Start the conversation
The responses to last week's "Why Trump's Tax Plan Is a Slap in the Face to the Middle Class" were incredible and thought-provoking… Many of you agreed with my position, and many didn't, but just about everyone had something useful and intelligent to say.
Today, I'll address a few that left me eager to respond.
Q: I read an article explaining that Trump's corporate tax plan is all a bunch of smoke and mirrors as well. The average S&P 500 company pays an effective tax rate somewhere between 10-20% (rough numbers as I don't remember the exact number). With all the loopholes and deductions, they pay nowhere near the 35%. So, basically, the premise was that lots of businesses will actually see tax increases.
It all goes back to the fact that Trump misrepresents just about everything he talks about. He is as big a liar as the rest of the politicians. It will be interesting to see how long it takes the masses to catch on… – SS
A: It's not fair to say the president's business tax plan is all smoke and mirrors. We haven't seen it fully fleshed out.
I believe we agree the so-called 35% top corporate rate isn't paid by many, because with deductions, credits, etc., their effective tax rate is about 14%.
Lowering the rate to 15% I think is too aggressive right out of the gate. Because the wealthy own most of this country's big producing assets (corporations) and manage them for exorbitant compensation (including stock options), it makes more sense to lower the corporate tax rate to a flat 25% while eliminating most deductions for two years starting in 2018.
Then, we lower it to 20% in 2020, then to 15% in 2023. Also, it makes sense to graduate the tax rate based on net profit. If we want to be fair to small businesses and startups, their tax rates should be lower and increase as they hit net profit milestones. That's essentially the same proposition as lowering the burden on individuals who don't make a lot. It makes business sense to let small and growing businesses keep more of what they make to hopefully expand.
Q: I agree with you, Shah, but as a middle class taxpayer with no children and relatively normal investments, my main desire is ACTUAL tax simplification. Why do I have to spend several hours a year figuring out how much I owe or how much of a refund I should get? I should get a bill or a credit notification from the federal government, along with a form allowing me to add or subtract things that are not reported or have been reported incorrectly, and changing the total accordingly. THAT would cut the budget for the IRS to nearly nothing. Frankly, if the amount is not completely out of line, and I agree with what the government records…
About the Author
Shah Gilani boasts a financial pedigree unlike any other. He ran his first hedge fund in 1982 from his seat on the floor of the Chicago Board of Options Exchange. When options on the Standard & Poor's 100 began trading on March 11, 1983, Shah worked in "the pit" as a market maker.
He helped develop what has become known as the Volatility Index (VIX) - to this day one of the most widely used indicators worldwide. After leaving Chicago to run the futures and options division of the British banking giant Lloyd's TSB, Shah moved up to Roosevelt & Cross Inc., an old-line New York boutique firm. There he originated and ran a packaged fixed-income trading desk, and established that company's "listed" and OTC trading desks.
Shah founded a second hedge fund in 1999, which he ran until 2003.
Shah's vast network of contacts includes the biggest players on Wall Street and in international finance. These contacts give him the real story - when others only get what the investment banks want them to see.
Today, as editor of 10X Trader, Shah presents his legion of subscribers with the chance to earn ten times their money on trade after trade.
Shah is also the proud founding editor of The Money Zone, where after eight years of development and 11 years of backtesting he has found the edge over stocks, giving his members the opportunity to rake in potential double, triple, or even quadruple-digit profits weekly with just a few quick steps.
Shah is a frequent guest on CNBC, Forbes, and Marketwatch, and you can catch him every week on Fox Business's "Varney & Co."
He also writes our most talked-about publication, Wall Street Insights & Indictments, where he reveals how Wall Street's high-stakes game is really played.