Following November’s presidential election, I offered some thoughts about how investors should perceive the uncertainties of a new administration.

Since then, we know more about who President-elect Donald Trump hopes to name to key positions and some of his direct-impact economic proposals. Some will fall under Trump's direct control; other depend on what Congress does with his budget and tax proposals.

One very important policy issue involves the Securities and Exchange Commission (SEC) and its makeup under a Trump administration. In recent news analyses, The Wall Street Journal has projected that newly appointed SEC members will likely reverse some Obama administration policies that affect the stock, bond and commodity markets.

High on that list are various rules put in place after the 2008-09 financial crisis, notably under the Dodd-Frank Act. Where expert observers admit some uncertainty, though, is how the likelihood of business-friendly regulators paring back some of those rules stacks up against what Trump had to say during the campaign.

Many of his public pronouncements were highly critical of Wall Street and financial elites. They were targets of campaign rhetoric about Wall Street’s negative impacts on ordinary citizens and small businesses.

Will the SEC’s enforcement regime change under the Trump administration? Probably not, the Journal predicted. More likely is initiatives from the past eight years of a Democratic administration will be reversed, such as limits on compensation for corporate executives.

Another prominent Trump promise was to reform the federal tax code. While just about anybody on either side of the aisle in Congress will say they want to do just that, the particulars – whose favorite loopholes get closed and which arcane provisions remain in place – have the potential to create hundreds, if not thousands, of bitterly fought battles.

That means that actually rationalizing and simplifying the tax code, which everybody favors in principle, may be less likely than changes to the basic rate structure. And that is at the core of Trump’s tax proposals.

Those include:

• Reducing marginal income tax rates for individuals and corporations. That would leave just three individual tax brackets – 12, 25 and 33 percent for ordinary income. Capital gains brackets would remain unchanged at zero, 15 percent and 20 percent. The standard deduction would more than double for individuals and couples, but personal exemptions would be abolished. Itemized deductions would be capped at $100,000 for individuals and $200,000 for couples.
• Reducing the corporate tax rate from 35 to 15 percent. What remains unclear is whether that would apply to all businesses or just those “C” corporations that pay income taxes directly. Under current law, other types of business, “S” corporations and partnerships pass income directly to their owners, where it is taxed at individual rates.
• Abolishing what remains of the federal estate tax. In its place, beneficiaries would be subject to income tax on gains to inherited assets if or when they are sold, but only above $5 million for individuals and $10 million for couples.
• Repealing the Alternative Minimum Tax. The tax was first enacted to ensure that, despite loopholes, the wealthiest individuals and corporations can’t completely avoid federal taxation. Inflation over the last several decades has meant the AMT is now catching more taxpayers with moderate incomes, making it increasingly unpopular in Congress.
• Repealing the “Net Investment Income Tax” (NIIT). The NIIT is currently at 3.8 percent.
• Taxing so-called “carried interest” at ordinary income tax rates. This is a proposal specifically aimed at certain ultra-high-income Wall Street types such as hedge fund managers.

Economists who have analyzed these proposals project they would reduce federal revenue by $6.2 trillion over 10 years and add $7.2 trillion to the federal deficit.

Those numbers could, of course, be reduced by cuts to federal spending, but history tells us that - whether enacted by Republican or Democratic majorities in Congress - tax cuts have never been fully offset by spending cuts.

The president-elect has argued his proposals will spur sufficient economic growth to more than make up for anticipated revenue losses. At the individual level, the Trump tax plan would save moderately high-income people – those in the $143,100 - $292,100 bracket – an average of $4,300 a year. For the 0.1 percent (those earning more than $3.8 million), the tax savings would average $1.07 million in 2017.

Republicans in the House of Representatives have proposed their own tax-reform package, which shares many - but not all - of Trump’s proposal features. Its impact, economists have projected, would be to reduce federal revenue by $3 trillion over 10 years, adding $3.1 trillion to the federal debt. The House proposal would save those moderate-income taxpayers ($143,100 -$292,100) far less than the Trump plan - just $340 a year on average. But the top 0.1 percent would come out even better, saving an average of $1.2 million each.

While both Republican and Democratic leaders in Congress say they expect to enact some version of tax reform in 2017, the devil is always in the details.Expect Democrats to put up stiff resistance to any plan that benefits the top one percent more than those in the middle. And unless both the White House and Congress are able to find common ground on the specifics, the status quo may remain in place for the foreseeable future.

Watch for anything being proposed as genuinely bipartisan, which may have a reasonable chance of becoming law. On the other hand, proposals that may appeal to the middle might also attract opposition from the more extreme wings of either party.

Another factor worth keeping an eye on is that, depending on what Congress does, one result could be to affect inflation rates. And if inflation starts to creep up, the Federal Reserve would almost certainly raise interest rates.
The Fed has already projected that it will bump up rates in three increments next year. So, anything that will speed up the economy is likely to affect interest rates, which in turn will affect bonds and some other financial markets.

In the meantime, when it comes to adjusting your individual tax and investment strategies, I’ll always advise remaining flexible and open to a wide range of possibilities. Remember, as I said in December, the most certain thing when it comes to government is uncertainty.