In the parlance of the kids, it’s about to get real. After all the hemming and hawing, gnashing and wailing, the tax bill (apparently) is set to pass. Not only does it preserve pretty much everything good about tax-advantaged retirement accounts, it’s favorable in other, admittedly roundabout, ways.
The Wall Street Journal reports the 21 percent corporate tax rate is a lock. Ideological arguments over income inequality aside, it means businesses will invest—big time. Capital deployment is rarely bad for economic and wage growth, although controversy over the merits of trickle-down economics will surely be renewed.
The corporate tax cut takes effect almost immediately (Jan. 1) which means the benefits will be felt that much sooner. More money means more savings, at least in theory, and even if deferral rates stay static, dollar contributions will nonetheless rise.
For all the talk of presidential incompetence and do-nothing Congress, this is the one that counts. A politically advantageous “Trump Bump” is offsetting a portion of the Twitter insanity, and positive ramifications of Tuesday’s planned action will be felt right around the fall of 2018, an electoral coincidence even traditional holdouts like Susan Collins, R-Maine, can’t ignore.
“Overall, the business community is very pleased with the bill,” Neil Bradley, chief policy officer at the U.S. Chamber of Commerce, told the paper. “If someone would have said 11 months ago, by the end of the year we’d able to produce a bill and get it to the president’s desk that does these things, skepticism would have been sky high.”
Of the 21 percent tax rate specifically, Bradley didn’t mince words. “That’s a home run, there’s no other way to look at it.”
Lord knows, there are plenty of other policy prescriptions to protest, but when it comes to the business and investing environment, we agree.
“How’s your 401k doing?” President Trump recently, and rhetorically, asked.
By all accounts, soon to be much better.