Seth is back with another installment of “What’s New(s)?”  highlighting the topics that he’s following closely which might have an impact on you, as well as some others that he thinks you might find interesting or fun. 

Editor’s note:  This blog post was supposed to go live last month.. but I forgot to set the publish time ~ Ivan.

Times of market volatility can be stressful, but it’s important to take a step back and think about things through the appropriate lens.  Take a look at this Twitter thread by Brian Feroldi highlighting 10 charts that every investor needs to memorize.  My personal favorites:

  • Jeremy Siegel’s chart on total real return by indexes from 1802-2013

  • 20 year annualized return by asset class – note the average investor return of 1.9%.  “Investors can be their own worst enemy”!

  • There will ALWAYS be a smart-sounding reason to sell… But it rarely works out.  A major reason why the average investor has such an abysmal return profile!

  • Ignore forecasts

The Inflation Reduction Act

Sen. Joe Manchin agreed in principal to the Inflation Reduction Act of 2022 which kicked things into hyperdrive last week.  The bill has measures to combat inflation and reduce energy/healthcare costs.  From a tax perspective, the bill is absent many of the proposed changes that were found in the Build Back Better legislation from last year which is good news for individual taxpayers.  Here are the key tax provisions found in this new bill:

  • Corporate minimum tax on corporations that exceed a $1B financial statement income threshold

  • Many new/extended clean energy incentives (including an extension of the popular residential energy credit for electric vehicle purchases from certain eligible automakers)

  • IRS funding to increase enforcement

  • A 1% excise tax on stock buybacks

  • The initial draft had changes re: carried interest benefits, but those have been removed courtesy of Sen. Sinema as of 8/4

Now that the bill has passed in the Senate it will head to the House.

The downside of the Inflation Reduction Act of 2022 for high income households that live in states with large property and state income taxes is that the bill doesn’t include any relief for the $10k limit on deducting state and local taxes (SALT).  Reps who have led efforts to remove or increase the SALT-cap limit have indicated that they will vote for the bill as currently written which means this provision is likely to remain in effect until TCJA sunsets in 2026.

Massachusetts has debated a millionaires tax for years and they are now leaving it up to the voters.  The Fair Share Amendment would tack-on an additional 4% on any income/earnings over $1MM.  The Fair Share Amendment will appear as Question 1 on the ballot on November 8 for MA voters.

Stock Volatility

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