Speaker 1: I gotta get Israel to calm down. Now the latest
Speaker 1: news We're on the verge, a real piece in the Middle.
Speaker 2: East, and your latest to Vinions.
Speaker 3: I trust what President Trump is doing.
Speaker 2: Fifty five the talk station.
Speaker 3: Potato five ifif you five car CD talk station. It
Speaker 3: being Monday, it's that time of week. Get to hear
Speaker 3: Where'm from all Worth Financials, Brian James, financial planner. He
Speaker 3: is talking about money matters. It is money Monday time.
Speaker 3: Brian James, Welcome back to the Morning show. Great to
Speaker 3: hear from you, my friend.
Speaker 1: Absolutely good to hear your voice too. It's a rainy
Speaker 1: money Monday. So let's sit and tide and talk about
Speaker 1: numbers and boring.
Speaker 3: Yeah, inflation, let's talk inflation. Let's show whether or not
Speaker 3: it's gonna impact the Fed's decision to cut interest rates
Speaker 3: or not, as the case may be. But the background
Speaker 3: of all this is the uh, the Trump trade wars,
Speaker 3: the the tariffs he's been levying or then taking off,
Speaker 3: as the case may be. It seems to be like
Speaker 3: a constantly moving target, you know, announces tariffs one day
Speaker 3: and then he says, well, I'm gonna pause him, give
Speaker 3: us time to negotiate or talk and you kind of
Speaker 3: a you never really quite have a grip of which
Speaker 3: directions going to go. But thus far, I think the
Speaker 3: general consensus, at least from what I've read no economist
Speaker 3: am I, is that thus far the tariffs really haven't
Speaker 3: impacted you and me on a day to day basis.
Speaker 2: The way everyone was.
Speaker 3: So frightened that it would, oh my god, the prices
Speaker 3: are going to go through the roof. Well that's not
Speaker 3: yet necessarily been the case, has it. Yeah, things that
Speaker 3: make Jerown Powell go hmmm. So we've seen this.
Speaker 1: We're now starting to see numbers coming out that were
Speaker 1: far enough past the tariff announcements and the actual presence
Speaker 1: of those tariffs. Remember, the announcement of the tariff and
Speaker 1: the actual tariff are two very different things, right, as
Speaker 1: we've learned. But June's CPI is forecasted to rise about
Speaker 1: a third of a percent month over month for both
Speaker 1: headline and core numbers. Remember those are the there's two
Speaker 1: different CPI figures that we all like to look at.
Speaker 1: This is the first real tangible impact we've seen from
Speaker 1: this new round of Trump era tariffs in getting core
Speaker 1: inflation near three percent annually. So it's kind of moving
Speaker 1: away from the target. The FED wants to be in
Speaker 1: the two percent range. That's what really makes Jerome Powell
Speaker 1: happy in the morning. But we're not there. And well,
Speaker 1: this to your point, this is not terrible. This is
Speaker 1: not a massive spike as some had prognosticated over the
Speaker 1: past few months. But at the same time, up is
Speaker 1: not down, and we're higher than the Federal Reserve once.
Speaker 1: So at the moment, Jerome Powell has a bit of
Speaker 1: a dilemma in terms of which which battle does he fight?
Speaker 1: Is he gonna fight inflation because this is also coming
Speaker 1: alongside a slightly weakening labor market, so things do seem
Speaker 1: to be cooling off.
Speaker 2: This is a tough one.
Speaker 1: I'm kind of glad that I don't have I don't
Speaker 1: have his job right now, because he's really got two
Speaker 1: forces pulling in the opposite direction on him.
Speaker 3: Well, I mean, are we entering like a nineteen seventies
Speaker 3: kind of situation with stagflation?
Speaker 2: No, I don't.
Speaker 1: I don't think we're there yet. You know, my crystal
Speaker 1: ball is as foggy as anybody else's. But I don't
Speaker 1: think this is this yet has all the same impacts
Speaker 1: that full stagflation did. And the reason that we one
Speaker 1: of the reasons I believe personally, is because there are
Speaker 1: so many catalysts Brian of ways that we make money
Speaker 1: now compared to the seventies, And I'm just thinking of
Speaker 1: things like, you know, the seventies, we didn't have a
Speaker 1: whole lot of innovation compared to what we have now.
Speaker 1: That's a good think of the last twenty years. We
Speaker 1: had the Internet come up, and we've had AI, We've
Speaker 1: had a real estate spike, we had COVID that drove,
Speaker 1: you know, the work from home technology and all this stuff.
