If the Republican tax plan passes basically intact, investment firm Invesco recently predicted it'll satisfy Wall Street and drive stocks higher.
Moreover, there's one particular element in the proposal which could have the biggest positive impact: A permanent 20 percent corporate tax rate, a deep cut from the current 35 percent level.
Invesco's global strategist Kristina Hooper believes the odds are high the new figure will stick.
"I give this a more than 50 percent chance of surviving. To me, this is the centerpiece of the legislation," Hooper said recently on CNBC's "Futures Now."
It's been more than 30 years since the tax code has undergone major changes. According to Hooper, stocks could rally another five percent over the next several months if the bill is passed with a corporate tax rate 15 percent lower than the current level.
"If we could just get those corporate tax cuts, I think that would be very powerful," she added.
Can the GOP hold the 20 percent line?
There are certain parts of the market which could run into some trouble. Hooper warns high-debt companies, home builders and even homeowners could become under pressure.
"If this goes through, we're going to see a reset in home prices in high tax states because the cost of owning a home there is going to go up significantly," noted Hooper.
Before that has a chance to happen, the Republican tax bill still faces obstacles. It needs to pass through both houses of Congress before it ends up on President Donald Trump's desk. Along the way, the bill could start to look vastly different than its current form.
Jared Bernstein, senior fellow at the non-partisan Center on Budget and Policy Priorities, believes the legislation will see a lot of changes over the next few months — and that includes whether 20 percent corporate tax rate figure stay.
Reference: CNBC
Read more: https://www.cnbc.com/
Thai
Eng