No real urgency to lock

No real urgency to lock

Markets are calming after yesterday’s tax reform announcement made by the Trump Administration. The tax reform proposal calls for extreme cuts for self-employed business owners as well as for large corporations.  The extreme level of reduction has certainly caused anger for liberals who feel corporations should be paying more taxes, not less.  Additionally, the lack of detail explaining how the reform will be paid for caused additional anger.  Although the hope is that economic activity will increase to make up for the revenue shortage, that theory is far from a guarantee.

 

Other concerns over the tax reform include the potential impact this move will have on inflation. With wealthy business owners having significantly more income to live off, it is almost certain that we will see higher levels of inflation as a result.  This will drive prices higher for all, including those who will have less to gain from the reformed tax rates. Therefore, it brings into question the fairness of the proposal. It will be interesting to see how this shakes out and the fights that will certainly be waged on both sides. This will bring out the ugly side of politics, which is not health for a country that is supposed to be healing.

 

There is little reason to lock. However, only float if you can’t watch the markets closely.