Financial News

[Chisoxfn]

It disproportionately affects people who plan and save. Those people are disproportionately rich. You don't have to have billions of dollars to save.

You need to replace "save" with "invest".

[Chisoxfn]

LOL, was there some stipulation that all the money was going into wages? A good company has what 15-40% (I am guessing) of their expenses going to payroll depending the industry. It's ridiculous to think all of their savings would go to wages.

 

Also, plenty of companies are buying back their own shares and paying out dividends. Which improves the value of shares and the value of peoples 401Ks.

 

People just hate that it's Trump's plan. There is definitely some issues with the personal tax plan plan but this is needed no the corporate said. If they're going to raise interest rates and pull the essentially free money off the table it's good that corporations have a boost on the bottom line with the debt situation getting scarier.

Corporate tax reform was needed, because the whole system is convoluted and we shouldn't have all this off-shoring that happens, but there are issues (like there are with any tax plan). The bigger question (and in many ways it is a philosphical one with multiple answers which depend somewhat on your own individual views) is where do you maximize the benefit on our economy (giving more back to Corporations or giving directly to people and who). My gut tells me the Corporate tax rate will be 2-3% higher in 5 years and the personal taxes will have shifted slightly as well (with more deductions at lower income brackets and increased rates at higher brackets).

[caulfield12]

Of course, now there is no money left over for critical infrastructure spending...but, priorities!

 

Putting more actual disposable income in the hands of the bottom 60% would have lifted aggregate demand and growth much more effectively...and arguably, many of those without college degrees voted for Trump with the expectation he actual cared about flyover territory and would improve their economic and health care situations.

 

Scant evidence to support that so far.

Edited February 28, 2018 by caulfield12

[StrangeSox]

Corporate tax reform was needed, because the whole system is convoluted and we shouldn't have all this off-shoring that happens, but there are issues (like there are with any tax plan). The bigger question (and in many ways it is a philosphical one with multiple answers which depend somewhat on your own individual views) is where do you maximize the benefit on our economy (giving more back to Corporations or giving directly to people and who). My gut tells me the Corporate tax rate will be 2-3% higher in 5 years and the personal taxes will have shifted slightly as well (with more deductions at lower income brackets and increased rates at higher brackets).

 

My understanding from talking to CPA/IRS relatives back around the holidays is that far from being a good "reform," the pass-through loopholes created a whole new exciting industry of tax arbitrage that big accounting firms are really, really eager to dig into for their well-heeled clients.

[Chisoxfn]

My understanding from talking to CPA/IRS relatives back around the holidays is that far from being a good "reform," the pass-through loopholes created a whole new exciting industry of tax arbitrage that big accounting firms are really, really eager to dig into for their well-heeled clients.

I'm not educated enough on the personal side of the reform to get into a big battle, but no one should be surprised that when something happens...good businesses are going to find out ways to as effectively manage their books based upon those rules/regulations. A key point you all missed somewhere is...we live in a very competitive world with very few monopolies (or even light monopolies) so the reality is, if a business or industry has all gotten a major benefit...it will be competed away pretty quickly. There might be few exceptions to those rules but that will absolutely happen.

[caulfield12]

On the contrary, the alternate approach was utilized by the Obama administration. That administration saw the greatest disparity growth between the 1% and 99% than any administration in modern history.

 

What did the stock market do from 2009-2017?

 

Maybe Dems like Clinton and Obama should apologize for the growth that took place...? How well under the Bushes and Reagan? What happened in 1987, 2001-2002 and 2008?

 

Republicans keep giving tax cuts to the rich and driving the stock market off a cliff.

 

And you’re completely discounting the economic effects of millions of lower income working families getting health insurance for the first time.

Edited February 28, 2018 by caulfield12

[ptatc]

Right, which is pretty much what was expected here. The corporate tax cut was a giant windfall to shareholders which disproportionately benefits the wealthy and won't really do too much for everyone else (maybe we'll see lower prices in some areas down the road, but if your goal was "help people who aren't wealthy," there's a heck of a lot more efficient ways to do that that don't exacerbate wealth inequality). Companies weren't cash-starved with investment and expansion opportunities, so the idea that we needed a big tax cut stimulus to spur the economy never made much sense.

 

e: You weren't making those arguments, but that's how it was being sold to the public.

There were many articles in various papers stating that companies were increasing their employee contribution to the 401K plans as well as some doing cash bonuses.