Speaker 1: Everything is a catalyst that somebody makes money off of.
Speaker 1: So that stuff, I think currently knocking on wood furiously
Speaker 1: is offsetting the downsides of what we're going through.
Speaker 3: That's interesting. I never really looked at it that way.
Speaker 3: A lot of job opportunities that just didn't exist, and
Speaker 3: we've created a whole new economy since the nineteen seventies,
Speaker 3: which was I guess more rooted in a traditional I
Speaker 3: guess more manufacturing type economy, and thus the problems we
Speaker 3: faced in the seventies.
Speaker 1: Yeah, that's right, And there was just a different environment
Speaker 1: in terms of how we recovered from things so we
Speaker 1: had spikes in oil prices, and of course that was
Speaker 1: a lot of that too, was driven by the President.
Speaker 1: Nixon wanted to drive interest rates down because he had
Speaker 1: an election coming up and he wanted happy people putting
Speaker 1: their votes into their ballot boxes, and so he pushed
Speaker 1: hard for low interest rates, and that spiked a lot
Speaker 1: of demand, which resulted in Paul Volker coming to the
Speaker 1: rescue with his Superman cape in the late seventies early eighties,
Speaker 1: forcing us into a pretty significant recession that then settled
Speaker 1: back down into this two to three percent range that
Speaker 1: we over the past forty years have determined as kind
Speaker 1: of the right happy place to be, because over the
Speaker 1: last forty years it hasn't been that crazy economically speaking
Speaker 1: when you compare it to the nineteen seventies. So we've
Speaker 1: kind of concluded that, okay, that must be the right
Speaker 1: place to be balanced, but it takes some sacrifices to get.
Speaker 2: There, all right.
Speaker 3: So we have this point three percent predicted figure for
Speaker 3: the consumer price that's supposed to come out today. Core
Speaker 3: rate that strips out food and energy also predicted to
Speaker 3: B point three, which makes it higher than the fetid
Speaker 3: hope because that would push it past the two percent
Speaker 3: goal and closer to three percent if it remain on
Speaker 3: this trajectory.
Speaker 2: If I got that right, that's correct, if you're on
Speaker 2: the right path.
Speaker 3: All right now, to lower interest rates be to add
Speaker 3: fuel to the fire of the inflationary numbers leads. That's
Speaker 3: what they always say.
Speaker 1: Correct, that's correct, exactly right, and that's what Trump wants.
Speaker 1: Trump has been talking about rates aren't low enough. He
Speaker 1: said that all the way through, and I honestly, I
Speaker 1: think I'd wear a tinfoil hat sometimes, but especially when
Speaker 1: it comes to politicians of every flavor, because everybody at
Speaker 1: the end of the day is just out for votes.
Speaker 1: That's all because they got to stay in their jobs. Anyway,
Speaker 1: I think it's a sexy thing to talk about interest rates.
Speaker 1: We've all become fixated with interest rates because we've we've
Speaker 1: fallen in love with the idea of refinancing our mortgages
Speaker 1: over and over again, and we feel entitled to these
Speaker 1: two to three percent mortgages. Therefore, if I'm a politician,
Speaker 1: it makes sense for me to just talk about lower rates.
Speaker 1: All you need is the SoundBite. I don't need to
Speaker 1: get into the possible downsides of having rates too low
Speaker 1: for too long. We saw that in the seventies, and
Speaker 1: I'm going to talk about that. I'm just going to
Speaker 1: trigger people's memories that, hey, I really liked when I
Speaker 1: could refinance my mortgage over and over again, so that
Speaker 1: can possibly win me votes. That's going to be the
Speaker 1: drum that I beat.
Speaker 2: Yeah, you know.
Speaker 3: And the other the sort of the side cul de
Speaker 3: sac on that point is if interest rates were back
Speaker 3: down to three for mortgages, I think it would probably
Speaker 3: exacerbate the already problem shortage of housing we have. There'd
Speaker 3: be more people out there wanting to buy, which of
Speaker 3: course drive the limited inventory prices up.
Speaker 2: Yeah.
Speaker 1: The people who would be happiest are the ones who
Speaker 1: bought a house anyway, knowing full well that it's not
Speaker 1: as good of an environment as it was over the
Speaker 1: past ten to fifteen years, but they were sort of
Speaker 1: gambling that rates are going to come down, I can refinance.
