US: Muted market response on release of tax draft – ANZ

Analysts at ANZ, note that the market’s reaction to the US GOP tax plan was fairly muted, with few surprises.

Key Quotes

“Homebuilder shares were the biggest mover due to a halving of the cap on mortgage interest deductions for new homes to $500k from $1m. The top individual tax rate would remain at 39.6%, but the plan lowers the corporate tax rate to 20%, with no discussion of phasing in. Business income tax is to be cut to 25%, with the safeguards on “pass through” to prevent tax avoidance not popular with the largest small business lobby, whose president said that they are unable to support the bill.”

“A tax of up to 12% is proposed for accumulated offshore earnings, perhaps higher than expected, while rebates for local/state taxes were reduced. The 401(k) scheme is not proposed to be changed. Trump said there will be a tax cut by Christmas; others are sceptical, with a lot of hurdles to clear.”