Tax Reform More Likely to Happen Than Not
Today's more aggressive framework doesn't change our view that major changes to the tax code are coming.
Joshua Aguilar: Today the big six--which is a consortium of White House leaders and House GOP leaders--met and announced their plan for a tax framework for corporate tax reform and personal tax reform. The first thing that they announced was a rate cut to 20%, whereas we envisioned a cut to 25%. Another thing that they announced was that interest-rate deductibility would be only partially lost, in favor of full expensing of capital expenditures. We originally thought that this was only going to be offered only to manufacturing firms, and this is now offered to all firms. Another thing is a switch to the territorial system, where we had originally thought it was a worldwide system.
This a more aggressive tax proposal. What will be interesting to see is, however, what are the offsets to the system, particularly in the deductions and credits that can be claimed? We think that's going to be a battleground for constituent debate. We still think, however, that the tax reform is more likely than not to pass, and, as a reminder, we really think that we've incorporated our assumptions to the corporate tax rate. There's right now, currently no changes to our fair value estimates across our coverage.