Tax Relief is Coming
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Did you know the IRS (Internal Revenue Service, a.k.a. the “tax man”) has a CEO? We didn’t either. But in a recent interview, the IRS CEO said that 94% of middle-class Americans will see tax relief in 2026.
Tax rates are coming down, with significant refunds coming in the 2026 tax year. American families could save between $11K to $20K per year under this new plan. In addition, taxes on Social Security benefits will mostly be removed, saving seniors up to $6000.
It’s important to understand the social and political situation in the US right now. There is massive disparity in incomes, which people are calling the “K-shaped economy”. Put simply, the rich are getting richer (from rising stock prices) and the poor are getting poorer (from the cumulative effects of inflation and stagnant wages). So the masses are discontent which behooves a populist president like Trump to respond.
But what can he even do? Solving the issue of wealth disparity is an impossible task — if it was easy, it would’ve been done already. One solution is to crash the stock market by changing capital ownership rules and hampering corporate profitability. This is unpalatable for the elite class which means it is unlikely to be implemented.
The next solution is to offer enough handouts and stimulus to temporarily lift the lower-income class. This appears to be the route Trump has chosen, as it’s politically favorable. One-time handouts like the Warrior Dividend, tariff refund, tax cuts and social security boosts will temporarily help lower-income households just long enough for midterm elections… but do nothing to fix the root causes of structural wealth disparity.
If this is the economic reality that politicians face, then fiscal stimulus becomes a no-brainer. And when fiscal stimulus is added to a growing economy, you have the conditions for a bubble or at least rampant equity acceleration. This is what we’re observing today and why we think stock markets are likely to be bullish for 2026.
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