Morningstar

Tax Reform More Likely to Happen Than Not

Tax Reform More Likely to Happen Than Not

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.

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About the Author

Joshua Aguilar

Director
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Joshua Aguilar is a director, AM Resources, for Morningstar*. After previously covering multi-industrial conglomerates and financial services firm, he is now assuming coverage of exploration and production firms in the oil and gas industry.

Prior to joining Morningstar in 2016, Aguilar was a practicing business transactional attorney in Florida. Aguilar joined Morningstar in 2016 as an Associate on the Financials team, was promoted to Analyst on the Industrials team in 2018, and Senior Analyst in 2022. He’s also served as our Associates Coordinator since 2021 and led our diversity efforts as DEI co-chair since 2020. Aguilar has served as a key mentor to several Associates on their path to Analyst. He’s also hosted a Morningstar earnings townhall, participated in Analyzing MORN, and been a strong contributor through both client interactions and his GE stock call. Josh co-authored an Outstanding Research Achievement (ORA)-winning piece with Kris Inton on CEO compensation in 2021. He’s also taught the model to new hires for many years as part of the Valuation Committee.

Aguilar graduated Magna cum laude with a B.A. in political science and criminology from the University of Florida. He also has an MBA from Rollins College and a J.D. from Wake Forest University. Aguilar remains an active member of the Florida Bar Association.

* Morningstar Research Services LLC (“Morningstar”) is a wholly owned subsidiary of Morningstar, Inc

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