Don’t Count on that Tax Cut Yet

26 Jun

We hear a lot about upcoming tax cuts, and despite Congressional difficulty, many still think a big cut Is coming. Between tax reform, infrastructure spending and deregulation, a lot could change in the American business environment.

But I wouldn’t count on all that happening.

From an investment perspective, even if we get big cuts, it likely won’t drive stocks higher because the reform proposal is very much a “wish list” lacking key details.

The goals are clear and sound: a simpler taxation system that results in less burden for taxpayers.

But tax reform inherently means there will be winners and losers. And the Trump administration didn’t try to please everyone. The rationale behind the plan is that the resulting growth will create more tax revenue, and thus, the bad feelings will be washed away by widespread economic success.

Ideally, our political leaders would create a system that is neutral because the current system drives behavior that is meant to avoid taxes. And believe me, it’s popular. Consider these five tax breaks:

  1. Employer-provided health insurance
  2. State and local tax deductions
  3. Retirement plan contributions
  4. Mortgage interest
  5. Charitable donations

You probably use one, many or perhaps all them regularly. Well, President Trump’s proposal would eliminate number two on that list. And the original drafts eliminated number three as well.

We seem to have an appetite for tax reform. But, are we sure that’s what we really want?

It could usher in bigger deficits, higher interest rates, lower equity returns and worse. Careful what we wish for.

A Tale of Two Presidents

19 Jun

Let me tell you about two U.S. presidents. One could be characterized as unconventional, not terribly political, elected to battle an uncertain economy and generally shake things up. The other is Donald Trump. Who is the first president I described? None other than Ronald Reagan. Both men were elected to lead in turbulent times, but [...]

In It Together

16 Jun

We all know the Affordable Care Act, known as Obamacare, is a hot topic among the nation’s political class. And it’s an important one on Main Street too. Here’s the thing to remember about Obamacare – while it may not affect you directly, it affects all of us in some way. After all, health care [...]

Witness to Another Bubble?

16 Jun

U.S. auto stocks have been in a selloff of sorts after drastic sales drops were reported recently. Ford and GM stocks are both down, with Ford reacting by ousting its CEO. In fact, the entire industry is down almost 5 percent year-over-year from 2016. And it’s not just new car sales that are down, because [...]

Watch Out for the Growing Student Loan Bubble

22 May

The amount of student loan debt in this country is approaching crisis levels. In fact, student loans could very well be the next big bubble to burst. While we’re right to praise the merits of education and the value of learning, it’s smart to ask – what about the cost? The total amount of student [...]

What’s to come of Health Care?

15 May

We’re about four months into President Trump’s first term and Obamacare lingers. But for how long? The president says the Affordable Care Act (Obamacare’s official name) will collapse on its own, that it’s a terminally ill patient with limited time who was declined treatment by Congress. Now, most people aren’t on Obamacare plans. Those who [...]

Retail’s New Pricing Battle

8 May

Not only are we losing retailers at an amazing clip, but it seems free market pricing is going by the wayside too. That’s because online retailers are using our data against us. Where consumers would use the web to compare prices between companies, web vs. brick-and-mortar stores and so on, now online retailers are shopping [...]

Brick-and-Mortar Stores in U.S. Closing Rapidly

1 May

News about the retail industry tends to crop up around the holidays, but if you look around, you’ll notice there is a lot going on with retail stores across the country – as in, a lot of them are closing. Almost 3,000 store closings have been announced so far this year, and we’re already outpacing [...]

Despite its Faults, the U.S. Still Leads the Way

24 Apr

The U.S. isn’t perfect – no country is. We have our issues at home and abroad. That said, some would have you think we’re in decline. But for all its imperfections, our country continues to dominate the global economy by a wide margin. Exhibit A is the fact that the U.S. accounted for 24.3 percent [...]

The Untold Story of the Income Gap

17 Apr

So much of the talk lately is about the income gap – that incomes for the rich are rising much faster than for the poor. Well, wages have risen fast for the top 1 percent of earners for decades. It’s the haves vs. the have nots playing out in chart form:   However, a new [...]