[StrangeSox]

I didn't mention Trump, dude. E: whoops I guess the headline attributed it to "Trump tax cuts" but that was the extent of his reference, not sure was "deluded rant" you're talking about. Can you try to not make every disagreement with anyone here so personal?

 

And I'm not surprised that companies aren't handing out the windfall to employees. I never expected otherwise. That's sort of the point--it was sold to the public as something it very obviously wasn't and isn't turning out to be.

 

As far as the puff pieces that were being put out, many had glowing headlines but the details weren't as rosey a originally portrayed. A lot of the announcements turned out to be things that had been long planned or in pine with what the industry had been experiencing in wage growth for a number of years. Again that'd go back to if you wanted public policy to help the working and middle class, which is how this plan was promoted, you could have done a heck of a lot better than what they came up with.

Edited March 1, 2018 by StrangeSox

[caulfield12]

Expecting tax cuts to actually benefit the majority of American members of the lower and middle classes=DELUDED RANT

 

That's not even getting into how any of those increases/bonuses are getting offset by rising health care costs caused by the complete chaos the Trump administration has attempted to cause in the insurance markets, so they could then turn around and blame it on ObamaCare/government instead of actually trying to FIX the things that weren't working, like the increases on families "in the middle" between $50-75,000 who got burned by increasing rates.

 

But no...throw out the entire system because of those exceptions.

 

Well, there are going to be JUST AS MANY if not more adversely affected by the Trump tax cuts whose stories we can read about every day...especially when lives are actually lost as a result, as if it's only about cold numbers or dueling political philosophies.

[StrangeSox]

Your post had a "deluded" in there before you cleaned it up but it was in a jumble probably from phone posting.

 

Speaking of making things up nobody was talking about Trump and I certainly didn't pivot to any ramblings about him.

[caulfield12]

Two posters both seeing "deluded" instead of "devolved," which wouldn't have made any sense paired with "rant."

MUST BE FAKE NEWS!!!!!

 

Let's check in with Seth Rich, who is now hiding out with Tupac and Jim Morrison somewhere in the Amazonian Rain Forest.

[Dick Allen]

You brought an article talking about how companies' are going to put their new profits to use. Somehow you pivoted from that initial point and it devolved into another "Trump ruins everything" rambling. He just signed the bill. He's in the past as far as this bill and its progress goes.

 

To financial side of it, I don't know why you would think a company getting a ~21% increase in pretax income would take it and give all or the majority of the incremental income to increases in wages and bonuses. That'd be a really silly use of that money. But I guess this is all or nothing.

 

 

He's read them all. When the news articles about them came out the board laughed at them and said that it was nothing. I wonder how many people getting paid minimum wage thought the several hundred dollar or couple thousand dollar bonus and thought it was nothing.

 

Sarah Sanders

@PressSec

What would your family do w/ a $4,000 raise from the President’s tax cut plan? REPLY & I’ll share your family’s story in the press briefing

 

 

I always get a kick out is someone justifying a $200 bonus because that person is making minimum wage, so it’s yuge. After tax, it's less than $0.50 a day. And a few of those bonuses were shown to have nothing to do with the tax cuts but trying to keep up with competitors.

Edited March 1, 2018 by Dick Allen

[caulfield12]

American workers will see only a small portion of the massive windfall of money going to companies following corporate tax reform, according to a new analysis from JUST Capital.

 

With the corporate tax rate dropping from 35% to 21%, many companies have announced plans to hike wages and give out bonuses. Yahoo Finance has compiled a list of names. This year, JUST Capital estimates that the Russell 1000 companies it follows will see $150 billion in tax-related income.

 

Of the 90 of the largest publicly-traded companies that have announced plans an average of 6% of that tax-related income will go to workers, according to JUST Capital’s analysis.

 

“Perhaps most concerning is if we assume that all proceeds not already earmarked for other uses actually flow to management and shareholders in the form of stock buybacks or direct distributions, then 58% of corporate spending will be running counter to the public’s definition of what is just,” the report said.

 

https://finance.yahoo.com/news/american-wor...-163125120.html

[RockRaines]

My understanding from talking to CPA/IRS relatives back around the holidays is that far from being a good "reform," the pass-through loopholes created a whole new exciting industry of tax arbitrage that big accounting firms are really, really eager to dig into for their well-heeled clients.

Those people haven’t even begun to completely understand what’s the reforms will do for their clients. My CPA and his practice were pretty adamant that the IRS folks aren’t there yet. What he did mention is that the new tax laws will be much more flexible for corporations than the individual, and recommended I set one up for myself.

