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.
Susan Willett is the director of trust services and oversees all aspects of trust administration for Old North State Trust, LLC. Old North State Trust, a North Carolina chartered trust company, provides: asset management services; income, estate and trust tax consulting; retirement planning and administration; and trustee and estate services to both individuals and businesses. Old North State Trust professionals have many years of experience and for over a decade have assisted clients in identifying and reaching their financial goals. For more information, visit www.oldnorthstatetrust.com or call 910-399-5470.
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