The new United States tax legislation was signed into law by President Donald Trump after a vote from the House and Senate in the days previous. The final reform bill slashes corporate taxes from 35% to 21%. Analysts have projected corporate revenues to climb as much as $6 trillion over the coming decade due to the new legislation.
Some of the biggest winners are U.S. banks. Goldman Sachs Group Inc. (NYSE:GS) is up 4.3% year over year. Two of the architects of the tax reform legislation were former Goldman Sachs executives; Treasury Secretary Steven Mncuchin and Chief Economic Advisor Gary Cohn. Goldman Sachs was forced to absorb a $5 billion hit from a repatriation tax, a one-time tax on cash it holds overseas. The bank last announced a quarterly dividend of $0.75 per share with a 1.2% dividend yield.
JPMorgan Chase & Co. (NYSE:JPM) stock has climbed 3.1% month over month. The bank also expects to take a $2 billion hit due to overseas cash holdings. However, leadership expects to be benefitted from the lower rate in the long term. CEO Jamie Dimon was insistent throughout 2017 that the U.S. needed a modernized tax code in order to see progress. The bank offers quarterly dividend of $0.56 per share representing a 2% dividend yield.
Goldman Sachs analyst Richard Ramsden upped EPS estimates by 13% on average with the assumption that the 21% corporate rate would become a reality.