[StrangeSox]

Those people haven’t even begun to completely understand what’s the reforms will do for their clients. My CPA and his practice were pretty adamant that the IRS folks aren’t there yet. What he did mention is that the new tax laws will be much more flexible for corporations than the individual, and recommended I set one up for myself.

 

Yeah, it was a mad panic for my CPA relative as everyone in their company had to work tons of overtime between when the bill passed (12/20 or so) and the end of the year to reformulate all of their clients' tax plans. On the IRS side, it won't hit the auditors directly for a few years, but the person I know on that side spent decades in the corporate tax world as did many of his colleagues. Maybe it's a biased sample, but it doesn't seem like most IRS auditors have spent their entire careers there.

 

There was lots of coverage, and still is, regarding the pass-through tax loophole and how a lot of accountants are salivating over all of the new creative ways they can structure their clients' taxes. Like so many things in the tax world, it comes down to how you can classify different types of income to best advantage your clients, and the new law is really murky. Rather than simplifying anything, it made it even more complex for these sorts of clients (if you're a typical W-2 wage earner, it's not really relevant)

 

https://www.bloomberg.com/news/articles/201...-blow-wide-open

If exploiting a tax loophole is as much an art as a science, then the tax planning profession is poised for a creative renaissance.

 

The inspiration is the tax law signed by President Donald Trump in December. The patrons are affluent Americans who can afford advice from the nation’s more ingenious accountants, tax lawyers and financial advisers.

 

And the new medium they’re experimenting with? A 20 percent deduction for so-called pass-through businesses, whose income is taxed on firm-owners’ personal returns.

 

It’s early, and the Internal Revenue Service has yet to issue guidance on how to interpret the hastily passed law. That hasn’t stopped tax pros from circulating proposals and riffing on each other’s ideas, as the industry seeks to coalesce around strategies that will save their clients money while standing up to scrutiny by the IRS and judges. Some pass-through owners may be instructed to group together their diverse businesses to minimize their tax bills, while others may be told to split pieces off.

 

“I’m sure folks will try to push the edge of the envelope,” said Mark Nash, a tax partner at PricewaterhouseCoopers LLP. “They always do.”

 

Trump and Congressional Republicans have said middle-class Americans and small businesses will be the biggest beneficiaries under the $1.5 trillion tax cut. But the strategies under consideration to take advantage of the 20 percent pass-through deduction show how top earners could ultimately reap the biggest gains.

 

‘Principal Asset’

All taxpayers who earn less than $157,500, or $315,000 for a married couple, can now deduct 20 percent of the income they receive via pass-through businesses from their overall taxable income. If taxpayers earn above those amounts and aren’t service professionals, they must meet tests to take the full deduction — the size of their deduction depends on how much they pay in employee wages or how much they’ve invested in capital like real estate.

 

For “service professionals,” the break fully phases out if they earn more than $207,500 if they’re single, or $415,000 if they’re married.

 

There’s ambiguity with the rules, though. For example: What’s a service business? The tax code already specifies an official list that includes health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services and brokerage services. But that language is “broad and vague and the IRS has never provided guidance as to what those terms mean,” Nash said.

 

Plus, that section of the new legislation ends with a puzzling coda. Also excluded are “any trade or business” where the “principal asset” is the “reputation or skill” of its employees or owners. Few are really sure what this means.

 

“If I put 10 professionals in a room, I’m going to have 10 different ideas of what’s going to be excluded,” said Edward Reitmeyer, a tax partner at accounting firm Marcum LLP.

 

That kind of confusion creates opportunities to work around the service definitions or to re-cast businesses in ways that arguably fall outside the excluded categories.

 

The GOP tax plan creates one of the largest new loopholes in decades

 

Let's start with how it works. The new deduction allows people with pass-through income — profits from a partnership or sole proprietorship, for instance — to write off 20% of that income before calculating their taxes.

 

The clearest winners are therefore owners of existing large pass-through businesses with many employees or lots of physical assets. The wealthy, in other words. President Trump, for one, stands to gain significantly. He reportedly owns more than 500 large, pass-through real estate firms — just the type of business that would qualify most easily.

 

Far more than most other types of income, pass-through business income is concentrated among the country's highest earners. The top 1% currently earns less than 12% of labor income, but more than 50% of all pass-through business income. By slashing taxes for pass-through businesses, the deduction will exacerbate our widening income gaps.