Speaker 1: Those people would be really, really happy. It's the people
Speaker 1: who are furiously trying to build up a down payment
Speaker 1: to buy their first home that are going to take
Speaker 1: it right in the face because it's just going to
Speaker 1: get slightly more, you know, more and more expensive as
Speaker 1: it already is.
Speaker 3: Yeah, there's no end insight to that one now. And
Speaker 3: back to inflation. The idea that Trump just announced over
Speaker 3: the weekend, he's going to put a thirty percent terarify
Speaker 3: on goods from the European Union and Mexico and that
Speaker 3: kicks in August first, obviously giving him a couple of
Speaker 3: week winded and negotiate, which I presume that's what he wants.
Speaker 3: That hasn't been factored into the situation, has it yet? No,
Speaker 3: not really, But at the same time, I think we're
Speaker 3: used to this, right.
Speaker 1: So remember back in April, the market hit an absolute bottom,
Speaker 1: and it hit it hard in early April, and that
Speaker 1: was the initial panic over oh my gosh, these tariffs
Speaker 1: are huge, one hundred and forty percent on stuff coming
Speaker 1: out of China and we're changing them every other day.
Speaker 2: Panic, panic, panic.
Speaker 1: Well then we realized, okay, wait a minute, that maybe
Speaker 1: we're not going to actually tear off band aids like
Speaker 1: it felt like we were going to. We're gonna kind of,
Speaker 1: you know, put these thirty day delays and all that
Speaker 1: kind of stuff on it. So the market is kind
Speaker 1: of winking at all this, it's just kind of ignoring it.
Speaker 1: You know whatever, let me know when you're done and
Speaker 1: you've decided, then the market will tell us what it's
Speaker 1: going to do. So, you know, futures as we're sitting
Speaker 1: here right now, are down a little bit for the morning,
Speaker 1: but not nearly as much as they would have been
Speaker 1: when these first tariff announcements came out months ago, when
Speaker 1: we were first getting used to our new chaotic reality.
Speaker 3: Well, and maybe that's because they didn't stick around for
Speaker 3: a long time. That was like, you know, Trump would
Speaker 3: announce them and the market will react, and then he
Speaker 3: would say, now I'm going to put a hold on
Speaker 3: those and withdraw them and again for the purpose of negotiating.
Speaker 3: Sitting in the negotiation table, it's all I guess can
Speaker 3: be made of why they're on in, they're off, and
Speaker 3: they're on, and they're off again. But you can't factor
Speaker 3: that in. If you don't have any idea which direction
Speaker 3: the tariffs are going to go, how do you forecast
Speaker 3: the future?
Speaker 2: He just can't do it.
Speaker 1: You know, I picture, you know, being mugged in an alley.
Speaker 1: If I jab my knife at you, you're probably going
Speaker 1: to be more willing to hand me over your wallet
Speaker 1: without me having to do any damage. That's really all
Speaker 1: we do, over and over and over again. It's just
Speaker 1: a negotiation. As ugly as it sounds, it truly is.
Speaker 2: Well.
Speaker 3: I know that the Wall Street journalist said the economists
Speaker 3: economists are seeing a lower recession risk with stronger job growth.
Speaker 3: That's Wall Street journal survey of the economists that they
Speaker 3: talk to. So I mean it's like a mixed bag
Speaker 3: of news and all this, Brian, I guess that's why
Speaker 3: there's so much confusion in terms of which direction we're
Speaker 3: going to go in terms of rate interest rates.
Speaker 1: Yeah, and this is very much a popcorn making time
Speaker 1: for the rest of us who do not have to
Speaker 1: make these decisions on that benefit or harm the rest
Speaker 1: of the world. Again, I go back to Jerome Powell.
Speaker 1: I don't know how the man sleeps at night. He's
Speaker 1: he's in a world where you know, again, he's got
Speaker 1: those two forces pulling an opposite direction, and he's the
Speaker 1: one who has to side which lever to pull in
Speaker 1: which button to push.
Speaker 2: So I do not envy that man right now.
Speaker 3: No, No, he's in quite a conunder. We'll talk more
Speaker 3: about this with Brian James from all Worth Financial that
Speaker 3: and I guess we also have some of the big
Speaker 3: beautiful tax breaks, maybe a little bit smaller than people anticipated.
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Speaker 3: Our eight nineteen if you've got pair C detalk station.
