3 Big Ideas in Trump’s Tax Plan

Whew! If you think it’s a piece of cake to sit in our TV studio in front of bright lights and answer a whole slew of tough questions from our very well-informed, very smart readers, you should try it sometime. But heck, I don’t mind. In fact, I find it very invigorating.

I know, because we just had a marathon one-hour session this afternoon.

We got great questions about my favorite miners that have doubled and tripled in value, the next bull market (or crash) in the stock market, the next correction in gold and what comes after, government debt defaults, bonds and much more. Martin and I fired back very specific answers with no punches pulled. Then, suddenly and without warning, it was over, with a long list of great questions still unanswered. That means we still have a lot of work to do.

But here’s what I suggest you do …

First, if you want to watch the recording, flubs and all, click here.

Second, stand by for the answers to all the questions we couldn’t get to because we ran out of time. We will write them up as soon as possible and send them to you.

Third, there’s one big unanswered question I want to address right now:

What will be the impact of the Trump tax plan?!!

Let me start by saying that this is NOT about politics itself. My sole purpose is to drill down to how politics impact your money. And there are very, VERY few changes in law or policy that impact your money more than tax reform, especially the kind of sweeping tax reform that President Trump has proposed.

The media seems to be all revved up by the idea of class warfare and big budget deficits; and I don’t deny those things are very important. But they also seem to be ignoring some big ideas that could jump-start business investment and boost economic growth:

Big Idea #1: A Boost in the Child Tax Credit

I have kids. They’re only worth $1,000 each as tax credits. That’s pitiful. No way does the Child Tax Credit (CTC) cover the cost of a child.

I could sell my kids to the circus to make up the difference (just kidding). Or, maybe, we could raise the CTC. That’s what President Trump wants to do.

The question is how much. Right now, Trump’s tax plan proposes:

To further simplify tax filing and provide tax relief for middle-income families, the framework repeals the personal exemptions for dependents and significantly increases the Child Tax Credit. The first $1,000 of the credit will be refundable as under current law.

In addition, the framework will increase the income levels at which the Child Tax Credit begins to phase out. The modified income limits will make the credit available to more middle-income families and eliminate the marriage penalty in the existing credit.

Would that be $2,000? $3,000? $4,000? Personally, I think $5,000 would be a good number. That MIGHT start to defray the cost of raising a child and getting them a good education.

As Congress considers Trump’s tax plan, they should take a close look at three ways to boost the economy and ease our citizens’ financial woes. Source: Pixabay.com.

Look, scientists and politicians are all warning us that the U.S. birth rate is way too low. Some are talking about a national emergency.” Well, if you want Americans to have more children, make it less of a financial burden on parents.

And the thing about kids is, man do they boost economic activity! Christmas, birthdays, school, camp, you name it – there’s always something to buy for kids. Never mind trips to the grocery store. Ay-yi-yi, my son can eat!

Big Idea #2: Expensing of Capital Investments

Under the plan, businesses will be able to immediately write off the costs of new investments in depreciable assets.

Why is this important? Because the way things stand now, business investment in the American economy collapsed in recent decades. And that means lower economic growth, fewer jobs, etc.

The idea behind Trump’s tax proposal is to make expensing immediate and simpler. So, companies will have an incentive to spend more money investing in their own businesses.

You want economic growth? This is how to get it.

Big Idea #3: Repatriation of Foreign Profits

The plan says that all cash held overseas by U.S.-owned companies would be considered repatriated, or brought back home. This cash would be taxed at a one-time lower rate. Trump hasn’t said what that lower rate is yet. But the rumor is 10%.

S&P 500 companies are holding $920 billion in cash overseas right now, and not paying taxes on any of it. That’s according to a Goldman Sachs estimate. Goldman says $250 billion of that could be repatriated. But if they’re going to get taxed on all of it, as Trump proposes, they might bring back more.

And if you look at ALL U.S. based companies, there is $2.5 trillion of profits held overseas to avoid paying the 35% corporate tax rate on earnings, according to Citigroup.

Bottom line: This cash could be invested in growing businesses, or it could be sent to shareholders as special dividends. Either way, it will be a huge injection of cash into the U.S. economy.

It’s All Part and Parcel of the Big Cycles

Speaking of cash flowing into the country, one thing our Edelson Institute cycles analysis tells us is this: We’re about to see another, even bigger tsunami of fear money start flowing into the U.S. It will be fleeing upheavals abroad in other countries.

Those other countries will have higher corporate tax regimes under Trump’s plan, by the way. As the plan proposes: “The framework reduces the corporate tax rate to 20% – which is below the 22.5% average of the industrialized world.”

The lower America’s corporate taxes are, the more foreign money will see it as a safe haven.

This creates so many large profit opportunities, it’s no wonder we’ve gotten so many questions about them from readers: Where? How much? What specific investments to buy and when? I trust you may have similar questions and may want to get all our answers. I hear you. That’s why we just held our Q&A session, and why we’re leaving the recording online for a few days. To watch it now, go here, and it will begin playing on your screen right away.

Don’t Look Too Close at How the Sausage Is Made

There’s an old saying that laws and sausages have this in common: You don’t want to look too closely at how they’re made. What President Trump has proposed is going to change a lot by the time Congress gets done running it through the wringer.

But there are real opportunities there. Especially for investors like you and me.

