The tax reform Bill is probably the most significant act---of many others---that the new Administration has accomplished. Senators McConnell, Hatch, Thune, Enzi, Black, Toomey, and Scott deserve credit as well, for accomplishing this tremendous feat before Christmas. This Bill eliminated several long-standing injustices in the Tax Code and contained with it two riders dealing with long-stalled issues.
The Corporate Media is gnawing its collective tongue in rage; thus they have failed to discuss the benefits of the new law.
One highlight of the Bill eliminated the Estate Tax on family farms. This alone would have made the Bill a great one. The Estate Tax on farms has been a decades-long injustice and has literally ruined thousands of farmers, ranchers, fisheries, orchards, etc. What would happen is that a farmer (for example) would die and leave the farm to his heirs. People in agriculture typically have very little money, but their estates were often valued in the millions because their land and equipment was high-value. Their heirs thus were hit with an Inheritance Tax that often forced them to liquidate the business to pay. No more. Nothing will revive American Agriculture like this will.
The Bill also cut Corporate Tax rates by 14%. The Left has been focusing their ire on this particular aspect of the new law. But this because they don't understand Economics. The Sanders supporters were always complaining about wealth disparities. The reason that so much wealth was being hoarded was because it cost too much to invest it. In other words, this is Reaganomics, though it will flow rather than trickle down, since Trump's cut is much higher.
Another major change is doubling deductions on personal taxes. This is going to have a major effect on reducing consumer debt. More money will be available for personal use.
An economic issue we've spoken of much here is the need to strengthen the US Dollar. The effects of tax cuts will be short-term unless the Dollar-value reverses inflationary tendencies. It will take some time to see whether or not the Dollar rises. Both Trump and Treasury Secretary Mnuchin seem to favor the floating dollar, so it will be dependent on the market moreso than policy. However, as Trump pointed out in today's speech, the new reforms will go a long way towards eliminating outsourcing. One of the Bill's features is a 100% deduction for Fiscal Year investments. This is called expensing, and it provides a huge incentive for businesses to invest domestically. Administration estimates are that this alone will return $3-5 trillion from overseas investments.
Investors have already been moving towards America again, even before the Bill was signed. The Market should---in theory at least---respond with higher Dollar valuations. The Dollar right now is about 97 cents below Base Year 1913. What will help our economy long-term would be that if these---and future---tax reforms lead to price deflation.
The two riders on H.R.1 were outstanding achievements as well. One of these terminates the individual mandate for Obamacare. Although Obamacare wasn't repealed in toto this year, one of its worst features was repealed. What this repeal basically does is stops forcing people to take Obamacare over better plans, while leaving in place its availability for those who can't afford health insurance. Even some Liberals originally supported this over Obamacare. It effectively simply extends Medicare to all indigents instead of forcing it on everyone.
The second rider opened ANWR for oil exploration and drilling. This issue has been stalled most of our adult lives; and probably no readers under 30 or so even remember what it was all about. Huge oil deposits were discovered below the Alaska National Wildlife Refuge and it was proposed during the Energy Crisis of the 1970s to free up this government land for oil. The proposal was stopped during the Carter Administration and Reagan was unable to get approval from Congress to start it again. Bush Sr. more or less gave up on the idea and it really hasn't surfaced as a political issue since. But the oil is still there; and now the political will is there to go for it again.
ANWR has been stalled for so long that there aren't any up-to-date statistics on how much of our foreign oil consumption it would reduce; but in the 1970s and 1980s estimates were very high. Some speculated then that the Alaskan Peninsula is about as oil-rich as the Arabian Peninsula. Time will tell; but opening ANWR can't but help in this regard.
So saying: Merry Christmas and a Prosperous New Year in 2017 actually sounds like we mean it again.
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