Happy Halloween. The next few days will surely provide a few tricks, and treats, depending on the thickness of your wallet. Here are a few tricks and treats to look for in your candy bag:
Affordable Care Act (ACA) — Tomorrow (November 1) marks the beginning of the the 2018 open enrollment period for people buying their healthcare insurance through state and federal healthcare insurance marketplaces.
Sorry, only tricks here. President Trump's decision to cease cost sharing reduction payments caused ACA insurance providers to substantially raise most of their rates. My family's healthcare annual insurance premium is going up $3,520 (27%).
Below are links to state and federal healthcare marketplaces that are relevant to many of my readers:
- California: coveredca.com
- Oregon: healthcare.oregon.gov
- Texas & states without their own marketplaces: healthcare.gov
GOP Tax Plan — Also tomorrow (November 1), House Republicans are scheduled to release their long-anticipated tax-reform bill [Correction: Late Tuesday night, House Republicans delayed their scheduled release of their bill until Thursday]. I speculated on the likely "tricks" and "treats" of the GOP tax plan in my October 11th CIO Commentary, but now we have more leaked information upon which to speculate. Consider these incremental/corrective to what I wrote in my CIO Commentary:
US expats may be in for a treat if the rumors that the US will ditch citizen-based taxation in favor of residence-based taxation, which the rest of the world uses. Another possible treat may be in store for my readers with high property taxes — the talk is that property tax deductions will preserved.
But my high tax state (e.g. California, Oregon, New York) readers will be scared to see that they likely won't be able to deduct their state income taxes. And my high earning readers could also received a fright from a new, higher income tax bracket, possibly even higher than the current 39.6% rate. But with a much lower tax rate on the companies they invest in, these high earning readers may still come out ahead under this plan. This will definitely be the case if they can move their services to their employer to the form of an limited liability company (LLC) or sole proprietorship, which will have its highest tax rate capped at a very attractive 25%.
The biggest fright may very well come from a massive reduction in deductible contributions to company retirement plans [e.g. 401(k), 403(b)]. Under current law, workers under 50 can make $18,500 in deductible (e.g. pre-tax) contributions to their company retirement plans in 2018, but the GOP tax plan is rumored to cut this back to $2,400. Roth contributions (i.e. after-tax) contributions, however, are rumored to remain. This "trick" allows the GOP to effectively pull tax revenue from the future into the present — or in other words, transfer wealth from the young to the old.
Fed Pick — President Trump is expected to announce his pick for Federal Reserve chair on Thursday (November 2). Current Fed Governor Jerome Powell is widely expected to be Trump's pick. Powell is seen to continue the accomodative policies of the Janet Yellen-led Fed, and thus is a "treat" for investors. However, don't expect the market to jump on Thursday if Powell is announced because the markets have already priced in the news — i.e. they've already eaten the candy. The scary scenario for investors is if Trump chooses John Taylor, who markets believe will be more aggressive in raising rates. Current chair, Janet Yellen, is still in the running and would likely fall in the Powell camp on the trick or treat spectrum.
So enjoy trick or treating with your little ones tonight, or watching the roller coaster that is call the 2017 World Series (Go Astros!). And brace yourself for the tricks and treats still to come tomorrow, and the day after tomorrow.