April 26, 2017
With little macro data overnight (aside from a modestly disappointing Australian CPI print), offset by an ongoing of corporate profits (this is the single busiest week for corporate earnings in more than 10 years), today everyone’s attention will be focused on three things to come out of Washington: taxes, healthcare, spending.
And while we did our best to summarize what is known and unknown last night, this morning JPM has released what may be the best summary assessment, one which comes to a predictable conclusion, namely that Trump’s tax plan “will be virtually impossible to pass through Congress”, in other words it is merely a gambit, or as Trump would see it, a first step in a negotiating process with Congress. Whether Congress responds favorable, especially to a plan that has no revenue aspect to it whatsoever, remains to be seen.
Until we wait, for those who may be unfamiliar with the framework of what Trump will propose today, here is JPM’s summary:
Washington – three big headlines overnight – taxes, healthcare, spending
Taxes – Trump’s much-anticipated tax blueprint will be released on Wed but
- a lot of the details have already been leaked to the press over the last few days;
- it seems very inchoate, leaving out key details esp. as it pertains to the individual code;
- it will be virtually impossible to pass through Congress.
With all that said, Trump will propose cutting the corporate rate and “pass-through” rate to 15% (from 35% and 39.6% now, respectively) and the repatriation rate to 10% (from 35%) while raising significantly the standard deduction for individual filers (which will have the effect of dramatically cutting individual rates). There are proposals being worked on for deducting child care costs but these won’t be ready for Wed. Trump’s plan won’t contain any large revenue raisers (there won’t be a BAT) and…