Here's What Wall Street Is Saying About Trump's Tax Plan

  • More questions than details frustrates some analysts
  • Most don’t expect this version to pass through Congress

President Donald Trump released his tax plan Wednesday, and Wall Street has a few questions.

The one-page proposal includes cuts that would benefit businesses, the middle class and some high-earning individuals. However, it lacks details on how these changes would impact the government’s budget deficit.

“The release is an opening statement of ideals,” Michael Zezas, a strategist at Morgan Stanley, wrote in a note to clients. “Yet our odds of a meaningful reform remain unchanged given it does not reduce risk of delay; provide key content details; outline a credible bipartisan path.”

Here’s a roundup of what others on Wall Street are saying:

Goldman Sachs Group Inc. 

Economist Alec Phillips expects a long road ahead for tax reform:

“While no decision is imminent, today’s announcement and indications of openness to a tax cut among congressional Republicans suggest that a tax cut is more likely than revenue-neutral reform. We expect a long road ahead for tax legislation. While we believe there is a good chance that tax legislation becomes law -- in fact, market participants might be underrating the odds of tax cuts, a change from earlier this year -- there may be few concrete legislative actions on tax legislation over the next couple of months for markets to react to.”

JPMorgan Chase & Co. 

Analyst Jesse Edgerton says it’s unlikely this plan passes through congress:

“Although the plan’s lack of detail makes estimating its revenue effects uncertain, we suspect the plan would be scored as dramatically increasing deficits, making likelihood of its passage through Congress slim...the recent announcement is likely best viewed as an opening offer in a negotiation with many rounds to go.”

Credit Suisse Group AG 

Analyst Honglin Jiang said the reason markets underperformed following the release is that much of this was already known:

“Trump’s tax plan contained little that was new beyond what had already been leaked over the last few days – goals such as reductions in personal income taxes and corporate taxes to 15 percent, foreign earnings repatriation and shift to a territorial tax system had all been well flagged. Markets had priced all of this in, and hence were disappointed when the plan presented no further details that would help speed its passage through Congress. In particular, the key issue of how they would be funded was left unaddressed.”

Cowen Group Inc. 

Analyst Chris Krueger told clients the plan left him with more questions than answers:

“Only real surprise was that the Trump tax plan exists, albeit on one page of ‘principles.’ There is no there there. It is a one-pager without any detail...for a tax code of ~70,000 pages.” Krueger adds there’s no mention of a border adjustment tax (BAT), “but also no mention of really anything.”

Compass Point Research & Trading LLC 

Analyst Isaac Boltansky called the lack of details a big disappointment for investors.

“The market expected a document outlining the administration’s 100,000 foot view on tax reform, but instead was given a view from the space station...today’s tax rollout was a disappointment – even compared to the markedly low expectations – but this was always going to be a herculean lift.”

KBW LLC 

Vice President Brian Gardner called the plan mostly symbolic with Trump quickly approaching his 100th day in office:

“The plan contains no details (i.e., the outline mentioned three tax brackets but did not indicate at which incomes those rates apply) and resembled the plan issued by the Trump campaign, so we do not see any major shifts in the administration’s focus on tax policy.”

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