Speaker 3: Very happy Monday to you. Done the money Monday thing
Speaker 3: with Brian James Smallworth Financial. Going back to the conundrum
Speaker 3: and the problem that Jerome Powell is in such a
Speaker 3: position you mentioned it in this article addresses it. The
Speaker 3: one who provided me The FED is to mandates. It
Speaker 3: can be at odds, and they're at odds now keep
Speaker 3: inflation in check and supporting the labor market. So to
Speaker 3: keep inflation in check. If it's run too hot, they
Speaker 3: raise rates to slow demand. Okay, when the labor market
Speaker 3: starts to drop off, they cut rates to boost barring
Speaker 3: and spending and thus in turn hiring. But you've got
Speaker 3: both going on at the same time. You have a
Speaker 3: cooling labor market as has been reflected, and you have
Speaker 3: a little bit warmer inflation number as you mentioned, it
Speaker 3: was point three or is reportedly going to be point
Speaker 3: three for the month to higher than the two percent
Speaker 3: annual trajectory. So it suggests, I mean, the answer seems
Speaker 3: to me to be just don't touch the rates at
Speaker 3: all at this point, rather than lower them or increase them,
Speaker 3: which nobody really is talking much about. Why would you
Speaker 3: even do anything to them right now if you have
Speaker 3: no clear vision of the future on this, Brian James, Yeah.
Speaker 1: At the moment, we're not at a point. Again, I'm
Speaker 1: not Jerome Powell. I'm not responsible for this. So this
Speaker 1: is really you know, me sitting off on the sidelines,
Speaker 1: being an armchair fed chair. But so yeah, I don't
Speaker 1: think we're at a point where we have to go
Speaker 1: one direction or the other, you know, with the exception
Speaker 1: of the pressure from the White House is enormous, of course,
Speaker 1: because this has been, like I said, this has been
Speaker 1: a campaign plank for President Trump for both of his
Speaker 1: both of his terms, and when he was not in office,
Speaker 1: he was still talking about it, right, always being that
Speaker 1: rates need to go lower, lower, lower, We'll worry about
Speaker 1: the rest later. So at the moment, I think it's
Speaker 1: it's kind of it's relatively easy for fed chair pal
Speaker 1: to not do anything about it because of those things
Speaker 1: that could happen, and the benefits would not outweigh the risks.
Speaker 1: Currently we're kind of at a bit of a balance,
Speaker 1: and that's what we're seeing in the stock and bond market.
Speaker 1: It's fairly knock on wood quiet time right now. But
Speaker 1: later in the year, later in September, if these if
Speaker 1: these trends continue, in other words, if the labor market
Speaker 1: continues to weaken and we continue to have the other
Speaker 1: things happening on the inflationary side, then he's probably going
Speaker 1: to have to make a move in one direction or
Speaker 1: another and lay his cards on the table.
Speaker 2: Well, it's right now, we're we're kind of stableish.
Speaker 3: But if that happens, in other words, inflation continues on
Speaker 3: its current upward trajectory and the labor market is on
Speaker 3: the downward trajectory, the likelihood that the rates are going
Speaker 3: to get lowered is slim and none, because that'll have
Speaker 3: a profound impact on inflation. At least that's what they say.
Speaker 3: Because and this is the other thing I wanted to
Speaker 3: test and find out what your perception is. The import
Speaker 3: taxes haven't yet crept into the consumer prices because apparently
Speaker 3: companies were front loading inventory because they anticipated these tariffs
Speaker 3: kicking in, so they've pre ordered a whole bunch of
Speaker 3: stuff in late two thousand and four, in twenty twenty five.
Speaker 3: But it's pointed out eventually they're gonna have to start
Speaker 3: passing on higher prices to consumers because their inventories are
Speaker 3: gonna run low and they're gonna have to start buying
Speaker 3: more stuff in things that they're gonna be subject to
Speaker 3: the tariff. So, I mean, if anybody, if this is
Speaker 3: an accurate assessment of the landscape, you know, prices are
Speaker 3: gonna go up.
Speaker 2: They're gonna have to. There's really no other choice.
Speaker 1: You're right, because because again we're as I said earlier,
Speaker 1: we've been calm over this reletive. Once we got over
Speaker 1: the initial shock that we're gonna start talking about tariffs
Speaker 1: very loudly. That was back in April, and then we
Speaker 1: realized it's not gonna it wasn't It's not as scary
Speaker 1: as it sounds because we really haven't seen the impact yet.