 

Because it is such a big loophole, you might reasonably wonder: Am I a chump if I don't try to claim it?

 

The short answer is "maybe," but proceed with extreme caution. The law is so poorly drafted, and its objectives so unclear, that you probably won't know for a while whether or how you can qualify. What's more, the law creates traps for the unsuspecting that could make you worse off in the long term.

 

The new law also says you can't claim the deduction for "reasonable compensation" for services. So our hypothetical worker may get the deduction only to the extent that she argues she is getting paid too much.

 

She might be able to avoid this requirement by carefully choosing the type of pass-through entity she creates or by striking out as an independent contractor. But the law is unclear, and it could take the IRS and Treasury Department a while to clarify the issue. In the meantime, if she proceeds, she risks incurring penalties.

 

Whatever route she chooses, this worker is going to need more tax advice. If she is in the middle class, the additional fees might exceed her relatively modest savings.

 

If she is single and earns more than $157,500 in taxable income, or married and earns more than $315,000, she might need to jump through further hoops. In that case, it's really going to matter what line of work she's in. If she's a real estate developer, she should be golden. But if she's a doctor, not so much — because doctors and host of other professionals are specifically forbidden from claiming the deduction if they are above the income thresholds.

 

It could take the IRS and Treasury Department many years to clarify exactly how the pass-through loophole works. By then, the new deduction will be on the verge of expiring, creating further uncertainty and risks for regular employees.

 

But that's exactly the point. The new deduction could provide a small tax cut for some middle-class employees — but only if they give up their benefits, spend scarce resources on tax advice, and pretend not to be employees in the first place. In the meantime, some of the richest Americans will get richer.

 

You can agree ideologically with a trickle-down approach and still recognize that this tax cut bill didn't simplify anything and doesn't meet the GOP promises of being focused on middle-class tax relief.

 

 

[StrangeSox]

You saw SS’s post. Noticed how he denied the chance to stick by his quote to me. He go caught in his own lie.

 

I either misread or mixed up something that isn't actually that important and said so. I didn't ramble about Trump, which was the main point of what you were claiming. Who's actually caught in the "lie" here, buddy?

Edited March 1, 2018 by StrangeSox

[StrangeSox]

Anyway, President Trump set to announce tariffs at meeting Thursday

 

He's expected to announce 20%+ tariffs on imported aluminum and steel later today.

[Dick Allen]

Anyway, President Trump set to announce tariffs at meeting Thursday

 

He's expected to announce 20%+ tariffs on imported aluminum and steel later today.

Where will Trump get his steel?

[RockRaines]

Yeah, it was a mad panic for my CPA relative as everyone in their company had to work tons of overtime between when the bill passed (12/20 or so) and the end of the year to reformulate all of their clients' tax plans. On the IRS side, it won't hit the auditors directly for a few years, but the person I know on that side spent decades in the corporate tax world as did many of his colleagues. Maybe it's a biased sample, but it doesn't seem like most IRS auditors have spent their entire careers there.

 

There was lots of coverage, and still is, regarding the pass-through tax loophole and how a lot of accountants are salivating over all of the new creative ways they can structure their clients' taxes. Like so many things in the tax world, it comes down to how you can classify different types of income to best advantage your clients, and the new law is really murky. Rather than simplifying anything, it made it even more complex for these sorts of clients (if you're a typical W-2 wage earner, it's not really relevant)

 

https://www.bloomberg.com/news/articles/201...-blow-wide-open

 

 

The GOP tax plan creates one of the largest new loopholes in decades

 

 

 

 

 

You can agree ideologically with a trickle-down approach and still recognize that this tax cut bill didn't simplify anything and doesn't meet the GOP promises of being focused on middle-class tax relief.

Really good quotes there. That jives with what my CPA told me. The standard deduction for my income level is less than 50% what I do when I itemize. So what you do is make a pass through business to park income/services and deduct your taxes based on that hybrid. Its an interesting legal way to basically shelter your money from the "simplified" deduction practice.

[StrangeSox]

You quoted me and attributed a personal attack to me that never happened. Then per usual back here, someone piggybacked you on it. There’s a transcript here. How you think I’m lying I don’t know. You got caught.

 

Yeah, and I freely admit I messed up the quote while phone-posting, and of course the way I messed it up doesn't actually have any significant impact to what you said. By the way, are you claiming you never edited your original post in any way?

 

Here's your lie:

 

Somehow you pivoted from that initial point and it devolved into another "Trump ruins everything" rambling.

