The Senate worked overtime over the weekend to pass its version of tax reform by a razor thin margin of 51 to 49 votes. This puts the U.S. much closer to seeing tax reform passed, possibly in 2017.
However, there are many differences between the tax reform bills generated from the House and the Senate.
Some of the major dissimilarities include the repeal of the individual mandate for healthcare in the Senate version, differing number of tax brackets for individuals and if they expire, how student loan interest is handled, when the corporate tax rate cut to 20% will become effective, and how the estate tax is handled.
The next step is for this bill to go into conference committee. This committee will look to “reconcile” the differences between the two bills, which basically means the committee will write a compromise bill. Congress will then vote on that new version. Members of Congress will also be looking to see how this committee's version will affect the deficit.
Also last week, data showed the U.S. economy grew 3.3% in the third quarter (July, August, September), a quicker rate than initially estimated. Simply Money Advisors believes the U.S. economy will grow around 2.5% in the final three months of the year, bringing total growth for all of 2017 also to about 2.5%.
Additionally, a report on the manufacturing industry showed the industry's health continues to improve thanks to strength in production, new orders, and employment.
This week, Wall Street will be eagerly anticipating the release of the November jobs report on Friday, December 8th. This report will be the first “clean” report since August before Hurricanes Harvey and Irma skewed the data.
Economists expect a report saying the U.S. economy added 199,000 new jobs in November and that the unemployment rate held steady at 4.1%. Jobs continue to be a pillar of strength in this 8-year economic expansion.
The Simply Money Point
With tax reform becoming more of a reality, the best way for you to take advantage of it is to make sure the investment portion of your financial plan is aligned with your financial goals and risk tolerance. Simply Money Advisors believes the higher corporate profits that will come from the cut in corporate taxes will help to push stock prices higher in the months ahead.