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We have been very reticent to comment on the various efforts to pass new tax legislation because we don’t want to jump the gun, but it is now looking like the Congress is going to cross the finish line on this one. The Senate passed a bill this week, and the House already passed their version. They are different, but close enough that it looks like they will be able to reconcile the two versions before the end of the year for signature by the President. What are some of the highlights?: Personal income taxes are lowered a bit and the amount of tax brackets are reduced (a lot in the House bill and a little in the Senate bill). These new tax rates would automatically revert to the current rates in 2025. The standard deduction is essentially doubled from about $6,000 to $12,000, but the personal exemption of about $4,000 would go away. (70% of Americans claim the standard deduction.) The bill also lowers the corporate tax rate from 35% to 20%. The alternative minimum tax was left alone (and yet it was eliminated in the House bill). The estate tax was not eliminated, but both bills would raise the exemption from a bit over $5 million to closer to $11 million. The two bills also add a new tax on companies’ stockpiled foreign profits. Presumably that would help pay for some of the lost revenue from the cuts and encourage that money to be brought back (and taxed at a much lower 20%) to the U.S. and used to expand the economy. There is a lot more in this roughly 600 page bill, much of which has nothing or little to do with taxes, and we’ll provide more comments and discussion as the weeks unfold, but for now it is looking like the final version of this law is taking shape.


U.S. stocks had a solid week due to both optimism about the passage of a tax bill and a mix of upbeat economic data. OPEC countries agreed to extend their agreement to cut oil production, which helped keep oil prices, and oil stock prices, high. After very strong consumer spending numbers in September, data for October came in last week showing additional increases in consumer spending. Corporate profits rose 4.88% in the third quarter, the best performance in a couple of years. After six consecutive months of net outflows from U.S. mutual funds and exchange traded funds, October saw a net $9.6 million of inflows into such funds.


Through October there have been 524,000 new homes sold in the U.S. The number of new homes sold in the U.S. has been persistently increasing each year since 2011 when 305,000 new homes were sold. This year will probably end somewhere near 600,000 new homes sold.


After two record setting years in auto sales, new car sales in 2017 will be down a little bit. November’s sales were down about 1% from a year ago. Sales have picked up a good bit since they dipped due to massive hurricane activity.