Tax reform: more than talk?

After the U.S. House of Representatives released the details of its tax plan, our Office of Public Policy put the likelihood of tax relief at 60%, up from 55% last month. How could the House bill, "The Tax Cuts & Jobs Act," affect you, your wealth and your investment strategy?

In a new US economy report (PDF, 45 KB), CIO Americas, Wealth Management (CIO) notes that, if the legislation were passed as is, high-income taxpayers would receive limited personal income tax relief and potentially a modestly higher tax burden in higher-tax states. However, small business owners stand to benefit from the lower rate on "pass-through" income.

Highlights of the draft legislation include:

  • The number of income tax brackets reduced from seven to four
  • Changes to personal deductions, including the mortgage interest deduction
  • The Alternative Minimum Tax (AMT) eliminated
  • A flat corporate tax rate of 20%, down from 35%

Markets are not fully pricing in tax reform benefits, and successful passage represents an upside scenario for U.S. stocks. Overall, the proposed corporate tax changes, as written, could boost S&P 500 earnings per share by 8%–10%.

For more information on how the legislation could impact you, read the full report (PDF, 45 KB).

Are you prepared to act on the legislative changes coming from Washington? Together we can find an answer. Connect with your UBS Financial Advisor today or find one

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