Christmas 2016 | December 2016
Okay, so the market was a little more positive than my prognosticated “meh”. I surely didn’t see a Trump victory in the making before the election. It’s further evidence to me that we just can’t trust our news sources anymore. I think most of us did have a measure of trust when we were younger, but perhaps we were simply naïve. It’s likely some of both, I imagine.
So what do we foresee now, with Republican majorities in both houses of congress, and having the presidency? I anticipate a tax package reducing both individual rates and corporate rates. A return to 15% long term capital taxes may come about. There is some talk about eliminating the estate tax, but at an exemption of $5.45 Million (2016 data), there isn’t a lot of noise out there calling for action on this. The president-elect may have some personal interest in the matter, I suppose.
The annual gift exclusion for tax purposes is $14,000, so it can be a Merry Christmas for those grandkids if you are so inclined. 529 plans still allow front loading the plans with up to five years of gifting.
As to the recent stock market run-up, clearly investors expect to see a much more business-friendly and energy-friendly Washington in the next two to 4 years. We can expect to see the previously mentioned lower taxes, reduced regulations on businesses, tax incentives for businesses staying in America, additional incentives to repatriate corporate profits that have gone overseas, less environmental restrictions on fossil fuel projects, and reduced criteria for both business and home lending. All those things are good for growth, but a bit worrisome for those that remember the issues of 2008 when the first bad debt domino fell.
The trick is to not let the pendulum swing too far either way. Ultra-stringent regulations and lending requirements stifle growth; the opposite can lead to credit and housing bubbles like we saw in 2008. It’s clear to all of us that voters decided the pendulum needed to reverse course.
As to The Affordable Care Act, or ObamaCare if you prefer, we will certainly see changes. My reading does not predict a wholesale repeal, however, without a significant replacement package. All indications are that any replacement legislation will make allowances for those “20 million” newly insured Americans, and for those who historically couldn’t get insurance due to pre-existing conditions.
So as we plan for the future and live in the present, the Christmas season is a time for me to remind myself to do just that. I remember so many happy times of my youth, and think of my parents and grandparents, other friends and family – it all passes so quickly, doesn’t it?
As this stage of life I celebrate the holidays with my three children and their families, all the while aware how fleeting time has become. So make sure you take the advice I give with a grain of salt, and then focus on celebrating the season with those you love. Peace and blessings to you.Contact Lorin