Former Fox News host Bill O’Reilly invited me on No Spin News last week to discuss the investment implications of tomorrow’s elections.

How the markets react in the weeks and months ahead will depend partly on whether former Vice President Joe Biden or President Donald Trump wins.

But another major factor is whether the Republicans maintain a Senate majority or it flips to the Democrats.

For example, a Trump presidency with a Democratic Senate – or a Biden presidency with a Republican Senate – would mean more gridlock, as the two parties can’t even agree on what to have for lunch.

(Gridlock, however, is better than some alternatives.)

A Trump victory with a Republican Senate would mean a return to the pro-business policies of Trump’s first two years, before the Democrats captured the House.

However, a Biden victory with a Democratic Senate would mean radically different policies, as Joe Biden and Senator Kamala Harris themselves have made clear.

Trump, for example, favors deregulation, making it easier for entrepreneurs and businesspeople to set up and grow a business.

Biden is a fan of the regulatory state and promises to shake things up dramatically for Big Tech, banks, insurers, drug companies, and especially the oil and gas industry.

(In July, he also promised to “end shareholder capitalism,” whatever that means.)

For investors, perhaps the biggest difference between Biden and Trump is their official tax proposals.

Biden wants to raise the top income tax rate to 39.6% and add a 12.4% Social Security tax on income over $400,000.

Tack on the average state income tax of 6%, and under a Biden administration the state and federal government could take up to 58% of your income.

(When rapper 50 Cent heard about Biden’s tax plan, he got angry, saying he didn’t want to become 30 Cent. But as a resident of Connecticut – with a 6.99% top state income tax – he would actually become 20 Cent.)

Biden wants to raise the top capital gains tax rate to 39.6%. Trump wants to reduce it to 18.8%.

Personally, I don’t know any investors who look forward to surrendering 40% of their realized gains to the IRS.

(And, again, that’s before your state government takes its share, which may be 6% or more.)

In addition, Biden would raise the corporate tax rate from 21% to 28%.

This is a bad idea, for many reasons.

Under President Barack Obama, we had the highest corporate tax rate in the developed world: 35%.

Trump slashed the rate to 21%, making the United States a much more competitive place to do business.

This was not a radical idea.

John F. Kennedy slashed taxes and the economy boomed. Ronald Reagan slashed taxes and the economy boomed. The same thing happened under Trump.

According to, the average corporate rate among EU countries is 21.77%. (That’s less than 1% more than our own.)

Biden wants to take the U.S. corporate tax rate from competitive to uncompetitive again.

That would hurt workers, consumers and investors because it would have an adverse impact on business decisions.

When corporate taxes go up, businesses have less money to spend on expansion, capital equipment, research and development, hiring, and wages.

(They also have less money to pay dividends and buy stock back, depressing both yields and share prices.)

Conversely, when the corporate tax rate goes down, businesses have more money for expansion, capital spending, R&D, hiring, wages, dividends, and share buybacks.

No doubt some voters like the idea of Uncle Sam sticking it to big corporations for reasons of “fairness” or “equality.”

These voters don’t seem to understand that policies that undermine economic growth and business development make their jobs, their incomes and their 401(k)s less secure.

A higher tax rate also means consumers will pay more for what they buy.

(It’s often said that corporations don’t pay taxes. They collect them. The cost is passed along to customers.)

Biden’s tax policies are not good for workers, business owners, entrepreneurs or investors.

Anything that makes business formation and expansion easier is positive for the economy and the markets.

Anything that discourages the creation or expansion of a business – like more red tape and higher taxes – is negative.

A President Biden would not be able to enact his radical tax plans without a Democratic majority in the Senate.

That’s something investors might consider when selecting their elected representatives tomorrow.