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28 Feb 2018

Taxation: Game Changer

Growth asset prices (both property and shares) are stretched and defensive asset prices (bonds) are also stretched when compared to their long term mean or average.

Question, could this bull market in the United States (third longest in history) go longer?

Answer, yes given that on 22nd December 2017 the United States signed into law the reduction of the corporate tax rate from 35% to 21%.

This is big.

This is a 40% reduction on the amount of tax that a business currently pays the Internal Revenue Service.

This is extremely good for companies that generate most of their income in the United States and for non-US companies with significant earning in the United States.

It permanently raises after-tax earnings and cash flow which is likely to result in more capital investment and increased dividends to investors.

Click to view.

This could end up being the key game changer that keeps the current bull market in the United States going longer and asset prices stretching further.


At Newealth we are always looking to support and promote our clients wherever possible and if you have any ideas or comments, please feel free to email me or to call me on +61 2 9267 2322.

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