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Is The Market Safe as Uncertainty Looms Over Tax Cuts?

October 11, 2017
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Since the day he took office, President Trump has pridefully pointed to the stock market as an indicator as of his economic agenda’s performance. In fact, the same trend continues today: Just this morning the President tweeted:

It would be really nice if the Fake News Media would report the virtually unprecedented Stock Market growth since the election. Need tax cuts

The interesting takeaway from this tweet is the emphasis on the need for tax cuts. Tax reform is at the forefront of the administrations’ plans, and they are finding that it is going to be a harder battle than they may have anticipated.

As Bloomberg puts it;

Trump faces ideological demands from Senator Rand Paul of Kentucky and procedural demands from Senator John McCain of Arizona. He’s got a wildcard in Alabama Senate front-runner Roy Moore and perennially difficult votes like Senator Susan Collins of Maine and Senator Lisa Murkowski of Alaska.

These power brokers threaten to derail the President’s most important reform yet, both politically and economically.

Politically it will demonstrate if the President is able to consolidate his powers in a Senate which has already proven fractitious in the face of major reform.

Economically speaking, this is by far the most significant piece of legislation that the President has proposed. The Washington Examiner says that the President plans to cut the corporate tax rate in half, which would have a massive effect on corporations’ bottom lines.

The future of the US tax system is not the only thing hanging in the balance. The bull market is also at stake. Although foreign catalysts have had little effect on the market, the effect of another major platform failure on the President’s part may just tip the scales to the breaking point.

If Trump’s tax plan comes up short, the stock market could feel the hurt in a big way. Companies that were banking on a tax break to boost their capital could suffer a major downturn in their stock’s evaluation. Investors should keep their eyes peeled for upcoming news on tax reform to ensure they are ready to react to any market changes.

To read Bloomberg’s article on Trump’s political battle for tax reform, click here.

To read The Washington Examiner’s article on the President’s tweets on tax reform, click here.

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