The Trump tax plan was revealed Thursday after several delays and numerous rumors, with the announcement leading to a drop in the stock market as the plan disappointed some on Wall Street.
The White House has long been touting the Trump tax plan as one of the biggest tax overhauls the U.S. has ever seen. But the bill was delayed repeatedly, with only a framework being released as Congress worked on the exact details of the bill behind closed doors.
While the current release is by no means final, several cuts that Wall Street was hoping for did not make the cut—at least, not yet.
The estate tax, for instance, is being pared down at a slower pace than expected. The tax applies to estates over $5.49 million for individuals or $11.0 million for married couples. Anything above that number and beneficiaries must pay a 40% estate tax. In six years, however, the tax plan would eliminate the tax entirely.
This was a priority for many Senate and House Republicans, but many questioned how this estate tax would benefit the middle-class. Regardless, Wall Street was hoping for an immediate killing of the tax, which would directly impact stock sales and other massive windfalls in terms of value.
Perhaps the biggest hit to the market came from the limit on mortgage-interest deductions. The bill caps deductions at $500,000, halving the current limit of $1.0 million. This would help drive down costs for housing as buyers may be more likely to hold off due to the lack of tax benefits.
While that’s good news for the middle-class, which has struggled with rising housing prices, the S&P 500 Index fell as real-estate companies suffered setbacks due to the Trump tax plan mortgage reveal.
In any case, the bill will be undergoing further modifications before it hits the House for a vote. If the Trump administration is unable to pass the bill before the holiday recess, there’s a chance that 2017 will pass without a single major legislative victory for the White House, while the middle-class may not receive the benefits they were promised by this administration.
“U.S. Stocks, Dollar Retreat on Tax Plan Details: Markets Wrap,” Bloomberg, November 1, 2017.
“House Tax Bill Has Major Changes for Businesses, Individuals,” Bloomberg, November 2, 2017.