Post by ferris1248 on Sept 13, 2024 10:50:25 GMT -5
Interesting article.........
"If I were going to cut the exposure to U.S. stocks in my 401(k), it would be because they are so expensive, or because Wall Street is so complacent. Both things make me nervous."
"But here’s a factor I wouldn’t include: Whether or not Kamala Harris may be the next president of the United States. No, not even when she openly says she wants to raise corporate taxes."
"I am not making a political point. It is always a bad idea to mix politics and money. Anyway, I’m an active member of the “green” party — and not the one that includes Jill Stein. I want to make money in my retirement portfolio, and I don’t want to lose it. Simple, really."
"The key Harris proposal that has some investors worried is her plan to raise corporate taxes. Harris has said she wants to raise the top rate of corporate tax from 21% to 28%. (Trump wants to cut it still further, to 15%.) And as president she’d have clout to do it, even with a Republican Congress; otherwise, the 2017 Trump tax cuts will expire at the end of next year. If that happens, the rate will go back to 35%."
"Apparently, some on Wall Street are worried. Strategists reckon the move would cut S&P 500 earnings by 5%."
"If true, should this matter?"
"My initial assumption was: Yes, this would be negative for the market. It sounds intuitive, right? You tax corporations more heavily, and their after-tax net income goes down."
If only life were so simple."
"Fact-based analysis requires actual facts — and actual analysis."
"So I went to the website of New York University’s Stern School of Business to get the real, after-inflation returns on U.S. stocks for every year going back to the Great Depression.
Then I went to the White House website and downloaded the data about the corporate tax burden in each of those years. Their numbers went back to 1934."
"You can’t just go by the top or headline rate of corporate income tax, because any company actually paying that should fire its accountants. The government watchdog, the Government Accountability Office, found a while back that between 2008 and 2012, “between 18% and 24% of all profitable large corporations had no federal income-tax liability,” even though the official top rate was 35%."
"So I looked at corporate income taxes as a share of U.S. gross domestic product. This is the same measure used by the Congressional Research Service when looking at the corporate taxes over the decades."
"And once I had those two sets of numbers — the corporate tax burden each year, and stock-market returns — I put them together."
"And you know what? As the late Gertrude Stein supposedly said, “There is no there there.” There is no meaningful correlation between the tax burden on U.S. corporations and the returns you earned as a stock-market investor. None."
"Counterintuitive, sure. But facts are facts."
"For statisticians, the coefficient of correlation was 0.09. That’s on a scale from minus 1 (a perfectly inverse correlation) to 1 (a perfect correlation). In other words, it’s almost exactly in the middle: near-perfect uncorrelation. That’s like tossing a coin and rolling a die, over and over again, and seeing how the two sets of results relate. They don’t."
"And when I compared the corporate tax burden in each year with the stock-market return in the next year, to see if there was a lag effect, the correlation went down further, to 0.04."
"How can this be? Stock-market strategist Joachim Klement, a managing director at Panmure Liberum in London, explains that when we look at the cost of corporate income taxes, we are missing the other half of the story: Where that tax money goes."
"It goes to government spending, or to households, or to cut government borrowing, he points out. And all three, through different ways, boost corporate profits."
“Changing corporate tax rates are essentially a means to redistribute corporate profits from one group of companies to another,” Klement wrote in a recent research note. “The net impact on corporate profits across an economy tends to be essentially zero.”
"But there’s no correlation between the president’s political party and the returns on the stock market. The market boomed under Roosevelt, a very liberal Democrat, and Ronald Reagan, a conservative Republican. It was dismal under Jimmy Carter, a Democrat, and also under Richard Nixon, a Republican. George W. Bush was an aggressive tax-cutting, pro-business Republican; U.S. stock returns over his eight years in office were terrible — yes, even before the 2008 crash."
"When Barack Obama was elected president in 2008, a legion of conservative individual investors fled the stock market, predicting he would drive the economy, and stocks, to wrack and ruin."
"They missed out on a chance to triple their money in eight years. No kidding: Total returns from Obama’s inauguration to his departure from the Oval Office were 200%, including dividends."
"Some liberals did much the same when Trump took over. Returns over the next four years: 83% (again, including dividends)."
"But there’s no correlation between the president’s political party and the returns on the stock market. The market boomed under Roosevelt, a very liberal Democrat, and Ronald Reagan, a conservative Republican. It was dismal under Jimmy Carter, a Democrat, and also under Richard Nixon, a Republican. George W. Bush was an aggressive tax-cutting, pro-business Republican; U.S. stock returns over his eight years in office were terrible — yes, even before the 2008 crash."
www.msn.com/en-us/money/markets/would-kamala-harris-s-corporate-taxes-be-bad-for-your-401-k-the-answer-may-surprise-you/ar-AA1qtuwC?ocid=msedgdhp&pc=u531&cvid=c321200983c24cdeb9352c2668d62111&ei=21
"If I were going to cut the exposure to U.S. stocks in my 401(k), it would be because they are so expensive, or because Wall Street is so complacent. Both things make me nervous."
