While discussing the recent job report and unemployment rate, Alex Brill said “it’s a phenomenal number in terms in job creation. Unemployment rate another phenomenal number. Our unemployment rate is basically stuck at 4.1. Last time it was five months in a row was back to 2012 when it was double the rate it is today. So we are seeing an economy near full employment with numbers that are really surprising this late in the cycle.”
“Those with a college degree or more have been enjoying a relatively tight labor market for a long time with unemployment rates near 2%. But it’s those with high school or less than high school degrees that had very high unemployment rates that now have the lowest unemployment rates they have ever seen around 5%. So things are pretty good across the spectrum both geographically and by the education dynamic.”
“Tax returns aren’t due for about 15 months until April 2019 and in that time IRS is going to put out guidance that is necessary. Particularly for this pass through provision which undoubtedly will involve some complications. But generally speaking, I think [with this tax reform] we are not aware of any loopholes or true drafting errors yet. We will see in the next weeks and months if anything opens up.”
“I think it is a historic moment and a fundamental change in the tax system in the United States primarily for one provision in particular – the change in the corporate tax rate from 35% down to 21%. Overall there’s probably close to 100 provisions, there is 500 pages to this bill. So there are lots of changes. I don’t love every single one of them and I am concerned about the deficit impact this bill will have. But I do think it’s going to drive a lot of investment into the United States. It’s going to make a lot of US firms more competitive globally.”
“There are all sorts of changes, international, regular C Corp, these pass through provisions for smaller businesses, and of course on the individual side. Everyone is going to be affected. The truth is, I think a lot of the middle class are going to be affected by a relatively small degree. The code is changing in many ways. Most of them will be better off, can’t guarantee that everyone will be better off…. I think the complexity of the tax code is shifting from the middle class, they’ll have a simpler system, but it’s shifting up to higher income individuals. And for many high income individuals, this pass-through provision is going to be more complex for them.”
“The bills both in the House and the Senate not only reduce the corporate C corporation tax rate from 35 to 25%, the issue we have been discussing, but both bills create a lower tax rate for pass through businesses: sole proprietorships, S corps, LLCs. Not all LLC’s will get that pass through. Not all pass throughs will get that break. But there is a large explicit tax break for small businesses. With respect to the question about deductions, those deductions will remain. Business deductions will remain deductible. Other deductions for individuals, some of them are being curtailed, but not on the business side.”