Speaker 1: Now we're riding the wave of prices that were locked in,
Speaker 1: as you just pointed out in Q four of last
Speaker 1: year and Q one of this year in anticipation. So
Speaker 1: things are still stable, but we're not truly in a
Speaker 1: full tariff oriented reality that's coming over the next several months.
Speaker 1: And if we if we really want to follow what
Speaker 1: the President says in lower rates, then that is going
Speaker 1: to provide opportunities for businesses to make more money. And
Speaker 1: they're going to They're definitely going to push that because
Speaker 1: it's what they do. It's, you know, what they should do.
Speaker 1: But on the other hand, they are not the ones
Speaker 1: responsible for keeping inflation in check. That falls to That
Speaker 1: falls to the Fed chair, and he's going to have
Speaker 1: to make some tough decisions in terms of guiding us
Speaker 1: through all that.
Speaker 3: Well, he's just got to wait and see what the
Speaker 3: teriffs do it if they even go into effect. Again,
Speaker 3: thirty percent announce kicked in August first for quite a
Speaker 3: number of our trading partners, and again the logical conclusion
Speaker 3: is that we'll raise prices ergo lowering rates when a
Speaker 3: time of rising prices is a recipe for rapid runaway inflation,
Speaker 3: which Donald Trump mean Donald Trump campaigned on lowering inflation.
Speaker 3: It's going to do the exact opposite of what he promised,
Speaker 3: and as we run into the you know, the next
Speaker 3: election cycle, that's not going to be a real good
Speaker 3: thing happened in Brian James. If you're hopefully hoping for
Speaker 3: the best for the Republicans anyway.
Speaker 1: And I'll hope for the best for all of us,
Speaker 1: which is, if you find a way to get along,
Speaker 1: then maybe we'd be we'd be in a better spot.
Speaker 1: But yeah, and I think the other challenging thing is
Speaker 1: betcher Pal doesn't get to change interest rates today and
Speaker 1: then make and then reverse.
Speaker 2: The change tomorrow. That's right. Trump apparently does, so that's.
Speaker 1: That's he's gonna Pal's gonna have to wait until the
Speaker 1: dust truly truly settles on this, because his decisions are
Speaker 1: much more permanent and long lasting than a day and
Speaker 1: a half.
Speaker 2: Worth of tariffs.
Speaker 3: Well, and I suppose in the background there's always the
Speaker 3: notion that just threatening the thirty percent teriffs will at
Speaker 3: least bring folks to the negotiation table and maybe we'll
Speaker 3: end up with a better deal. Before anything kicks in
Speaker 3: and ultimately impacts inflation, one can only pray that we
Speaker 3: get that kind of resolution. Brian James, let's continue with
Speaker 3: you and some of the big beautiful tax breaks a
Speaker 3: little bit smaller than some anticipated. One more with Money
Speaker 3: Monday's Brian James. It's a twenty five right now, fifty
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Speaker 3: Take twenty nine if you if I have kseen the talxtation.
Speaker 3: Brian Thomas was a or financials Brian James on Monday
Speaker 3: Monday coming up with the next segment, tax fish or
Speaker 3: state representative talk about Ohio's marijuana laws and his efforts
Speaker 3: to protect your ability to get weed under the law
Speaker 3: as passed and in the meantime, Brian James, I hate
Speaker 3: the name of it, the great, big, beautiful bill blah
Speaker 3: blah blah, little alliteration there anyway, promised a lot and
Speaker 3: delivered on a whole lot, of course, making the twenty
Speaker 3: seventeen taxes permanent, which is a tax break for all
Speaker 3: of us. Had they increased everyone would have felt the
Speaker 3: pain of that, but not as big a change to
Speaker 3: you know, things like the deduction for taxpayers sixty five
Speaker 3: and older. And I was a little distressed about the
Speaker 3: salt deduction, that standard state local tax deduction that they
Speaker 3: raised from ten thousand to forty thousand, although it comes
Speaker 3: with some significant limitations as well. Let's talk about that
Speaker 3: to start with Ryan.
Speaker 1: Yeah, so when we hear these salt, these are the
Speaker 1: terms and things that kind of glaze people's eyes over
Speaker 1: because it just starts to sound boring when we throw
Speaker 1: all these acronyms out there. But salt stands for assault,
Speaker 1: stands for state and local taxes. So state and local
Speaker 1: tax caps are jumping from ten thousand dollars.