All the best,

Sean Brodrick


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Comments 12

  1. Joachim Mueller November 4, 2017

    Unbelievable! This is calling for socialism!
    Since when should I pay for other people’s children? I already pay for their children’s schooling and many of those parents have more money than I do.
    Instead of a race to the bottom when it comes to company taxes other countries should raise their taxes. That should be an international agreement.
    If the US wanted to really reform the tax system she would change to the VAT system. Internet sales should not be tax free, services should not be tax free. Then companies could compete internationally. Furthermore, the heavy handed approach by US authorities should be eliminated. Companies should be taxed only once and expatriates living in some other countries should pay taxes there and only there.


  2. Peter October 24, 2017

    I disagree with your comment about other countries being in higher corporate tax under Trump. There are currently countries that are at 11 -12%.
    The comment about repatriation of funds. There is too much risk for companies bringing money back into the US for two reasons.
    1. This tax proposal is not a tax overhaul but rather a tax cut. This means that it is only going to be short term and would most likely expire after 5 – 8 years, just like the Bush tax cut did.
    Because it going to be short term, Corporations will not take the risk of moving money back into the country only to be caught up in another governmental squeeze or change of regulations under another president.
    2. Google and Apple’s biggest markets are The Asian and Indian markets, so why would they move money back. They would rather keep their money back in those countries and not pay any taxes.
    With regards to taking these funds and investing it in the US, we all know that companies are NOT investing in themselves, but rather are buying back their own stocks and paying investor dividends years in advance by borrowing money instead of using their cash…Nobody is talking about the 25% pass through expenses. It appears that businesses that produce goods will not be benefiting, only the service industries like real estate would. So again, this is going to benefit the wealthy since may own real estate
    Taking way personal deductions like the property tax & mortgage interest deduction, homeowner exemption of $250k for single person and $500k for married couple would make this tax cut moot for middle class. So basically, they are reducing the tax brackets on one hand taking these benefits on the other hand.


  3. redchevy4 October 5, 2017

    Raising the CTC to $5,000. would be a great help to middle class families.(please don’t sell your kids to the circus, you’d miss them)
    Repatriation of funds back to the US, if reinvested in this country, would greatly help grow the economy, perhaps decreasing the impact of default in the future.


  4. KAREN MILLER October 5, 2017

    Giving away money via the child tax credit does stimulate the economy, but it increases the burden on the tax payer which is eventually going to be those same children whose parents received the child tax credit. IF there is one thing America does NOT need more of, it is debt which will be increased if the child tax credit is increased. I personally feel if people cannot afford to properly feed, clothe and education children, they should not be having those children at the tax payers expense.


  5. James October 5, 2017

    The purpose of holding money is to facilitate planned transactions, more money will be held the greater is the volume of transactions planned. Second since it is the real quantities of goods and services that people care about, not their nominal values, the relevant quantity of money demanded will be expressed in real terms. If the government wants people to have children it should make it more affordable to do so.


  6. Phil Issenberg October 4, 2017

    1st. I believe in your research analysis and how you deliver it. I have asked several questions and to the best of
    my knowledge, never received an answer.

    2nd. I am an investor now in the market. I retired in January after 50 years in a successful custom gold & diamond
    business. I have dealt in gold in 7 figures during the first Au run in 1980-81. Times are different today.

    3rd. I asked a very specific question about SBGL two times. It has not been answered yet. Why not????


    • Sean Brodrick October 5, 2017

      Hi, Phil. We can’t answer specific investment questions about stocks you own. We are publishers, not investment advisers. Sorry.


  7. tommr October 4, 2017

    OMG! I can’t believe that you, who I presumed to be a proper capitalist, want other people to pay for the raising and education of YOUR children! Or anybody else’s children either! Anyone who doesn’t have the resources to support children, has no business having any! That is except in a collectivist state.


  8. Gen M October 4, 2017

    For those who believe strongly in global warming, realize if humans are the cause, it is 100% due to too many people on the planet. Keep the IRS out of welfare, a large family is a choice, if you can’t pay for it don’t do it. I could live with a progressive tax that gives a $2500 credit for 1 child (none refundable), $1000 for the second, any more are on you. By the way, taxpayers already pay for K-12 education, it is up to the parents to “raise” them till they get there. What part of $20 trillion in debt already isn’t sinking in, it will for our kids.


  9. Brian Wilkie October 4, 2017

    I think the tax plan outlined is a joke. From the child tax credits with 1 thousand refundable , you would be lucky to break even with one child . With more than one a big loss. Tax rate , who owns the majority of stock who’s money will be brought back.. While the middle class taxpayer would receive some benefits the billionaires including the President would more then take a majority of the money. If this passes it will kill the middle class forever and you can bet even with all his lies the President and his money friends would benefit greatly. A tax scam in the making on the backs of the middle class. I feel the article is nothing but fraud.


  10. Conway Andersen October 4, 2017

    Should the federal government subsidize couples having children? You are correct that the $1,000 is not enough to raise a child. That should go into your own family planning. Do you want to encourage couples to have more children by paying them more money? Americans like receiving “free” government money. Eventually the financial burden will be left to all of our children.


    • michael October 5, 2017

      Absolutely right. I don’t want to pay for raising your kids. I already paid for my own (grown, thank God).You want to have children? Fine, you pay for them, not the taxpayer.