher inflation since Dec. 2019, worsened by inflation fears. [Read]

First weight loss ETF launches: Roundhill Investments’ new GLP-1 & Weight Loss ETF ($OZEM) is the first thematic fund dedicated to the weight loss industry — hoping to capitalize on fast-growing shares of Eli Lilly ($LLY) and Novo Nordisk ($NVO). But is its 0.59% expense ratio worth the squeeze? [Read]

Business & Wealth

Resort day passes are on the rise: Want a luxury resort experience without paying $400 per night? Hotels are embracing new ways of making money — including selling access to its amenities in day passes. [Read]

PayPal ($PYPL) to build ad business: First, it was Google. Then, it was Meta, Uber, and Amazon. And now, a struggling PayPal is looking to advertising to reignite its growth — becoming the latest tech firm to use customer data in advertising. [Read]

T-Mobile ($TMUS) acquires U.S. Cellular ($USM): Weeks after acquiring Mint Mobile’s parent company, America’s third-largest mobile carrier announced a $4.4B deal to acquire “most of U.S. Cellular,” aiming to enhance coverage. [Read]

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DIGIT OF THE DAY

2.951M Travelers Took Flight on the Busiest Travel Day Ever In US History

That’s almost 1% of the US population flying in a single day. Last Friday, the TSA screened the highest number of travelers ever, supporting analysts’ predictions that 2024 would set new travel records. But this year, it’s all about international travel.

• United Airlines ($UAL) reported up to a 45% increase in demand for flights to European cities hosting Taylor Swift concerts, and Delta ($DAL) also noted its “largest-ever international summer schedule,” with an “increase in flying to Europe around her tour.”

• During their earnings call this month, Airbnb ($ABNB) said it expects growth to accelerate on stronger international travel demand from the 2024 Paris Olympics and 2024 Euro Cup.

We have liftoff: Travel is projected to add $11.1T to the global economy this year, surpassing the previous record of $10T in 2019. A significant boost comes from the rebound of Chinese visitors after travel restrictions were lifted in early 2023. A Dragon Tail survey found that only 10% of Chinese travelers don’t plan to go abroad — down from more than 50% a year ago.