"But here’s a factor I wouldn’t include: Whether or not Kamala Harris may be the next president of the United States. No, not even when she openly says she wants to raise corporate taxes."
"I am not making a political point. It is always a bad idea to mix politics and money. Anyway, I’m an active member of the “green” party — and not the one that includes Jill Stein. I want to make money in my retirement portfolio, and I don’t want to lose it. Simple, really."
"The key Harris proposal that has some investors worried is her plan to raise corporate taxes. Harris has said she wants to raise the top rate of corporate tax from 21% to 28%. (Trump wants to cut it still further, to 15%.) And as president she’d have clout to do it, even with a Republican Congress; otherwise, the 2017 Trump tax cuts will expire at the end of next year. If that happens, the rate will go back to 35%."
"Apparently, some on Wall Street are worried. Strategists reckon the move would cut S&P 500 earnings by 5%."
"If true, should this matter?"
"My initial assumption was: Yes, this would be negative for the market. It sounds intuitive, right? You tax corporations more heavily, and their after-tax net income goes down."
If only life were so simple."
"Fact-based analysis requires actual facts — and actual analysis."
"So I went to the website of New York University’s Stern School of Business to get the real, after-inflation returns on U.S. stocks for every year going back to the Great Depression.
Then I went to the White House website and downloaded the data about the corporate tax burden in each of those years. Their numbers went back to 1934."
"You can’t just go by the top or headline rate of corporate income tax, because any company actually paying that should fire its accountants. The government watchdog, the Government Accountability Office, found a while back that between 2008 and 2012, “between 18% and 24% of all profitable large corporations had no federal income-tax liability,” even though the official top rate was 35%."
"So I looked at corporate income taxes as a share of U.S. gross domestic product. This is the same measure used by the Congressional Research Service when looking at the corporate taxes over the decades."
"And once I had those two sets of numbers — the corporate tax burden each year, and stock-market returns — I put them together."
"And you know what? As the late Gertrude Stein supposedly said, “There is no there there.” There is no meaningful correlation between the tax burden on U.S. corporations and the returns you earned as a stock-market investor. None."
"Counterintuitive, sure. But facts are facts."
"For statisticians, the coefficient of correlation was 0.09. That’s on a scale from minus 1 (a perfectly inverse correlation) to 1 (a perfect correlation). In other words, it’s almost exactly in the middle: near-perfect uncorrelation. That’s like tossing a coin and rolling a die, over and over again, and seeing how the two sets of results relate. They don’t."
"And when I compared the corporate tax burden in each year with the stock-market return in the next year, to see if there was a lag effect, the correlation went down further, to 0.04."
"How can this be? Stock-market strategist Joachim Klement, a managing director at Panmure Liberum in London, explains that when we look at the cost of corporate income taxes, we are missing the other half of the story: Where that tax money goes."
"It goes to government spending, or to households, or to cut government borrowing, he points out. And all three, through different ways, boost corporate profits."
“Changing corporate tax rates are essentially a means to redistribute corporate profits from one group of companies to another,” Klement wrote in a recent research note. “The net impact on corporate profits across an economy tends to be essentially zero.”
"But there’s no correlation between the president’s political party and the returns on the stock market. The market boomed under Roosevelt, a very liberal Democrat, and Ronald Reagan, a conservative Republican. It was dismal under Jimmy Carter, a Democrat, and also under Richard Nixon, a Republican. George W. Bush was an aggressive tax-cutting, pro-business Republican; U.S. stock returns over his eight years in office were terrible — yes, even before the 2008 crash."
"When Barack Obama was elected president in 2008, a legion of conservative individual investors fled the stock market, predicting he would drive the economy, and stocks, to wrack and ruin."
"They missed out on a chance to triple their money in eight years. No kidding: Total returns from Obama’s inauguration to his departure from the Oval Office were 200%, including dividends."
"Some liberals did much the same when Trump took over. Returns over the next four years: 83% (again, including dividends)."
"But there’s no correlation between the president’s political party and the returns on the stock market. The market boomed under Roosevelt, a very liberal Democrat, and Ronald Reagan, a conservative Republican. It was dismal under Jimmy Carter, a Democrat, and also under Richard Nixon, a Republican. George W. Bush was an aggressive tax-cutting, pro-business Republican; U.S. stock returns over his eight years in office were terrible — yes, even before the 2008 crash."
www.msn.com/en-us/money/markets/would-kamala-harris-s-corporate-taxes-be-bad-for-your-401-k-the-answer-may-surprise-you/ar-AA1qtuwC?ocid=msedgdhp&pc=u531&cvid=c321200983c24cdeb9352c2668d62111&ei=21