US tax: more tax details to come by the end of the week - Nomura

Analysts at Nomura noted a key factor to financial markets currently and explain the 'need-to-know' details.

Key Quotes:

"What's happening?

We expect House Ways and Means Committee Chairman Brady to release a draft tax plan later this week (under the US Constitution tax legislation has to be initiated in the House). At the time of writing, press reports suggest that some aspect of Brady’s proposal may still be in flux. The release of the full draft of the legislative text may not come until Thursday or Friday. 

We expect a separate proposal to be brought up in the Senate Finance Committee in a couple of weeks. But in the end, the House and Senate will both have to agree on a single proposal. What to look for Figure 1 lays out the estimated budget effects over the first 10 years (2018-2027) of most of the major elements being considered for business and personal tax changes. The challenge the House faces is how to provide up to $6tn in tax reductions while only allowing the deficit to increase by $1.5tn.

What will happen next?

1. Over the next several days and weeks we expect a variety of analyses to be released from different sources. Those analyses will address both the overall cost of the proposal and its impact on different groups of taxpayers. The first question will be if the proposal meets the revenue targets laid out in the Budget Resolution. The distributional impact will also be important. On the personal side, how many taxpayers will be worse off? How do the 1% and 0.1% of the income distribution fare compared to the median family? What industries benefit the most? 

2. Lobbyists will immediately spring into action to protect their interests. 

3. There will likely be hearings during the week of 6 November as the draft bill is marked up in the House Ways and Means Committee. 

4. The Senate will release its plan and the process starts again, though maybe not as frenzied since the Senate and House plans will share common elements."