A Foolish Take: Tax Cuts and Stock Prices
The CEO of a major regional bank recently told me something interesting about the prospective tax reform making its way through Congress. If a tax reform bill passes, he believes it will give the economy two or three more years of expansion.
This makes sense given that taxes are simply an expense, weighing directly on a company's bottom line. Because earnings drive stock prices, moreover, it also makes sense that tax cuts would be good for stocks.
Data source: Yahoo! Finance. Chart by author.
Source: Fool.com
