Around The World in 100 Words - November 2017, Week 44

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Around The World In 100 Words November 2017; Week 44 Showtime! At last, the gala screening of the Republican's long-awaited Tax Legislation has hit the big screen! Good news for investors, as the Bill includes a tax cut for large corporations from 35% to 20%, while individual rates are being set at 15%, 25% and 35% on lower income thresholds. The last overhaul of US Tax came during the Reagan Administration, and the US economy and stock markets responded by roaring ahead. The days of recession, stagflation and underperforming stock markets were over, and the hallowed place Reagan occupies in the pantheon of US Presidents was assured. But will it work this time?

 

That is the question of course, and not a $100 one either, more like $1 Trillion. And that's a lot of money, even for an economy the size of the United States. More disposable income in the hands of consumers means more spending, more investment and more jobs. Less tax means share prices have room to move up further, as US companies can deliver higher profits to shareholders in the form of rising dividends and share prices. But more than that, the Republican's tax proposals are about empowering the individual to make economic decisions important to them. Economic freedom in other words. Maximizing individual liberty both politically and economically should be of primary concern for democratically elected governments. Sadly though, we have just the opposite here in Canada, where tax-and-spend politicians are determined to spend your money faster than you can earn it.

 

So what's the bottom line? Well, time will tell, but when the Republican's Tax Bill becomes law, it will provide the foundational basis for a return to higher growth rates and stock market returns. It's good for Canada too, as 75% of our exports end up down there. Sad that the best policy for growing the Canadian economy is being written by American not Canadian politicians. But we'll take it. More on this topic to come!

 

Martin Weiler

519-546-5088

 

 

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