Trump’s Tax Plan Is ‘As Good As It Gets’ For JPMorgan, U.S. Banks

0
399

U.S. banks like JPMorgan Chase & Co. (JPM – Get Report)  would thrive under President Donald Trump’s tax proposal, as the firms benefit from a cut in the corporate rate while being spared from potentially painful provisions like the elimination of the deduction for mortgage interest.

The corporate tax rate under Trump’s plan would drop to 20%, according to an outline of the plan released Wednesday by the U.S. Treasury Department, from the current 35%. While the proposed figure is higher than the 15% that Trump has pushed for, it’s below the rate of 28% to 30% that many analysts and investors had expected a few weeks ago, said Jaret Seiberg, financial-services and policy analyst at Cowen Washington Research Group in Washington.

“The rate cuts are deeper than had been anticipated,” Seiberg said in a telephone interview. “That’s likely to lead to more economic activity, which at the end of the day is really what’s best for banks. They thrive when the economy’s booming.”

Bank stocks rallied earlier this year on investor bets that Trump’s tax plan, when coupled with a rollback of regulations imposed following the 2008 financial crisis, would bolster corporate profits and economic growth. More recently, the stocks had retreated as Trump failed to achieve other campaign promises, such as overhauling former President Barack Obama’s healthcare law — a signal that the tax changes too might be in danger.

Yet much of the advance has stuck. On Wednesday, an index of large-bank stocks climbed 1.6%, bringing the gain over the past 12 months to 40%.


Read more: https://www.thestreet.com/story/14322701/1/trump-tax-plan-as-good-as-it-gets-for-banks.html

LEAVE A REPLY

Please enter your comment!
Please enter your name here