Goldman Sachs and JPMorgan Flat on Tuesday As Tax Reform Is Fleshed Out

Shares of Goldman Sachs Group Inc (NYSE:GS) and JPMorgan Chase & Co. (NYSE:JPM) were down 0.16% and 0.55% respectively in the late morning on September 26. Both banks have had a strong September as tax reform from the Trump administration gets hashed out.

New details came out on September 25 on tax reform. Sources will knowledge of the plan report that the top individual tax rate will be cut from 39.6% to 35%, and seven income tax brackets will be chopped down to three. A memo leaked to the Washington Post revealed that the Republicans are eyeing a 20% corporate tax rate from the current 35%. Trump originally had ambitions for a 15% corporate tax rate.

The leaked details are somewhat controversial and may irk small business owners who were hoping for a bigger reduction. Under this plan, small businesses would be taxed at a 25% rate and corporations at 20%.

Why are JPMorgan Chase and Goldman Sachs top stocks to own if and when tax reform kicks in? Both banks have big baskets in companies that pay high corporate taxes and have big cash holdings overseas.

Goldman Sachs has declined 4.2% in 2017 and JPMorgan has climbed 8.4%. For investors who still have faith in the “Trump Trade”, especially when the administration is about to gun for its biggest prize; tax reform, now may be a great time to buy the two banks that could benefit the most from the move.