AAII Readers Discuss Tax Reform & Ways Federal Government Could Boost the Stock Market


Now that the 115th Congress has convened and a new President has been sworn in, it is time for those in Washington, D.C. to get down to actually governing. As is typically the case, a lot of promises were made during the campaign season. Often these promises are just empty words. One promise that is a perennial favorite, especially among Republicans, is tax reform. With a Republican President and Republican-controlled Congress, the likelihood for “true” tax reform seems high.

AAII Weekly Survey Question

To see whether AAII readers agree with this assessment, we asked them the following:

How likely is it that fundamental tax reform will occur during the 115th Congress?

Here are the results as of 6 a.m. (Central) on January 30, 2017:

Out of the 2,722 readers who responded, nearly two-thirds (63.1%) believe there is some likelihood that fundamental tax reform will take place over the next two years. Forty-two percent feel it is somewhat likely that fundamental tax reform will take place during the current Congress, while 21% are more optimistic, feeling it is highly likely that fundamental tax reform will take place.

Overall, 29% believe it is unlikely that the meeting of the legislative branch of the U.S. federal government will result in fundamental tax reform. This group is split nearly 50-50 between those that feel it is somewhat unlikely and highly unlikely.% see the built-in diversification that comes with investing in mutual funds and ETFs as the primary reason for investing in them. This was the overwhelming choice, as the next three options were all clustered together at 11% to 13%. Lastly, 11% of the respondents said they do not invest at all in mutual funds or ETFs.

Finally, only 7% of respondents are indifferent as to the likelihood of fundamental tax reform during the current Congress.

Weekly Special Question

Tax policy is one of the many ways in which the government can impact the stock market. We were curious to see the ways in which our readers believe the federal government could positively impact the stock market. So we asked:

What could the new president and Congress do that would have the biggest positive impact on the stock market?

In all, 451 readers provided responses. Feeding off last week’s survey question, the majority felt that tax policy would have the biggest positive impact on the stock market with nearly 54% of respondents making reference to taxes. However, there are a variety of ways our readers believe that tax policy can impact the stock market. Among the 243 responses that mentioned taxes, over one-third (37%) cited either the reform of corporate tax laws or lowering corporate tax rates as a way to positively impacting the stock market. Nealy one-quarter (23.5%) of tax-related responses focused on revising the U.S. tax code as a way of positively impacting the stock market. Another 13% said that allowing multi-national companies to repatriate cash held overseas would have a positive impact on the stock market. Rounding out the top tax-related responses, 6% and 4.5% feel that lowering the capital gains tax and lowering/eliminating the taxation of dividends, respectively, would spur the stock market.

Moving away from taxes, nearly 14% of all respondents believe that lowering government regulation would have a positive impact on the stock market

Given the frustration many American have with politicians, it is probably not surprising that almost 8% of respondents saying a mass resignation by the Congress and/or president would have a positive impact on the stock market.

Here is a sampling of the responses:

  • “Eliminate taxes on dividends for individuals.”
  • “Allow overseas profits from U.S. firms to be brought back to the U.S. at a low tax rate.”
  • “Avoid a trade war.”
  • “Balance the budget.”
  • “Build infrastructure.”
  • “Change trade agreements in order to create fairness for the U.S.”
  • “Do away with onerous regulations that do nothing to help businesses…”
  • “Leave well enough alone.”
  • “Lower the rhetoric, stop the tweets and show themselves to be responsible and thoughtful.”
  • “Work out solutions together by listening to the American people instead of their own egos.”
  • “Work together.”

Everybody has an opinion! Why not give us yours? Participate in our weekly member poll, updated every Monday, and see the results online at http://www.aaii.com/memberquestion.


1 Reply to “AAII Readers Discuss Tax Reform & Ways Federal Government Could Boost the Stock Market”

  1. I think every one needs to have a stake in the game.
    We have probably 50% of the population either paying no taxes or working for the government. This group is always infover of increasing the taxes. It cost them nothing or keeps them employed. Lower the thresh hold for paying income taxes at a low rate but so everyone is in the game.


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