Navegó a una página que no está disponible en español en este momento. Seleccione el enlace si desea ver otro contenido en español.

Página principal

U.S. Tax Policy Takes Center Stage

Wells Fargo Investment Institute - November 2017

Darrell Cronk, CFA, President of Wells Fargo Investment Institute and Chief Investment Officer for Wealth and Investment Management discusses potential changes to U.S. individual and corporate taxes—and what the changes could mean for investors.

Transcript: U.S. Tax Policy Takes Center Stage

This information is made available with the understanding that Wells Fargo and its affiliates are not engaged in rendering legal or tax advice. Be sure to consult with your own tax and legal advisors before taking any action that may have tax or legal consequences. 

The last major reform of the U.S. tax code was passed in 1986 under President Ronald Reagan. The goals of the Trump administration to simplify the tax code are largely the same as those three decades ago: reduce the number of tax brackets and allowable deductions while also lowering overall rates. 

As tax policy is debated and negotiated in Washington over the coming weeks and months, U.S. investors are watching closely for key policy choices, including: what the income cutoffs are for the new proposed brackets, whether there will be a bracket for higher-income taxpayers, the size of the child tax credit, possible limits on state and local tax deductions, and the amount that can be invested tax-advantaged in 401(k) plans. 

Lower individual tax rates could give households more cash to spend, potentially benefiting consumer goods and service companies. Housing could be negatively impacted if the mortgage deduction is less than the new standard deduction for many taxpayers. 

Title graphic: Corporate Taxes 

U.S. corporate income tax rates are among the highest in the world. So lowering them would potentially enable U.S. companies to be more competitive globally. We think it’s likely
we will see a corporate tax rate dipping to 25% or lower from the current marginal rate of 35%. Smaller firms would likely benefit more than larger ones from this reduction, just as U.S.-based firms would likely benefit more than multinationals. 

One area where we see some bipartisan support is repatriation of overseas profits, in which multinational companies that have parked their foreign profits overseas bring them back to the U.S. for usage and taxation. Some policymakers have already proposed incentives to encourage companies to repatriate these overseas profits. 

Shareholders of multinationals with large overseas assets, particularly U.S.-based technology companies, are poised to benefit from repatriation. 

In addition, if a corporate tax package includes a deduction for capital spending, that could really boost corporate earnings. 

Title graphic: Investor Implications 

Our modeling of equity market earnings indicates widely different market outcomes, depending on how these policy choices are settled. We expect to narrow down the outcomes as tax negotiations progress. 

Already, though, financial markets are discounting some progress on tax reform. Be sure to follow the Wells Fargo Investment Institute for the latest tax policy developments and investor implications.

General Disclosures 

The opinions expressed reflect the judgment of the speaker as of the recording date and are subject to change without notice. The material has been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Past performance is no guarantee of future results. Additional information is available upon request. 

The information contained herein constitutes general information and is not directed to, designed for, or individually tailored to, any particular investor or potential investor. This report is not intended to be a client-specific suitability analysis or recommendation, an offer to participate in any investment, or a recommendation to buy, hold or sell securities. Do not use this report as the sole basis for investment decisions. Do not select an asset class or investment product based on performance alone. Consider all relevant information, including your existing portfolio, investment objectives, risk tolerance, liquidity needs and investment time horizon. 

Wells Fargo Investment Institute, Inc. is a registered investment adviser and wholly owned subsidiary of Wells Fargo Bank, N.A., a bank affiliate of Wells Fargo & Company. 

Wells Fargo Wealth and Investment Management, a division within the Wells Fargo & Company enterprise, provides financial products and services through bank and brokerage affiliates of Wells Fargo & Company. Brokerage products and services offered through Wells Fargo Clearing Services, LLC, a registered broker-dealer and non-bank affiliate of Wells Fargo & Company. Bank products are offered through Wells Fargo Bank, N.A. 

Wells Fargo Advisors is registered with the U.S. Securities and Exchange Commission and the Financial Industry Regulatory Authority, but is not licensed or registered with any financial services regulatory authority outside of the U.S. Non-U.S. residents who maintain U.S.-based financial services account(s) with

Wells Fargo Advisors may not be afforded certain protections conferred by legislation and regulations in their country of residence in respect of any investments, investment transactions or communications made with Wells Fargo Advisors. 

Wells Fargo Advisors is a trade name used by Wells Fargo Clearing Services, LLC and Wells Fargo Advisors Financial Network, LLC, Members SIPC, separate registered broker-dealers and non-bank affiliates of Wells Fargo & Company. 


© 2017 Wells Fargo Investment Institute. All rights reserved.