It seems we may be inching closer to tax reform after Reuters reports that:
The Senate on Thursday approved a budget blueprint for the 2018 fiscal year that will pave the way for Republicans to pursue a tax-cut package without Democratic support.
This is a major step forward for an administration that has had trouble passing major legislation in the past. It is also great news for the markets, which Reuters reported being up at today’s open.
Business Insider explains the importance of this particular resolution:
The budget’s passage represents a key step because it contains instructions for the process known as budget reconciliation. Reconciliation will allow Republicans the chance to pass a tax bill through the chamber with a simple majority and avoid a Democratic filibuster. This is important since the GOP holds only 52 seats, a slim majority.
While the GOP’s majority has proven to be tenuous at best during its battles for healthcare, recent demonstrations in both the Senate’s voting as well as shows of unity such as the President’s speech with Sen. Mitch McConell may indicate that this run at major reform may be easier.
The market is counting on tax reform to cut the corporate tax rate by almost half, boosting overall corporate net revenue and therefore pushing up their stocks. The government hopes that such a move will allow companies to hire more American workers with the newly freed-up capital
Investors should still be wary; similar scenarios have unraveled under the Trump administration and everything could change on a dime. However, this is a step in the right direction which should give the market some comfort.
To read Reuters’ article on the market’s reaction to progress on tax reform, click here.
To read Business Insider’s article on tax reform, click here.
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