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Market Update

The Impact of Tax Reform On Stock Prices

As the debate over tax reform heats up, some firms (including Morningstar) are incorporating a lower tax rate into their pricing assumptions.

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Last week, we got our first look at the framework of what potential tax reform could look like. It comes after President Donald Trump had urged Congress to start making progress on tax reform. He said now's the time to "simplify the tax code, reduce taxes very substantially on the middle class. And make our business tax more globally competitive."

Whether the administration can pass a substantial tax plan is, of course, still an open question. With promises of healthcare reform not yet coming to fruition and other issues distracting the administration from passing its agenda, no one can be certain that tax reform will happen or exactly what it will look like.

Bryan Borzykowski does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.