Speaker 1: Welcome to another edition of The Chicks on the Rate Show,
where we talked to our BFF and sponsor of the show,
Zach Abraham from Bulwark Capital Management. Okay, Zach, we're going
to talk tax cuts today. So that now that Trump
is back in office, well he will be back in
office in the next couple of months. We're going to
have a Republican led House, a Republican led Senate, and
advisors are predicting an extension of the twenty seventeen Tax
Cuts and Jobs Act that the TCJA, which was the
largest tax code overhaul in thirty years, and it provided
a lot of relief, a lot of tax productions for
businesses and individuals, and most of those benefits are set
to expire at the end of twenty twenty five. I
imagine that some folks that even hate from are possibly
stoked that he won. Just from an economic I'm talking
to you, Bernie Sanders, are kind of excited about him, maybe,
you know, reinstating some of those tax cuts and so
what I guess, what do you think about that? And
then also it's a two pro first question, what do
you think about the tax cuts? And then what do
we get from Trump? Tax cuts possibly getting extended.
Speaker 2: Yeah, so the I think the extension of the corporate
tax cuts are baked into the cake. And I think
that that's probably one of the biggest underpinnings for the
market rally that you've seen since the election. Right, So
stocks had to start pricing out the possibility of that
tax break going away, and then they add to price
back in, you know, the reality of that tax cut.
So that's probably been a big part of that run
that we've seen in markets. And and I think that
and look, that's a good thing. And it really doesn't
matter what you think about that tax rate when you
start talking about corporate tax rates. I think it's hilarious
when people say that the rate needs to be higher
and I look at them and I go, based on
what they're like, well, companies make too much, and I
go stop, stop right there. Okay, what you need to
look at is you need to look at the international
average corporate tax rate, Okay, because if you are above that,
you are incentivizing employers to leave our country. Okay, Yeah,
so what you think they should pay really doesn't matter. Right.
We cannot have a corporate tax situation that is non
competitive with the rest of the world, so you just can't.
So whatever that average is, you need to be right around.
If that average was like twenty percent, could you afford
to be at twenty two? Yeah, probably right because there's
not a big enough relief there. But if you're thirty
year domestically and by going to Ireland, they can be
at twenty if they're going to save fifty percent in
taxes per year, like buy them a going away present
now because you're going to.
Speaker 1: Need one, right, Yeah. Yeah, it's and it's just.
Speaker 2: It's just common sense. I am really hopeful on on
what they can do on the personal tax side of it.
I think a lot of that's going to be kind
of what they're some of the stuff they're talking about
doing with the I R S is incredible.
Speaker 1: That that was one of the because that's what I
was going to ask you is a lot of people
say only the rich benefit from this. Is not rich.
I'm not rich. So it's like, you know, so people
that you know, watch our show and everything, they'll be like, okay,
so what about like the normal what about the normy?
You know, are they gonna what's what's the benefit? Because
I mean it's like, okay, they're not going to a
company is not going to leave, right, But then how
does that affect somebody who is not, say rich, Because
this is what liberals say, right, it only like helps
the rich people, Zach, You.
Speaker 2: Know, yeah, I mean or or people that work for
that company.
Speaker 1: Right right, right right exactly.
Speaker 2: Yeah. So so and I think you need to, like
I said, I if we want to really tackle these situations.
It's one of the things that drives me nuts about
liberals is they want to talk about fair and then
want right. And I'm like, okay, so now that we've
had fun with nursery rhyme time, let's let's let's step
over to the adult part of this conversation. Because fair
inequity have nothing to do with it. Right, So, what
you think is good, nobody cares. It's it's it's if
you're not willing to give them a twenty percent corporate
tax rate. There's plenty other corporate companies that will countries
that will, They'll be happy to do it. They're populous,
will will you know, reap the rewards and all that
kind of stuff, all.
Speaker 1: The businesses and if businesses benefit, it benefits everybody that
works for that business. It triggers down. I mean, well,
why can't people see that?
Speaker 2: Well, and here's the other thing that liberals really don't see. Okay,
one of the biggest things that you can do for
wages the common man, and and and small business. Remember,
small business still employees. I think you're at sixty percent
of the jobs in this country are provided by small business.
So remember, most small businesses do not directly benefit from
those corporate tax cuts because those corporate tax cuts are
reserved for C corps. Right, you got to be much
large corporation, like for instance, Bulwark is a is an
LLC operating as an escortate. Okay, that's what that's what
That's what most small businesses are. So when you start
talking about regulatory cuts, regulatory cuts work a lot different
than most people think. Regulation regulation cuts tend to be
the most positively impactful for the smallest businesses, not the
other way around. And it's because of those regulations. An
easy way to think about it is if you're if
you're a global corporation and in one of the thirty
countries you operate in, your tax rate goes up twenty
five percent. Right, you can just move things around the
globe a little bit and offset that charge. Right, if
you're a small business that operates only in that environment
where tax rates just went up twenty five percent, your
stock your labor costs just twenty five percent. Right, So regulations,
it's taxes tend to benefit. Tax cuts tend to benefit
the people that make the most money because they get
the largest nominal amount of savings. Regulations tend to benefit
the smaller company. They benefit everybody, right, But yeah, largely speaking,
it's it's going to be you know, because like if
you have a regulatory like pullback in regulations, it's not
going to really impact JP Morgan too much because they're
going to have that team of lawyers on standby all
the time no matter what. Right. Whereas if you the
impact has on bullwork, it can be quite, it can
be quite you know, a meaningful, a meaningful impact. So
I think I think that's the biggest part of it, right,
that regulatory ripped down. If they follow through with what
they're saying, and they sure seem they sure seem pretty
you know, pretty determined to do, so those regulation cuts
might as well be tax cuts for small businesses.
