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The ESG Update, Vol. 1

Updated: Feb 14, 2018

We are pleased to share with you the first Skye Advisors ESG Update! We promise to keep you in-the-know with timely, relevant, and accessible ESG (environmental, social, governance) financial details.


I hope this message finds you enjoying the holiday season and some much-needed downtime. This year, the holidays have new meaning for me as I continue to work hard transferring client files and planning for our collective futures at Skye Advisors. This has been a time for reflection and work, all in preparation for the new year ahead! I will be contacting you by the end of this week to schedule a time to meet after the new year, but in the meantime, please don’t hesitate to call if you have questions.


After hours of headline news, I felt you would value a “translator” for the tax package passed last week. It left many unanswered questions, most notably was whether the increased costs from lower taxes would, in fact, be paid for by economic growth. Most worrisome is the impact on the federal deficit that will come from a $1.5 trillion cut in tax revenue.


Spoiler alert: a tax cut after a 9-year bull market (when the global economy is strong) doesn't do much more than increase the national deficit. Instead, tax cuts are the way to go to soften the blow after market corrections and recessionary times.

Keep in mind, any and all projections are just that… projections, made more difficult because there are hundreds of moving parts. The Tax Policy Center’s first macroeconomic analysis projected a modest 0.8% boost to the gross domestic product in 2018, and little effect at the end of the tax package’s 10-year horizon.

If growth measured by GDP was the goal, creating economic growth didn’t flow through to the numbers. What will grow is U.S. debt.


Including macroeconomic effects and interest costs, the Tax Policy Center projects debt as a share of GDP will increase 5 percentage points in 2027. It appears that while the country truly needed tax reform, the final deal could end up costing $2 trillion from tax cuts with far too few reforms.


Another spoiler alert: I can’t think of many clients that should start planning how to spend their future tax savings!


Below is Barron’s take on this much-anticipated benefit to Americans. Market and economic emails like this will be drawn from sources I know are real news. I’ve cut out some of the noise around issues that most likely don’t impact you and have included links to a helpful “Key Highlights” chart and a tax calculator.


As always, please contact me with questions or concerns at julie@skyeadvisors.com or (918)408-7981.



What the New Tax Law Means for You

Excerpts by Karen Hube, Barron’s, December 23, 2017


The new tax bill passed by Congress on Wednesday and signed into law on Friday is a major coup for U.S. corporations, but a mixed bag of give-and-take for individual taxpayers with benefits sharply skewed to the wealthy.


The benefits to most individual taxpayers are scheduled to expire in 2025 – a strategy put in place to keep the cost of the bill below a $1.5 trillion threshold meaning they didn’t have to rely on support from Democrats.


Wealthy taxpayers are expected to continue to benefit from the only major permanent provision under the bill—the reduction in the corporate tax rate. Most shareholder wealth is concentrated among the wealthy, and as corporations benefit from their lower tax burden, so, too, will shareholders in the form of higher dividends and rising stock prices.


While Republicans claim that the benefit to corporations will ultimately trickle down to the working class through pay raises and job expansion, many economists are dubious, as previous tax breaks have not borne this out.


Tax Moves to Make Now. Some year-end moves could save a bundle. Consider these tax-saving moves:

  • Pay now any 2017 state income taxes that you would normally pay in 2018. Usually, taxpayers prefer to hold off paying taxes until necessary. But prepaying is a way to take advantage of state tax deductions, which are going away next year. Prepayment of 2018 expenses has been a popular tax planning topic, but much of it is limited. The law specifically prohibits people from prepaying 2018 state and local income taxes. Property and real estate taxes are not explicitly prohibited, but many local tax collectors are unable or unwilling to accept these payments. You can, however, prepay your January mortgage bill and deduct the interest.

  • With the standard deduction raised to $24,000, many folks will take the standard deduction rather than itemize, so it may make sense to make future years’ charitable gifts before year-end. Someone who doesn’t have a mortgage will be taking the annual maximum allowable $10,000 deduction for state and local taxes next year and makes a $10,000 yearly charitable gift. They’d have $20,000 in deductions, which means they’d take the standard deduction. That deduction for the charitable contribution would be lost. If the next five years’ gifts were made in 2017, that’s an extra $50,000 deduction this year, compared with no tax benefit for the gifts if they were spread over future years.

  • Most planning opportunities will be next year from estate-plan revisions for the very wealthy and the change in tax rates on businesses warrants a hard look at how wealth is structured.

Bottom Line. Without the simplification of the tax code, it’s a different set of rules, but the same game. Unfortunately, we have not seen the largest tax reform in 30 years and we will not, in fact, be able to file our taxes on a postcard.

Read the full article (subscription to Barron’s required) »


Please contact Julie Skye with questions or to set up an appointment at julie@skyeadvisors.com or (918) 408-7981.


#esg #sociallyresponsibleinvesting #sri #skyeadvisors #firstaffirmative #charlesschwab #36N #tulsa

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