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In a nut shell Tax cut/Job act passed
Old 12-20-2017, 04:42 PM   #1
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In a nut shell Tax cut/Job act passed

No politics please but in a nut shell is this Tax bill good for us or not. The more I read the more confused I get. I can't imagine having a stronger economy what it is going to do for the markets. One worry I see is growing to fast with a great economy now.
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Old 12-20-2017, 04:48 PM   #2
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I liken it to getting a no-annual-fee, no-interest-payments due cash advance from a credit card except other very wealthy people also get a bigger cash advance from your same credit card. And the interest payments are just added to your balance until 2026 when the bill finally shows up.

So, yes, it is good for the jobs and economy ... at least for a while.

Historically, Reagan did something similar in the 1980s and gave every man, woman, and child in the US something like $3,000 to do as they pleased.
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Old 12-20-2017, 04:52 PM   #3
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It was designed as a bit of a time bomb due to the temporary nature of the individual cuts...somewhat nice for some people in the interim with a reversion to the "as before" in 10 years.

I think there will be a lot of tax-lawyer gamesmanship going on that will undercut the expected tax revenues, as people take advantage of the pass-through provisions.

And I personally do not foresee the corporate tax cuts leading to anywhere near the growth to make up for the lost tax revenue, but I guess we'll find out in about 10 years.
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Old 12-20-2017, 04:53 PM   #4
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Generally a good thing unless you live in a high tax state as it caps your state and local tax deductions (SALT).

Wealthier will gain more benefit but that is because the wealthy pay most of the taxes.

The middle class should benefit from a lower tax rate.

Further, the reduction in corporate taxes should increase hiring and profitibility. This indirectly affects the middle class through more jobs and an increase in investment gains.
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Old 12-20-2017, 05:37 PM   #5
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We no longer pay any federal tax so I didn't really care about that part. I do like the cut in corporate tax rate as that should help some of my stocks that have sheltered massive amounts of money overseas.

I used to care.

Oh, Merry Christmas!
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Old 12-20-2017, 05:46 PM   #6
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I hope that it does what is being touted, GDP growth at 4-6%, increase in government receipts, job growth, more money in the pockets of the consumer class. The skeptical nature of my gut tells me different. A recent survey of CEOs say that priorities with any increase in revenue will result in stock buy backs, paying down debt, funding for M&As and CAPEX spending is fourth in the que. Time will tell though but I'm a wait and see guy before getting too excited. As far as for my own tax situation, it will change little if at all.
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Old 12-20-2017, 05:47 PM   #7
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Originally Posted by Travelwanted View Post
Generally a good thing unless you live in a high tax state as it caps your state and local tax deductions (SALT).

Wealthier will gain more benefit but that is because the wealthy pay most of the taxes.

The middle class should benefit from a lower tax rate.

Further, the reduction in corporate taxes should increase hiring and profitibility. This indirectly affects the middle class through more jobs and an increase in investment gains.
Yep that is what I get out of the bill also. I really can't see in the near future that it will hurt me in any way. I see it as a win and all good things don't last forever and if they try to please everyone it would fail.
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Old 12-20-2017, 06:23 PM   #8
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Further, the reduction in corporate taxes should increase hiring and profitibility. This indirectly affects the middle class through more jobs and an increase in investment gains.
The hiring part is what confuses me. Who is going to get hired when the unemployment rate is already at a 16 year low? If it goes much lower, we're going to be at a 50 year low. Why wouldn't companies just do more off-shoring and create jobs in countries where the labor market is not so tight and taxes are also low (e.g. Ireland, China, India, Russia) instead of competing for the scarce labor here and potentially having to pay higher wages?

If the labor shortage does get worse, and companies do want to hire in the US for some reason, then that will push wages up and that really will be a boon for lower class workers.

I do think investors will benefit through increased dividends and higher stock prices as a result of buybacks.
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Old 12-20-2017, 06:51 PM   #9
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Goosing the economy by reducing taxes was needed more in 2009 than now. What bullets will be used when the inevitable next economic downturn arrives?
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Old 12-20-2017, 06:59 PM   #10
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The nice thing about not earning any income is not having to worry about big changes in the tax law. This was my last year of w*rk, and I did pay a lot of CA taxes. But next year I'll just have a small amount of interest, dividends and capital gains, so I don't see the tax bill making much of a difference either way.

I would think the lowering of corporate taxes to 21% would have a positive effect on the stock market, which will of course benefit all of us who are invested in equities.
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Old 12-20-2017, 07:01 PM   #11
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We are retired and will end up in the 12% bracket and get a bit of a tax break .
Hopefully the tax cuts for businesses will continue the growth in jobs and help push wages higher considering they have been stagnant for so long. This should help the working class.
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Old 12-20-2017, 07:02 PM   #12
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I think it will be good for investors.
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Old 12-20-2017, 07:03 PM   #13
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Yes, I see the corporate tax reduction keeping the bull market alive and well for a long time.
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Old 12-20-2017, 07:03 PM   #14
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<mod edit>

I think for most of us here, the effects will be minimal, other than changing the way deductions work. More people will be able to take the standard deduction.
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Old 12-20-2017, 07:23 PM   #15
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While unemployment is low look at the labor force participation rate. Still a lot of people on the sidelines that aren't willing to work or underemployed at the current pay rate. Eventually some of these people will be pulled off the sidelines back into the labor market. Of course if labor prices gets too high (which I think we have a ways to go) the transition to automation will progress faster than projected.
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Old 12-20-2017, 07:28 PM   #16
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Many companies have already announced they are raising the wages of their employees as a result of the tax plan. It is a great thing for most working people and businesses.

The market is projected to 'roar'.
Quote:
AT&T is paying bonuses of $1,000 to more than 200,000 U.S. employees.
AT&T's CEO said it was in response to tax reform.
https://www.cnbc.com/2017/12/20/tax-...employees.html

Quote:
Wells Fargo, Fifth Third Bancorp unveil minimum wage hikes after tax bill passage
Fifth Third and AT&T are paying employees special bonuses after getting tax cuts under the Republican tax plan.
Wells Fargo said Wednesday that it would boost minimum wages for employees to $15 an hour, following Fifth Third's similar announcement.

https://www.cnbc.com/2017/12/20/fift...l-passage.html
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Old 12-20-2017, 08:41 PM   #17
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Based on all the wage hikes and bonuses announced this afternoon plus the capital investments, maybe what's going to pop out of the nutshell is inflation. That 2 percent CD might not be as appealing six months from now.
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Old 12-20-2017, 08:58 PM   #18
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Old 12-20-2017, 09:14 PM   #19
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DW and I have a chunk of change in tax-deferred plans. We'll try to use the rate cuts to our advantage, converting to Roth accounts

It'll be interesting to see how the revocation of the ACA insurance mandate plays out. Insurance premiums will certainly go up, but the pesky part of the ACA is that the IRS has to subsidize premiums to make them affordable. That will eat into federal tax revenue. How much depends on how many people stick with Obamacare.
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Old 12-20-2017, 09:57 PM   #20
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DW and I have a chunk of change in tax-deferred plans. We'll try to use the rate cuts to our advantage, converting to Roth accounts

It'll be interesting to see how the revocation of the ACA insurance mandate plays out. Insurance premiums will certainly go up, but the pesky part of the ACA is that the IRS has to subsidize premiums to make them affordable. That will eat into federal tax revenue. How much depends on how many people stick with Obamacare.

ACA >>>> that name needs to be changed unaffordable Care Act.

Some good points and it will be interesting to see what happens to HCI going down the road.
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