Biden wants to undo Trump's tax cuts. Wall Street is backing him anyway
New York (CNN Business)As the nation's biggest banks prepare to report their latest earnings next week, these titans of Wall Street face a conundrum.
Many financial services executives are supporting Joe Biden over President Trump — even though a Biden win could be a slight negative for the industry.
Deregulation championed by the White House and Congress and low interest rates ushered in by Jerome Powell, Trump-appointed Federal Reserve chairman, have helped fuel a market rally in the past few years that was — at least until Covid-19 hit — very good for bank profits.
But according to a recent analysis from S&P Market Intelligence, Biden's proposed tax plan could lead to a combined $7 billion increase in corporate taxes annually for the nation's top 10 banks.
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Big banks can shrug off a bigger tax bill
While a tax hike by Biden would hurt their profits somewhat, it may not be a disaster for financial firms.
The S&P analysts noted that a higher corporate tax rate could actually boost bank valuations. That's because many big banks have deferred tax assets that represent future savings which can help offset higher rates. The value of these assets would actually increase if tax rates went up.
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http://www.cnn.com/2020/10/09/investing/bank-earnings-preview/index.html
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