Go Out and Buy This ETF With U.S. Tax Reform Looming

The Dow Jones Industrial Average soared on Monday, December 4 after the Republican-controlled Senate pushed through its vote on tax reform 51-49 on the morning of December 2. The most crucial element of the reform package will be a 15% reduction in the corporate tax rate from 35% to 20%, as well as a repatriation rate of 14.5% to incentivize U.S. companies that are storing cash overseas.

Investors who want to get in on the pro-growth frenzy should take a look at the iShares Core S&P US Total Market Index ETF (TSX:XUU). The index blends ETF that cover the S&P 500, including small cap and mid cap funds. The ETF has climbed 11.5% in 2017 as of early afternoon trading on December 6.

The Senate vote was a significant step forward, but debates are still raging within the party over how to manage the impacts on U.S. debt. Early projections have estimated that the tax plan will add $1.5 trillion to the total debt due to loss of tax revenues. President Trump and other Republicans have signaled intentions to move on to “welfare reform” next, which may telegraph a round of social cuts on the way in order to mitigate the debt increase.

JPMorgan Chase & Co. has estimated that the S&P 500 could increase by 5% in 2018 in response to the tax reform. After an incredible 2017 the U.S. stock market appears poised to build on its momentum in 2018.