The U.S. Senate narrowly passed a $4 trillion budget measure last Thursday, taking a big step towards a tax reform package supported by President Trump. The vote, as expected, was mostly along party lines.
While there is sure to be plenty of additional political controversy surrounding the topic, the stock market has enjoyed a continued climb higher this year fueled in part by expectations for tax reform. Morgan Stanley Financial Advisor Dan Ament stopped by KARE 11 Sunrise Wednesday to discuss the package, and its potential impact on investments.
Here are some of the potential impacts:
- Corporate Tax Impact? Reduce the current corporate tax rate from 35% to 20%. Provide tax break to incentivize bringing profits (cash) back to U.S. that is currently held outside U.S.
- Individual Tax Impact? Reduce the current 7 individual income tax brackets down to 3 or 4 (12%, 25%, 35% and possibly retaining higher bracket for higher earners … currently 39.6%)
- Estimated $1.5 trillion of tax cuts: The tax cuts would add an estimated $1.5 trillion to the deficit over the coming decade. For comparison, the Federal budget for 2017 projects a $3.7trillion deficit over 10 years.
- Minnesotans Eyeing Potential Loss of State Tax Deduction: A large disagreement remains regarding eliminating state and local tax deductions which hurt tax payers in higher taxed states. Losing this deduction is a concern to many MN tax payers. Why? MN ranks 4th in the U.S. for income tax rates. When comparing total average state tax burden including property, indiv. Income taxes and sales taxes it ranks 5th nationally. (Source: Wallethub.com).
- Stock Market Assessment? Lower corporate taxes = higher earnings = higher stock valuations?
© 2017 KARE-TV