Transformation Blog

Bringing business back home

The boldest rewrite of the U.S. tax code since 1986 cleared the Senate Saturday and began the process of reconciliation with the House bill, with the President planning to sign it before Christmas. The major beneficiary of the $1.2 trillion legislation was big business, which will find its capital no longer pushed out of the country. Corporate tax rates will fall from 35% to 20%. Evidence of its MAGA impact was immediately registered in Germany, where panic to reduce its own tax rates—to remain competitive—began to materialize.

Most American taxpayers will be better off, with a slightly lower rate structure, a doubling of the standard deduction, and slightly lower rates for pass-through businesses (S-corps and LLCs). Americans will no longer face penalties if they don’t have health insurance! Real estate will be impacted by elimination of federal deductibility of state income tax, and the capping of itemized deductions for property taxes and mortgage interest. The blue party is pretty unhappy with the impact on the blue states and also by the realization that its havens will likely not see much of the returning corporate capital (an estimated $3 trillion of corporate profits is currently parked overseas).

Detractors wailing about benefits to the rich are spouting nonsense, while well-meaning individuals complaining about the increase in debt will eventually have to realize that the national debt is NEVER going to be paid off. It will most likely be settled by a giant, crippling economic explosion, after which we can start over.

Pulling another plug. The Trump Administration announced plans to withdraw the U.S. from a United Nations pact on the handling of migrants and refugees. The pullout will be effective at the end of 2018, putting the U.S. back in control of its borders—and determining who will be allowed to enter our country.

National reciprocity for concealed carry –which would make a concealed carry permit from one state valid in the other 49—was scheduled for markup in the House Judiciary Committee, on its way to a vote on the House floor.

Government waste in 2017 was topped by a $30,000 National Endowment for the Arts grant for a play, dubbed “Doggie Hamlet,” in which a group of “artists” ran around a 30-by-50 foot field in New Hampshire taunting a group of sheep. The article contains 99 more Federal Fumbles, published by Senator James Lankford.

MARKETS – for the week ending December 1

Real money declined: gold closed down $5 at $1282/ounce and silver fell 60-cents to $16.39/oz.

US stocks rose: the Dow and S&P closed up 2.9% and 1.5% to 24232 and 2642.

Mining stocks (the XAU Index) dropped 1.8% to 79.66.

Crude oil (the WTIC Index) eased back 59-cents to $58.36/barrel.

Commodities (GCC Index) slid 0.7% to 19.15.

Currencies. The Federal Reserve Note (= dollar, via USD Index) finished flat at 93.00.

Cryptocurrencies. Bitcoin rocketed $2300 higher to $10800/coin.

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US Treasury bonds were mixed: the 10-year yield rose 3 basis points, while the 30-year yield  remained at 2.76%.


About the Author

Wayne Peterson is President of Wayne Framework 2, LLC, author of “But What If I’m Right?” and publisher of the Transformation Watch newsletter and weekly Crypto Reporter. For free weekly receipt of these financial blogs, subscribe here.


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