Yet Another Reason The Tax Bill Stinks

It’s just like Wall Street (and its mouthpiece, The Wall Street Journal) to get all lathered up over supposed tax reform that has little more going for it than the usual heap of manure we’ve come to expect from Congress.  I made this point recently in discussing some fine print in the tax bill that would keep the alternative minimum tax for corporations. It were as though the Magna Carta had retained a provision that shoplifters be drawn and quartered in the public square.  So what else is in the fine print?  Today we learned, for one, about a provision that would deny equity investors the ability to choose which shares they sell to reduce a position. Now, whatever they unload will be reckoned for tax purposes on a first-in, first-out basis — a process that is guaranteed to raise one’s tax bill if the stock has been rising. The change is likely to stimulate significant year-end selling ahead of the new law.

Business As Usual On The Hill

And here’s the kicker: If we needed further proof that we are represented solely by jackasses on Capitol Hill, it is this: The FIFO measure would raise a paltry $2.4 billion over the next ten years.  Notes the Journal, “Some money managers and analysts say there has been so little discussion of the [change] that investors may be surprised to learn that [it] could reduce — or even wipe out — what they would save from an income tax reduction.”  In the meantime, the spectacle of the stock market climbing vertically in anticipation of all the wonderful things the tax bill supposedly will do for the economy would be a joke if it weren’t going to prove so costly for so many.  When Congress promises “tax cuts for the middle class,” we should skip the celebration and hold onto our wallets.

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