First up, Trumps tax cuts are going to help US shale, via the FT
And yet the proposals would be a very big deal if passed, at least for US stocks and at least in the short term. After abandoning various ambitious reform ideas, such as the border tax adjustment, the plan floated by the administration for companies appears to have three key elements: a cut in the basic rate of corporate tax from 35 to 20 per cent; a one-time “repatriation tax” to encourage companies to bring cash home, and a shift to allow businesses to write off immediately all new depreciable investments.
According to Goldman Sachs’ David Kostin every one percentage point fall in the corporate tax rate adds a dollar to expected earnings per share for the S&P 500, which currently stand at about $US130 for next year, and have been drawn up on the assumption of no tax cut. That implies that the tax cut, if passed by the end of the year, would drive a one-off increase of about 11.5 per cent in expected earnings for next year. Obviously, that is a big deal.
