Recalling president-elect Donald Trump saying in August 2015 that it would be a dream of his to put H&R Block Inc. (NYSE:
As a result of the downgrade, HRB shares dropped 9% as investors took seriously the threat that taxpayers may move away from tax preparation services and toward online filing.
Congress May Unite
It isn’t just fear of Trump that’s behind this move. With Republicans in control of the House and Senate and Democrats like Senators Elizabeth Warren and Bernie Sanders in favor of tax simplification, many feel promises of tax reform may actually become reality.
Trump’s promise to crack down on immigration and repeal the Affordable Care Act could also hurt H&R Block’s bottom line. In June the company reported revenue of $3.04 billion in fiscal 2016 versus $3.08 billion in fiscal 2015.
Turning Bad News Into Good
What may turn out to be bad news for companies like H&R Block could turn into good news for some of Silicon Valley’s best and brightest. That would be quite a switch from the animosity felt on both sides so far.
Trump’s threats against immigration that would impact the valley’s reliance on workers with H-1B visas to this antitrust anti-trade threats have all cast a shadow since the election.
Taxes Could Be Key
When it comes to taxes, however, Trump and Silicon Valley
If Trump is able to enact a new rate of between 10 and 20% it’s possible some of that overseas cash could begin to find its way to the U.S. Much could come from companies like Apple Inc. (NASDAQ:
3 Problems With Trump’s Tax Plan
As some have
Bottom income earners will see a tax cut of about $560 for a family earning between $40,000 and $50,000 per year. Those at the top will get an average tax cut of $317,000. The difference is exaggerated since the percent of the tax cut is much larger for higher income earners.
In addition, unless GDP goes through the roof, all those tax cuts will increase our national debt enormously. Finally, despite promises to help out businesses, Trump’s tax plan may do very little to help certain types of firms such as partnerships, LLCs and sole proprietorships which would not have access to a reduced corporate rate of 15% but would be facing the top individual rate of 33%.