Today, once again we hit an all-time high in the stock market as measured by the S&P Index. The tax bill passed in 2017 continues to have a major impact. The bill, intended to reduce the number of corporations and their jobs from leaving the U.S., has worked well. The U.S. lost 4500 corporations to these exits but almost none since this bill passed. While treasury revenues increased after the bill passed so did the deficits. But that was caused by a separate spending bill. It will take time for all the benefits to show. Corporations take time to plan and execute major projects. The biggest factor is that the corporate tax reduction portion of the bill is as permanent as any law can be.

On the other hand, the trade war and tariffs are so significant, they can offset all the benefits of the tax bill. The only reason that has not happened yet is the hope that the tariffs problem will be short term. A highly regarded economist pointed out the average U.S. tariff was 4% and the average tariff foreigners charged us was 5%. A 1% difference sounds like a reason for negotiation not one for war.

Katz Family Financial