Top Historic Tax Rates

AJA Weekly Recap

2024 | July 15

The Weekly Focus

Think About It

“The thing about football – the important thing about football – is that it is not just about football.”

― Terry Pratchett, author

The Markets

Stocks Rise

The Dow rose almost 2%, topping the fractional gains for the S&P 500 and the NASDAQ and coming just short of joining its peers in record territory. The Dow’s result left it 3 points below the record that it had set two months earlier, when it closed above 40,000 points for the first time, finishing at 40,003.6.

A better-than-expected inflation report on Thursday lifted hopes for potential interest-rate cuts in coming months. The Consumer Price Index slipped 0.1% from May to June—the first month-to-month drop since May 2020―and annual inflation fell to 3.0% from 3.3% the prior month. However, a separate report on Friday showed a larger-than-expected rise in prices at the wholesale level.

Results from three major U.S. banks that reported second-quarter numbers on Friday were mixed, with two institutions reporting year-over-year earnings declines. Entering earnings season, analysts were forecasting that overall earnings across the S&P 500 would rise 8.9% relative to the previous year’s second quarter―the strongest quarterly growth rate in more than two years, according to FactSet.

Yields of government bonds dropped, as investors took Thursday’s inflation report as an indication that interest-rate cuts could be coming sooner rather than later. The yield of the 10-year U.S. Treasury bond fell to 4.18% at Friday's close―the lowest in nearly four months―and yields of 2- and 30-year notes also declined.

An indicator that tracks U.S. consumer sentiment slipped to its lowest level in eight months. Friday’s preliminary reading from the University of Michigan’s Consumer Sentiment Index fell short of most economists’ expectations, although the survey nevertheless found improvement in consumers’ inflation expectations for the second month in a row.

Tuesday’s scheduled release of U.S. retail sales data could indicate whether a recent sales slump extended into June. In May, sales rose 0.1% on a month-to-month basis after recording a 0.2% decline in April. Both figures were down sharply from the gains recorded in March and February.

Source: John Hancock Investment Management

Tax Rates

Investors often focus on corporate tax rates because they can directly affect the profitability of large companies and thus their share prices. However, tax rates and the nation’s philosophy around taxes have both fluctuated throughout history. As the accompanying chart shows, corporate and individual tax rates were higher for much of the 20th century before declining during the Reagan era. The stereotype of each party is that Republicans favor lower taxes while Democrats support higher rates, particularly for corporate income taxes. Of course, the exact priorities and proposals of each party have evolved over the decades, especially around balancing the budget.

The cornerstone of President Trump’s tax policy was the 2017 Tax Cuts and Jobs Act, which reduced the corporate tax rate from 35% to 21%. To put that in context, the U.S. previously had the highest corporate tax rate of any OECD country, and the reduction puts us just below the OECD average. The corporate tax rate peaked at 52.8% in the late 1960s, although changing tax brackets make historical corporate tax comparisons challenging. Also, what corporations actually pay can differ significantly from statutory rates.

Unlike individual tax rates, the 2017 corporate tax cut is not set to expire but can be changed by the party in power. While it is still early in the election cycle and the candidates’ platforms may change, President Biden has proposed raising the corporate tax rate to 28% and the corporate alternative minimum tax rate (CAMT) to 21% from 15%. CAMT, created as part of the Inflation Reduction Act of 2022, is intended to ensure that large profitable companies pay at least a minimum amount of taxes. While President Trump’s proposals are not yet clear, he has suggested to business leaders that he would cut the corporate tax rate to 20%.

A Quiz for Soccer Fans

Over the last couple of weeks, fans of the world’s most popular sport were riveted as the men’s championships played out in Europe and the United States. Last weekend, Spain took on England at the UEFA EURO 2024 championship in Berlin, Germany, while Argentina and Colombia duked it out for the Copa América title in Miami, Florida. Fans of the beautiful game (soccer) can test their knowledge of the tournaments by taking this brief quiz.

1. In the history of European Championship matches, 30 own goals have been scored. (An own goal is when a team scores on itself.) How many own goals were tallied in the 2024 tournament prior to last weekend?

a. Two

b. Four

c. Seven

d. Ten

2. Colombia beat Uruguay in the Copa América semifinal. For some of that match, Colombia had 10 players on the field after losing a player to a red card. How long did the team compete with only 10 players?

a. 15 minutes

b. 45 minutes

c. 60 minutes

d. During injury time (aka stoppage time)

3. Spain’s Lamine Yamal was the youngest player to start in the Champions league and the youngest to score at the European Championship. How old was he when he scored?

a. 15

b. 16

c. 17

d. 18

4. Who holds the record for the most assists – passes that lead directly to goals – in the Copa América tournament?

a. Luis Suarez

b. Lionel Messi

c. Luis Figo

d. James Rodriguez

5. Bonus question: Which women’s team won the 2024 CONCACAF W Gold Cup?

a. Mexico

b. United States

c. Canada

d. Brazil

What’s your favorite bit of soccer trivia?

Answers: 1) d; 2) b; 3) b; 4) d; 5) b

AJ Advisors

www.ajadvice.com

Phone: (615) 709-8709

Fax: (615) 505-3306

eMoney

Charles Schwab

Advyzon

John Stauffer, CFP®

Partner

john@ajadvice.com

Andrew Quinn, CFP®

Partner

andrew@ajadvice.com

Emily Triano

Operations Manager

emily@ajadvice.com

Maya Laws

Operations Associate

maya@ajadvice.com

Past performance does not guarantee future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, strategy, or product (including those recommended or undertaken by AJ Advisors, LLC), or any non-investment related content, made reference to directly or indirectly in this communication will be profitable, equal any indicated historical performance level(s), be suitable for your portfolio or individual circumstances, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. You should not assume that any discussion or information contained in this communication serves as the receipt of, or as a substitute for, personalized investment advice. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to their individual situation, they are encouraged to consult with the professional adviser of their choosing. AJ Advisors, LLC is neither a law firm nor a certified public accounting firm and no portion of the content herein should be construed as legal or accounting advice. If you are an AJ Advisors, LLC client, please remember to contact the firm, in writing, if there are any changes in your financial situation or investment objectives or if you wish to impose, add, or modify any reasonable restrictions on our investment advisory services. Until so notified, AJ Advisors, LLC will continue to rely on the most recent information provided. A copy of our current written disclosure statement discussing our advisory services and fees continues to remain available upon request.