Speaker 1: What about downsides? Are there any downsides to this? Like
are there are there are there downsides to like him
doing tax cuts. I mean, would you or is it
just all positive? Would you see it as all positive?
Speaker 2: Well, I mean, look, you're not going to There used
to be a myth and this will upset some people
when I tell it to them, and I would tell
them to take it and stride because I had to.
It's a myth I used to believe in as well,
which is that tax cuts always pay for themselves. I
mean the stimulation they provide for the underlying economy offsets.
It's not true. Mathematically, it's not true. So taxation is
really a maximization game, does it? You know, are these
things helpful? What are the end impacts? Yeah? I mean
these things are going to be overall helpful to the
over to the broader economy. I think that you've got
bigger things in play though, Like I mean, the type
of the type of regulations they're talking about slice or
cutting out would be massively beneficial for productivity for so
many different things. Tax revenues a lot of those corporations
are going to have higher profits, right, So you've got
a scenario where a government could be paying less in
terms of money going to the regulator. But because the
underlying corporations in those sectors are generating higher profits, right,
government spending less, but it's also taking more in on
taxation side of it. But bottom line is moving around
tax tax levels here and there. That isn't going to
fix our problems on the debt side of things. On
the depth side, they're too large, meaning you're not going
to fix any of these things on the margins. If
we want to be realistic, if somebody wants to come
out and really level with the American people about what
we're going to do with the debt, here's what they'd say.
They'd say, Look, we're going to try to eliminate as
much government waste as we can and cut corners where
we can. Right, We're going to save what we can,
and we're going to try to be as sane as
we can. But spending has been so out of control
for so long that if we were it's sort of
like getting a takeing somebody. It's a heroin addict, right,
you want to use methadone and you want to weed
them off it. Well, gradually, if you just go cold turkey,
chances are pretty good that you lose the patient. Same
is true. In our scenario. What you've got to do
is you've got to be stimulative enough to the underlying
economy where wage growth outpaces the inflation rate. That should
be the goal, because the only way we're going to
get out of here, out of this position, is with
higher than normal inflation. And the reason I say that
is there's a couple of ways we can deal with debt. Right,
we see it on our own personal balance sheets. You know,
let's say we go buy a house, we put two
hundred and fifty thousand dollars down and buy a seven
hundred and fifty thousand dollars house, Okay. Or let's say
we put five hundred thousand dollars down and buy a
million dollar house. We've got fifty percent debt taquity. Right,
we can either pay that loan down really aggressively, or
that house can go up in value. If the house
goes up fifty percent, my debt taquity just got a
lot better, right, therefore improving, and that's kind of what
we need to do here. Is perverse as it sounds,
is we kind of need to let inflation run hotter
for a period of time and let asset prices go up,
so by default that sort of shrinks the debt as
a percentage of the overall asset base. Yeah, and either way,
because if you don't do that, the impacts are too
negative government. You know, we're running seven percent deficits. If
you balance the budget right now, we go and do
a depression.
Speaker 1: Yeah my god.
Speaker 2: Yeah, I mean it's just it's it's become too big
of a problem. So you're just gonna have to take
a longer term trajectory out of this thing.
Speaker 1: Okay, I did like that. I don't want to end,
like we don't want to talk about that. I just
want to listen. I just want to I want to
think to myself that I'm we're all going to make
a lot more money in the next four years. We're
all going to do better, and we're all going to
need somebody to ask how do we handle this money? Zach.
And that's where you get into play, So like, how
can people get in touch with you? Zek How can
people find you and to get information from you as
to how to handle their money and to invest it.
Speaker 2: Yeah, No, go to Bowarkapitalmanagement dot com. We've got our
last road show of the year coming up Thursday. What
would that be Thursday the twenty for twenty eight. I
believe this is what that would be. No or no,
excuse me, Thursday of the twenty first.
Speaker 1: And you also have a radio show, right, you do.
Speaker 2: Have radio show every single week on and we do,
and we do a podcast segment every single day called
the Daily Dots where we discuss everything that's applicable that
happened in finance and politics.
Speaker 1: And yeah, you have a lot more positive stuff to
talk about now.
Speaker 2: Yeah, no, and look want to I don't want to
overcrowd this. Look. I think that we are going to
get the best, in my opinion, we're going to get
the best economic outcome possible. And when you talk about
the regulatory cuts and things like that, I think they're
going to be extraordinarily bullish for wage growth. And here's
the deal. If you've got an economy that's averaging six
six and a half percent wage growth and you're running
four percent inflation, which is above trend, that isn't a
bad scenario. That means that our wages are growing faster
than the cost of goods around us. That's a really Yeah,
that's a great outcome, and that's better than what we've
had for the last several years, so I think it
does look good.
Speaker 1: It's awesome. I think it's great news. I love it.
It's better than what we would have had had we
had more of the same. Oh my gosh, so great.
Speaker 2: Yeah. Well, I mean I was getting ready for litterboxes
in every bathroom, you know.
Speaker 1: I mean, you know, I know us too, So it's
all good. It's all good. So yes, everybody check them out.
Know your Risk Radio dot com. Thank you, Zach. I
appreciate it.
Speaker 2: You bet, thanks for having me fun as always. Investment
advisory services offered through Trek Financial LLC and SEC Registered
Investment Advisor. The opinions expressed in this programmer for general
informational purposes only and are not intended to provide specific
advice or recommendations for any individual or on any specific security.
Any references to performance of security so it thought to
be materially accurate and actual performance may different.
Speaker 1: Investments involve risk and are not guaranteed.
Speaker 2: Past performance doesn't guarantee future results. Trek twenty fourth three
zero