 

This never happened. There's a transcript here. I'm perfectly happy to let this drop and to move on to actually discussing topics of interest instead of board members again.

Edited March 1, 2018 by StrangeSox

[bmags]

https://www.bloomberg.com/news/articles/201...fraudulent-icos

 

Expanding a broad crackdown on fraudulent initial coin offerings, U.S. regulators have sent a number of subpoenas to firms they suspect might be violating securities laws, said a person with direct knowledge of the matter.

 

The Securities and Exchange Commission has been concerned for months that some ICOs are raising money for businesses that don’t even exist. The agency has issued subpoenas to firms and individuals behind specific offerings that it believes might be breaking the law, said the person who asked not to be named because the investigations aren’t public.

 

In not shocking developments

[StrangeSox]

Anyway, President Trump set to announce tariffs at meeting Thursday

 

He's expected to announce 20%+ tariffs on imported aluminum and steel later today.

 

 

This has been in complete chaos this morning, and the meeting has now changed to a "listening session" so who knows what'll actually happen.

 

 

but now it's back on and he announced tariffs.

 

Strong and stable

No White House chaos

 

 

oh they got this all screwed up, let me fix that

 

Strong and stable?

No, White House chaos!

Edited March 1, 2018 by StrangeSox

[bmags]

What a difference two days makes.

 

Tuesday:

*POWELL SAYS HIS CONFIDENCE ON INFLATION GETTING STRONGER

 

Thursday:

*POWELL: NO STRONG EVIDENCE OF DECISIVE MOVE UP IN WAGES, MORE LABOR MARKET GAINS CAN OCCUR WITHOUT CAUSING INFLATION

— Brian Chappatta (@BChappatta) March 1, 2018

 

 

While I'm glad Powell came out with his second statement, I think US will miss out on what the second term from Yellen could have done.

 

Powell isn't going to prematurely kill the economy or anything (hopefully), but she had done such a good job at beating down the hawks and moving toward a more reasonable view of the inflation target range.

[StrangeSox]

This has been in complete chaos this morning, and the meeting has now changed to a "listening session" so who knows what'll actually happen.

 

 

but now it's back on and he announced tariffs.

 

Strong and stable

No White House chaos

 

 

oh they got this all screwed up, let me fix that

 

Strong and stable?

No, White House chaos!

 

 

more here

 

Trump declares his trade war: targets steel, aluminum

 

I can’t overstate the effect of Trump's new tariffs, 25% on steel and 10% on aluminum. (As we reported Sunday, he upped the recommended 24% on steel to 25% because it's a nice round number).

 

Why it matters: These tariffs have the potential to roil markets and affect relationships with allies. Trump is also touching the third rail of international trade law — he’s using an arcane trade law known as Section 232 to justify his actions. He’s saying “F You” to the World Trade Organization and arguing the global overproduction of steel and aluminum constitutes a national security threat to the U.S. He's also breaking with Capitol Hill and top officials — including Gary Cohn, James Mattis, Steven Mnuchin and Rex Tillerson — who have been arguing strenuously against these tariffs.

 

Mattis says they’ll be a national security problem if they’re broad-based and don’t allow allies off the hook. And one other thing — the loss of staff secretary Rob Porter contributed to the chaos here. Porter controlled the paper flow and oversaw the weekly trade meetings in the Roosevelt Room. What happened over the past 24 hours was a complete breakdown in White House process.

 

Watch for huge fallout: Will Gary Cohn and other free-traders stay after this? Trump just completely circumvented the interagency process and is executing a policy Cohn and others think is calamitous.

 

Perhaps the thing that will most unsettle Trump is the markets falling after his announcement. Cohn and Mnuchin had been using Trump’s love of his record-setting stock market as a way to convince him not to take any dramatic trade actions. Over the course of a year Trump watched his top officials — the free-traders versus the protectionists — duke it out in front of him, in meetings that sometimes descended into officials flat out insulting each other. These fights have happened in the Oval and more recently in the Situation Room.

[Pants Rowland]

This has been in complete chaos this morning, and the meeting has now changed to a "listening session" so who knows what'll actually happen.

 

 

but now it's back on and he announced tariffs.

 

Strong and stable

No White House chaos

 

 

oh they got this all screwed up, let me fix that

 

Strong and stable?

No, White House chaos!

 

Reminds me of that Lionel Hutz ad

Edited March 1, 2018 by Pants Rowland