Speaker 2: To forty thousand dollars.
Speaker 1: This is the deduction you can get because you have to,
Speaker 1: because you have to pay state and local taxes.
Speaker 2: It's not a major issue.
Speaker 1: I don't hear many of my clients here in the
Speaker 1: Tri state area complaining about, you know, other than you know, people.
Speaker 2: Who just don't want to pay taxes in general.
Speaker 1: But it's not near the burden here that it is
Speaker 1: elsewhere in your higher tax date.
Speaker 3: But the deduction is a benefit to those high, high
Speaker 3: tax blue states.
Speaker 2: Oh absolutely, and that's where this is coming from.
Speaker 1: And you remember in twenty seventeen when this first went
Speaker 1: into effect, it was a poke in the eye. It
Speaker 1: was an attack, you know, from the red side to
Speaker 1: the blue side because of that very reason, because basically
Speaker 1: making the case that well, you you've chosen to make
Speaker 1: your state a high tax state, so you've got to
Speaker 1: live with the consequence. Well, now the going the other way,
Speaker 1: because there's an awful lot of moneyed interests out there
Speaker 1: who say, look, we're rich too, and we want to
Speaker 1: save on taxes, so fix this. So part of this
Speaker 1: act is increasing the deduction you get from a cap
Speaker 1: of ten thousand dollars up to forty thousand dollars, but
Speaker 1: it phases out for taxpayers with modified adjustic gross income
Speaker 1: above five hundred thousand and goes away completely by six
Speaker 1: hundred thousand dollars.
Speaker 3: Well, and anybody who's paying forty thousand dollars in state
Speaker 3: and local taxes is probably a higher income earner anyway, exactly.
Speaker 2: Yeah.
Speaker 1: But the point is though that it's not this it's
Speaker 1: interesting to me because it's a tax cut for people
Speaker 1: who are probably on the wealthier side, but it does
Speaker 1: have a cap at incomes between five hundred thousand and
Speaker 1: six hundred. Anybody who makes over six hundred is not
Speaker 1: going to benefit from this at all. And if you're married,
Speaker 1: you're at a slight disadvantage compared to to a single
Speaker 1: person in this situation.
Speaker 3: All right, I know the megabill contains a new deduction
Speaker 3: senior's car loan interest and tips and overtime that those
Speaker 3: are limited as well. I mean it's not you get
Speaker 3: to deduct one hundred percent of your tips or you
Speaker 3: don't have to pay taxes and one percent of your
Speaker 3: tips or overtime. There's some caps on that one too.
Speaker 1: Yeah, it's getting and I think I've mentioned this before,
Speaker 1: but yeah, so the Trump administration is just trying to
Speaker 1: benefit people who who most need it. If you're somebody
Speaker 1: who accepts tips, you're probably making a good amount of money,
Speaker 1: but you're you know, people who making five, seven hundred
Speaker 1: and fifty, you know, one hundred million dollars a year
Speaker 1: aren't taking tips. So this is on the lower end
Speaker 1: of income with the income side, and it is a benefit.
Speaker 2: Clearly for that.
Speaker 1: I think what's going to be really interesting is again
Speaker 1: to see exactly what creative ways people find out find
Speaker 1: to come up with labeling certain chunks of their income tips.
Speaker 1: Somehow I feel like hedge fund managers are going to
Speaker 1: start taking tips. It will be sort of that similar
Speaker 1: to that carried interest phenomenon where they've made something up
Speaker 1: out of the seventeen hundreds so not have to pay
Speaker 1: taxes on things.
Speaker 2: Now?
Speaker 3: Is this a consult with your financial planner moment for
Speaker 3: people in these various categories about how you get ahead
Speaker 3: of it and are there ways that you can arrange
Speaker 3: your portfolio or your payouts or however wherever you are
Speaker 3: and your retirement stage of your life, you need to
Speaker 3: anticipate how to deal with this and be forward thinking
Speaker 3: about some of these deductions and changes in the law.
Speaker 1: I think you know what my answer is going to
Speaker 1: be because I'm a little Buddist, having been one for
Speaker 1: thirty years, but absolutely because these are all puzzle pieces.
Speaker 1: Everybody has to deal with two sets of puzzle pieces.
