States with high tax rates may be in some serious economic danger. Goldman Sachs has put out a statement warning that New York may lose a significant portion of its highest earners. The reason why is that the new Congressional tax plan does away with the deduction that allows taxpayers to deduct their state taxes from their federal taxes. That means that high tax states like New York may lose high earners, and thus a significant portion of their tax income, as the wealthy move to tax-free states.

FINSUM: This is the kind of policy that could actually cause a significant migration shift among the ultra-wealthy and may have serious effects on real estate and state finances (look out for munis).

Published in Politics
Tuesday, 21 November 2017 09:50

The Big Loopholes in the New Tax Plan


The haste with which the Republican tax plan got pushed through the House last week might present some very big opportunities for America’s wealthiest, and hurt tax revenues for a long-time to come. The current tax package created loopholes for hedge fund and private equity managers to pay lower taxes through the tax benefits designed for small business owners. Additionally, weaknesses in inheritance taxes may mean inheritors can avoid paying taxes in perpetuity. “There sure are a lot of glitches and loopholes, in large measure because there’s so much complexity in this bill that’s being raced through”, says a commentator from the Urban-Brookings Tax Policy Center.

FINSUM: This article phrases the tax loopholes as if they were intentional, which they may not have been. If they were, it is bad tax policy. Either way, there are some weaknesses here that need to be addressed.

Published in Eq: Total Market
Friday, 17 November 2017 11:30

Houses Passes Tax Overhaul


The Republican tax package is half way home. Yesterday, the House passed a tax overhaul, sending the package on to the Senate. The package passed is considered the most sweeping since Reagan, and would lower overall government tax revenue by $1.4 tn. However, the bill faces an uncertain future. Senate Republicans have an even more extreme iteration of the tax package, and there is already a serious pushback from not only Democrats, but Republicans too. This makes passage uncertain, and anything that does get passed by the Senate is likely to be sent back to the House.

FINSUM: It is very hardtop predict how this will play out. There have been many times this year where measures passed in the House only to die in the Senate.

Published in Politics


Hiding in plain sight is probably the best way to describe it. The new Republican tax plan has a major tax hike for stock investors that has largely gone unnoticed to this point. The tax plan contains a new provision that would do away with the status quo of letting investors choose which shares to sell off first as part of unloading a holding, and instead force investors to sell the oldest shares first. Many fund managers say the change could cost investors millions. The CEO of Eaton Vance summed up the changes this way, saying that if they become law, “markets will work less well. Our fund managers will have their hands tied, and our shareholders will owe more in taxes”.

FINSUM: This is a major change that has not been covered at all by the financial media. It will not only raise tax payouts, but it also constrains financial freedom. Bad policy.

Published in Eq: Large Cap
Friday, 10 November 2017 08:50

Tax Divisions Weigh on Stocks


The market fell in a big way yesterday, at least for 2017. The Dow fell over 100 points and the S&P 500 was off 0.8%. The catalyst? It was worries over what appears to be a faltering tax package. The big problem is that the Senate’s tax plans contrast sharply with the House’s, showing just how far Congress and the Republican party need to go to get a package passed. According to the WSJ, the two plans differ in ways including “the timing of a corporate tax-rate cut, the number of individual tax brackets, the details of international tax rules, and the particulars of estate-tax changes”.

FINSUM: We always thought it would take a lot of time and work to get a new tax package through. However, we do not believe that if Congress fails to do so it will have big impacts on the market. We think investors are incredulous of the prospect for a big tax package and that it has not been priced into this market.

Published in Eq: Large Cap
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