Wednesday, May 17, 2017

The Reality of the Trump Tax Plan

Offering his insights the author explained, “I’ve looked at it and understand the details but it is almost meaningless. I think this is for show and something of a “trophy” for Donald Trump’s first hundred days. They want to put a stake in the ground and begin negotiation but the numbers [on the tax bill] don’t add up and it would never get through the U.S Congress with the present form.”

“It is completely devoid of detail and even the points given don’t give specifics. It is an interest starting place and a good discussion point but I don’t take it very seriously at all. There will be a tax bill later on in the year though.”

When asked how the market has responded in the past months to the talk about the tax plan he pressed. “President Trump was elected in November and the U.S market went up with the S&P jumping 100 points, the Dow Jones went up 1000 points – because of the possibility of the Trump tax cuts. Then in December the Dow Jones went up another 1000 points because of the possibility of the Trump tax cuts. Then again in January the market went up another 1000 points because of the Trump tax cuts. This is bubble behavior. The market went up three times based on the same tax cuts.”

“[The President] is only going to cut taxes once. The market seems to react at every rally opportunity. There is an old saying on Wall Street “buy the rumor, sell the news.” Late today the U.S stock market averages turned down because they took a look at the tax cut proposals released today and it didn’t have a lot of the things they wanted with details expected. It is a one page press release, so we still have more to see. I think the market is going to reserve judgement.”

“If, in fact, the proposed tax bill doesn’t come anywhere close to what Trump is describing the market is going to sell off because they cannot meet expectations.”