The fiscal package
Well, the first trade deal under the Trump administration has been ironed out, and more are said to be on the way. Markets continue to applaud the progress, with strong gains for stocks in recent days as American officials prepare to meet their Chinese counterparts in Switzerland this weekend. With trade discussions underway, attention has turned to top legislative priorities, especially given President Trump’s repeated goal of passing “one, big, beautiful bill.”
What’s happening? Reports suggest that Trump made a direct request to House Speaker Mike Johnson this week to raise the upper tax bracket for some of the richest Americans. The new 39.6% tax rate (up from 37%) would be for individuals earning at least $2.5M, or couples making at least $5M. Trump also wants to do away with the carried interest tax break used by hedge funds and private equity, as well as other measures, like imposing higher tax bills on owners of major stadiums and arenas.
It’s a significant departure from past policy for Republicans, who have traditionally sought tax cuts to grow the economy. There is likely to be considerable infighting on the new types of offsets, which are aiming to raise taxes on the rich to pay for tax cuts elsewhere. Trump has already promised no taxes on social security, tips, and overtime pay, but the budget shortfalls from those moves would need serious offsets, especially given struggles on the spending side, such as cutting back on major entitlement programs like Medicaid.
Taxes and your money: “The goal of tax optimization isn’t to avoid paying taxes, but to maximize your wealth on an after-tax basis,” Neuberger Berman writes in The Power Of Tax Deferral, discussing tax-loss harvesting and deferring capital gains. Investing Group Leader Chris DeMuth Jr. also explores a wide range of tax optimization investing strategies in Seeking Alpha article, Give Yourself A Tax Cut.
