At the end of September, Trump revealed his much talked-about tax plan, suggesting comprehensive tax cuts for individuals and corporations. Some of the key suggestions are a cut in the corporate tax rate to 20% from 35% and slashing of the number of individual tax brackets to three from seven.
The lowest bracket will increase from 10% to 12%, the middle bracket will be 25%, and the highest tax bracket will fall from 39.6% to 35%. The proposal will now be studied and perhaps altered in the coming days.
The Trump administration is also proposing a move from the current worldwide tax system to a territorial system, letting companies to send their offshore profits back to the United States without extra taxes.
With several failed attempts to enact health-care reform, hopes may not be too high about the recently proposed tax reforms by the Trump administration. But the administration will leave no stone unturned to enact at least a leaner version of a tax (cut) reform to confirm its stay in power. So, the broader market should feel an air of optimism in the fourth quarter.
Goldman sees 2018 earnings for the S&P 500 companies to get a boost of 12% while Bank of America Merrill Lynch believes that the new rate would benefit earnings by about 11% in 2018.
Following we highlight a few ETFs that stand to gain out of this tax overhaul, if it at all gets enacted.