The final details of the US tax overhaul were revealed on Friday and the Republican tax plan cuts the corporate tax rate to 21% on a permanent basis, while offering temporary cuts to individuals, notes the research team at Danske Bank.
“The tax plan is expected to be voted through Senate by Tuesday and signed by President Donald Trump by the end of the week, before entering into force by February. According to the Joint Committee on Taxation (JCT), the reform will raise economic growth of about 0.8% over the next ten years. However, according to the JCT’s estimate (link), this will only cover about a third of the cost, which means that the reform will add at least USD1trn to the USD20trn national debt over next decade. The plan could also boost US corporate earnings by some 10% on average, with oil refiners, airlines and banks among the main beneficiaries, according to Financial Times.”
“Expected passage of tax plan lifts equity markets. On Thursday, concerns about the tax plan passing this year weighed on stocks as not all Republican senators had committed to supporting it. However, on Friday there seemed to be full backing for the deal with all 52 Senate Republicans in support. This lifted US stocks, with S&P rising 0.9% and the gains have carried over to Asian trading this morning.”