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A (Mostly) Good Week For Your Money

What can you say about a stock market that keeps churning out new highs? I suppose the “glass half empty” crowd is holding its breath in anticipation of another 2008-style crash, but the rest of us are enjoying the ride. Most investments are performing well, and the economy is getting a boost from the “wealth effect,” which means that consumers are spending money because they feel flush.

This week was friendly to your money in other ways, as well. Despite the dysfunctional Congress, news on the health insurance front was positive, as Trump took actions to reverse bad ObamaCare policies. Thanks go to Senator Rand Paul (R-KY), himself a physician, for pointing out to President Trump that certain concepts were not passed into law by Congress, and could therefore be changed by the Chief Executive. For instance:

  • From an individual standpoint, insurance can now be purchased across state lines, increasing competition in areas that have limited or no choice of carriers and policies
  • Small groups (independent financial planners and others) are now allowed to band together to form insurance purchasing groups, similar to larger businesses
  • Insurers will no longer receive illegal subsidies to bolster their profits artificially, instead they must compete for business
  • Artificial minimum insurance coverages are relaxed, reducing costs, so policyholders no longer will be required to pay for coverages they don’t need and/or don’t want

Another positive for your money, again thanks to Senator Paul, was about a topic near and dear to me, the so-called “tax reform” or “tax cut” outline that is being discussed in the halls of Congress. We believe that there would be a segment of the population that experienced a tax increase if changes were not made to the current outline.

This week brought a probable corrective measure from Paul. The issue is somewhat complex, so I’ll try to simplify. Today, every taxpayer gets 2 minimum forms of relief; a Standard Deduction and Personal Exemptions. Simple tax returns use the 1040-EZ, which combines them into s single number, giving rise to the 1-page tax return. 1040 Form filers have 2 separate items, which together yield the same dollar amount.

Under the current proposal, the Standard Deduction is increased, but at the expense of the Personal Exemption, which disappears. The net effect of these two is negligible for most individual taxpayers, but would actually penalize families with children.

The problem was brought to President Trump’s attention this week by Sen. Paul, who received a pledge that the eventual system would assure that every taxpayer would get an actual tax cut. This amounts to a new campaign promise by President Trump for his second term, and I expect him to honor that promise.

Make no mistake, there was good news this week for your money. My mission is to hold the political class to the fire when they make outlandish claims. Praise will come when they get it right.

There is only one method of tax reform and simplification that corrects all the problems and inequities – the FairTax, which will be the topic of an upcoming blog.

Van Wie Financial is fee-only.  For a reason.