Tax Reform to the Forefront

Sep 29, 2017   //   by Bruce Mason   //   Weekly Market Update  //  No Comments

source site Fall officially started last Friday, but you could have fooled me!  The weather isn’t the only thing that is hot these days.  The markets remain steady despite the meltdown in Washington DC.  While we can count on mother nature to bring us cooler weather in the weeks ahead, it is not certain that cooler heads will prevail in our Capitol.

enter site Let’s start with the first of two big stories that directly or indirectly affect everyone in this country.  This week the GOP struck out again with the repeal of Obamacare.  Majority Leader Mitch McConnell failed to garner the minimum 50 votes necessary for passage of the GOP bill.  Holdouts included Senators McCain (AZ), Collins (ME), and Murkowski (AK) who all faced strong opposition in their home states.  Not giving up hope, Senate Republicans are now promising to repeal the Affordable Care Act by January 2019 while President Trump has stated his intention to press forward and negotiate directly with Democrats on health care legislation.  Some progress is being made to shore up the federal Medicaid subsidies to insurance companies which should bring insurers back to some of the markets they previously abandoned.  In addition, there is talk President Trump could sign an executive order allowing people to buy health insurance across state lines (which is currently not legal).  Conceptually, this should constrain or even reduce premiums due to increased competition.

opcje binarne jak obstawia_ The second large story which you are undoubtedly aware is the proposed tax reform put forward by the GOP this week.  While it offers some details, it isn’t explicit enough to know its potential impact.  Many provisions are still being worked out behind closed doors and should be made available in the weeks ahead.  However, here’s what we know:

  • It doubles the standard deduction while getting rid of personal exemptions
  • It gets rid of most deductions except for mortgage interest and charitable contributions
  • It repeals the alternative minimum tax (AMT)
  • It reduces the tax on pass-through income to 25%
  • It repeals the estate tax
  • It reduces the current tax table from seven brackets to three (although income ranges are not known)

i a white guy dating a black girl Surprisingly, early reports suggest it is Republicans that are not happy with the plan.  One of the larger deductions being phased out is state and local taxes which amount to a large hit for those in high tax states including, California, New York, New Jersey, and Illinois. In company news, Target announced they plan on raising their minimum wage to $11 per hour in October from a current level of $10 per hour.  The retailer also committed to boosting its minimum hourly wage to $15 by the end of 2020.  This is another move in the direction of rising wages which not only set a precedent other retails may have to follow but may also spark inflation which has been stubbornly low despite the Federal Reserve’s best efforts.  In a more concerning bit of news, Citibank is bringing back collateralized debt obligations (CDOs) which nearly brought down the financial industry and our economy in 2008.  According to Bloomberg, the bank has spent the past two years hawking synthetic CDOs and promoting returns as high as 20% but feels things are safer this time around.  This time will be different.

source link In closing, if you were wondering what it would cost to buy an uncut diamond the size of a tennis ball, we found out this week.  After a year of negotiations, the British dealer Graff Diamonds agreed to buy the 1,109-carat Lesedi La Rona diamond for $47,777 per carat which works out to $53 million.  Laurence Graff said in a statement, “The stone will tell us a story, it will dictate how it wants to be cut, and we will take the utmost care to respect its exceptional properties.”  If only I could find a stone that talked like that!  Now you know. September 30, 2017

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