Here’s What Wall Street is Saying About Trump’s New Tax Plan

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On Wednesday, additional details about President Trump’s new tax plan were made public. While not everything has been hashed out, Wall Street has already begun commenting on what is known about the proposal. Overall, the majority of these financial institutions agree there are some good points, but more details are required to fill in the gaps and caution is wise.

As reported by Business Insider, Wall Street is still somewhat hesitant to say that the proposed changes to the tax code will spur the economic growth the Trump administration has been touting, though a lack of actionable specifics in the plan is partially responsible for the lukewarm reception in that regard.

However, on the markets front, highly taxed US businesses and a variety of multinational corporations with substantial cash holding overseas saw gains as traders purchased assets that are anticipated to directly benefit from the tax policy changes.

Certain Wall Street firms did respond to the proposals. Here’s what they had to say.

Bank of America Merrill Lynch

While the company didn’t see anything in the new tax proposal to justify an adjustment in BAML’s economic outlook, the did release a few comments on the plan.

BAML stated that the report does have “a few more details,” but admits it is “far from comprehensive” as this stage. The company also claimed the plan as it is written has “all the goodies but none of the pain.”

They continued, “While the Republican leadership made further progress on a tax bill, we continue to believe that a comprehensive tax legislation bill faces long odds.”

BAML also noted that the current version “does not lay out how it will pay for the tax cuts” and that “any new taxes, repeal of deductions and loopholes, or a significant increase in the budget deficit could face stiff opposition in Congress.”

Morgan Stanley

Morgan Stanley did state that the tax plan is a “positive step,” but is understandably cautious at this point. They believe “difficult debates linger, suggesting provisions will be further moderated & executions risks remain.”

In regards to the proposed corporate tax rate cut, Morgan Stanley said, “Given the procedural constraints for achieving a permanent corporate tax rate reduction, and the unattractiveness of a temporary corporate rate cut, our base case is that legislation will ultimately settle closer to a 25% rate given the political challenges of embracing the yet unidentified pay fors required to achieve 20%.”

They also anticipate that Democrats are “very unlikely” to support the plan based on the call to cut “the top individual tax rate” and eliminate the estate tax.


Nomura, who also did not change their economic outlook, considers their view more pessimistic, partially based on the assessment that “the fiscal outlook today is considerably worse than in times past when taxes were cut,” making them less inclined to believe that “significant tax cuts” are on the horizon.

However, they do believe that “Congress will likely pass tax cuts for individuals in early 2018.”


The Australian-based firm does say that “simplifying and rewriting the US tax code could be one of the best avenues for stimulating growth” but also states that “there was nothing yesterday about eliminating over 70,000 of redundant and overlapping pages of the tax code.”

Macquarie suggests that the proposed plan has “relatively meager benefits” and that “it has achieved little to stimulate consumption.”

The firm even goes as far as to say, “While on paper the proposal creates a shortfall of $3-4 trillion over a decade, it is unlikely to survive. Instead, numbers closer to $1.5 trillion are far more likely, with most benefits flowing into financial assets rather than consumption or investment.”

Wells Fargo

Wells Fargo elected to comment on the potential impact on the markets, though maintained a cautious stance. The company said, “We continue to caution investors about believing there’s significant market upside as it relates to changes in the tax picture. We’re placing more faith in a rotation rather than an upward market ‘pop.’”