Democracy Dies in Darkness

Economy | Perspective

The Dow nears 25,000, the ‘death tax’ lives and other 2017 surprises

By Allan Sloan

December 31, 2017 at 11:55 AM

A cleaner sweeps the floor after the closing bell for the final day of trading for the year at the New York Stock Exchange. (Andrew Kelly/Reuters)

We all handle the end of the year in different ways. One of my customs is to reread what I've written during the past 12 months, own up to mistakes of commission and omission that I haven't already corrected and give you brief updates on some of the things I've discussed.

It's been a much more interesting stock market year than I expected. In early January, I wrote about the prospect of Dow 20,000. Now, we're looking at Dow 25,000. I sure didn't expect that, but I'm happy to see it.

Related: [Why this obsession with Dow 20,000 is silly]

I've had to stop cackling about how much better the Dow Jones industrial average would have been doing had the Dow selection committee not replaced AT&T; with Apple in 2015. Apple's price promptly started falling, AT&T;'s rising.

But when last I looked, Apple was up about $60 for 2017 — more than AT&T;'s entire stock price of about $39. Having Apple rather than AT&T; has boosted the Dow by more than 400 points. For the Dow, Apple is no longer an iFiasco.

I predicted that the Republicans and President Trump would press hard to end the estate tax — a simple and obvious call. Killing what they falsely call the "death tax" is a Republican obsession and could conceivably save Trump's heirs $1 billion or so in taxes. That was one of five potential benefits for Trump — which I called the Trump Tax Fivefecta — that I wrote about in early November, with help from my Washington Post colleagues. People are now rehashing that stuff.

Related: [How the GOP could repeal the estate tax — and rip off 99.8 percent of us]

I was pleasantly surprised that rather than wipe out the estate tax, which would have been the ultimate gift to the plutocracy, Congress merely — merely! — doubled the amount exempt from tax to $11 million for a single person and $22 million for a couple.

But watch. Even though probably fewer than 1 of every 1,000 estates — down from 1 of every 500 — will now be liable for the tax, it won't stop the whining about "double taxation." However, that's rarely the case when it comes to huge fortunes. For example, Warren Buffett — who, to his credit, is donating almost his entire net worth to charity — hasn't paid gains tax on the massive growth in the value of his Berkshire Hathaway shares over the past 50-plus years.

Related: [A tax cut bill only Donald Trump could love]

Apologies for writing sloppily that the tax cut bill that Trump and Congress just crammed down our country's throat benefits "the rich." In fact, some people — including friends of mine — who knock down huge salaries and bonuses and live in high-tax areas are going to be hurt badly because they're losing almost the entire benefit from being able to deduct state and local income taxes. Therefore, they face substantial federal tax increases.

Related: [The GOP has some real chutzpah]

I should have drawn this distinction earlier and been more careful in my language.

I also owe an apology to David Cay Johnston, a well-known tax journalist who's a friend and a former Detroit Free Press colleague. David has been saying for years that the alternative minimum tax that ensnared millions of people like me who don't own anything resembling a tax shelter wasn't the same thing as the minimum tax Congress adopted in 1969 following revelations that some high-income people used shelters to avoid paying the IRS a penny.

A tax maven told me recently that David was right and that the AMT — which under the new law will theoretically apply only to incomes much higher than mine — was a noxious byproduct of the widely praised 1986 tax overhaul. I had paid no attention to the distinction David drew. But I should have.

I had a lot of fun writing an irreverent column, inspired by one of my neighbors, predicting that Amazon.com will put its second headquarters in Toronto rather than the United States

Related: [Why Trump might be driving Amazon HQ2 to Canada]

I said that the difference between the way Canada welcomes high-end immigration and the way Trump is trying to limit it could help spark a decision by Amazon to go Canadian. And that Amazon chief executive Jeffrey P. Bezos (who owns The Washington Post but had no input into that column or this one) might say so publicly if he picked Canada. Alas, I think the odds of my being right about Toronto are improving. About Bezos, who knows?

Now, a follow-up to a follow-up. In September 2016, I discussed how AdvisorShares fired Charles Biderman, founder of TrimTabs, as manager of the TrimTabs Float Shrink ETF. That fund kept the TTFS stock symbol but was renamed the AdvisorShares Wilshire Buyback ETF. Biderman, who's a friend, then started a rival ETF called — what else? — TrimTabs Float Shrink.

Related: [An only-on-Wall Street quirk that investors should know about]

Here's an update on the rival funds' performances. Through the end of 2016, Wilshire beat Biderman. But through mid-December of this year, according to Morningstar, Biderman's 24.5 percent total return (price appreciation plus reinvested dividends) was more than double Wilshire's.

One column I'm glad I wrote — but wish I hadn't had to — noted that Trump, like me, has Jewish children and grandchildren but failed to defend them against the hateful things the anti-Semites who gathered in Charlottesville were saying.

Related: [Trump’s biggest failure? Not standing up for his own family.]

As an American who's Jewish — please note the word order — I found Trump's failure to call out the anti-Semites attacking his family inconceivable. Maybe if they had mocked Trump's hair color rather than his kids' and grandkids' religion, he would have said something.

That will do it. Regardless of whether you agree with me, I wish you and yours a happy, healthy and prosperous 2018.


Allan Sloan is a columnist for The Washington Post. He is a seven-time winner of the Loeb Award, business journalism's highest honor.

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