Speaker 1: You've got your own situation and all the facts and
Speaker 1: figures and resources and responsibilities that you have in your
Speaker 1: own little world. But then the other set of puzzle
Speaker 1: pieces is whatever the outside world is going to do
Speaker 1: to you. That's your employer, that's your government, your tax authorities,
Speaker 1: and all that kind of stuff, and you have to
Speaker 1: pay attention to really what the benefits are. Why are
Speaker 1: these changes being made. The drum beat right now is that, yes,
Speaker 1: we may tax cuts permanent from twenty seventeen, and that's
Speaker 1: a wonderful benefit for people. But you have to look
Speaker 1: under the hood and remember where these tax benefits are
Speaker 1: landing for the vast majority. So, for example, tax cuts
Speaker 1: and Job Act from twenty seventeen dropped. For people making
Speaker 1: between fifty and seventy five thousand dollars, your taxes dropped.
Speaker 1: Your effective rate dropped by about twenty two percent, right,
Speaker 1: from nine percent to seven percent, down twenty two percent.
Speaker 2: That sounds like a big number, right.
Speaker 1: If you make two hundred to four hundred, then you
Speaker 1: had your effective rate drop by about ten percent, not bad,
Speaker 1: that's still double digits. Corporations, however, Brian Thomas at the
Speaker 1: same time saw a forty three percent reduction and actual
Speaker 1: taxes paid. This tax cut that we just made permanent
Speaker 1: with the obbbbbbbbb is not for individuals, it's for corporations.
Speaker 1: We gave individuals and families a reason to go vote
Speaker 1: for it, because we got to say, hey, you're looking
Speaker 1: at a ten percent decrease, but corporation's got about four
Speaker 1: times that. So you have to pay attention to where
Speaker 1: the benefits are well.
Speaker 3: And then there's always the argument that corporations don't really
Speaker 3: pay taxes. Their taxes are reflected in the price of
Speaker 3: the goods and services that they offer, So a reduction
Speaker 3: in corporate taxes may mean well, lower prices for us exactly.
Speaker 1: And so the argument against this, and I've had this
Speaker 1: discussion here in the all Worth offices with some other
Speaker 1: folks about where the benefits came from this, and the
Speaker 1: argument is often that, well, it's offset by economic growth
Speaker 1: because we're saving money for companies. Therefore they're going to
Speaker 1: reinvest in new things and all that kind of suff
Speaker 1: we're going to make more money. That just doesn't pan
Speaker 1: out though. In twenty eighteen twenty, shortly after twenty seventeen,
Speaker 1: of course, GDP rose to two.
Speaker 2: Point nine percent.
Speaker 1: That's up two point four from twenty seventeen, so we
Speaker 1: saw a little bit of bounce there, but it got
Speaker 1: back to trend by twenty nineteen, abound two to two
Speaker 1: point three percent. Even if you include the round trip
Speaker 1: of COVID, the recession, and then the recovery, it stayed
Speaker 1: in the range of the load to mid twos. Meanwhile,
Speaker 1: corporate share buybacks, in other words, companies saying, hey, we
Speaker 1: got extra money, let's buy back some of our shares.
Speaker 1: If we own our shares, we don't have to pay
Speaker 1: dividends on them. Those increased by about fifty five percent
Speaker 1: between seventeen and eighteen. So firms use those tax wind
Speaker 1: falls for buybacks and dividends to shareholders, not new investments.
Speaker 1: So we did not see the capital growth that was
Speaker 1: touted to offset the tax cuts.
Speaker 3: Got to look at it to multiple sides. We have
Speaker 3: Brian James every Monday to talk money matters and make
Speaker 3: sure you get yourself a certified financial planner person who
Speaker 3: owes you a fiduciary obligation so you can prepare adequately
Speaker 3: for your future. Got to take the reins yourself on
Speaker 3: that one. Nobody's gonna do it for you. Brian James,
Speaker 3: appreciate you opportunity to talk with you every Monday. I'll
Speaker 3: look forward to next Monday, and I hope between now
Speaker 3: and then you have a great week. YouTube talking a
Speaker 3: week a thirty seven five K sit the talk station
Speaker 3: Text Fish or state Representative Fisher is going to join
Speaker 3: us in the next segment talk about marijuana laws and
Speaker 3: some Republicans' effort to change them and tighten down on them.
Speaker 3: First though, Cover, since you speaking of money matters, it
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Speaker 1: This is fifty five KRC, an iHeartRadio station.
Speaker 2: Have you taken your