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Home>UPDATE: These small-cap and mid-cap companies have a lot riding on Trump's tax cut

UPDATE: These small-cap and mid-cap companies have a lot riding on Trump's tax cut

UPDATE: These small-cap and mid-cap companies have a lot riding on Trump's tax cut

10/03/2017

By Philip van Doorn, MarketWatch

Smaller companies tend to derive most of their sales at home, making their income taxes simpler and more costly

After the tremendous response to our look at the income-tax rates of the largest U.S. companies (http://www.marketwatch.com/story/these-companies-may-enjoy-a-windfall-under-trumps-tax-plan-2017-09-29), we now follow up with a list of small-cap and mid-cap companies for which President Trump's proposed corporate tax cut might be even more important.

When we listed the median tax rates for the 30 companies in the Dow Jones Industrial Average (http://www.marketwatch.com/story/these-companies-may-enjoy-a-windfall-under-trumps-tax-plan-2017-09-29), we saw that seven had median income tax rates of more than 30%, while seven had median rates (which include any state or local income taxes, as well as federal income taxes) that were already below Trump's proposed 20%. The current federal corporate tax rate is 35%, one of the highest in the world.

We also listed the U.S. companies in the S&P 500 with the highest and lowest median income-tax rates (http://www.marketwatch.com/story/these-companies-may-enjoy-a-windfall-under-trumps-tax-plan-2017-09-29).

Jefferies analyst Steven DeSanctis called the president's tax proposal "a measly outline" in a report on Sunday, but also noted that small-cap stocks had been rallying since the Trump administration announced its proposal Sept. 27.

Here's how the S&P Small-Cap 600 Index , the S&P 400 Mid-Cap Index and the large-cap S&P 500 Index have fared since Sept. 26:

"History is repeating itself with [small-cap stock investors] jumping based on tax reform," DeSanctis wrote, because small-caps had also rallied to a greater degree than shares of larger companies during the heady days following Trump's election in November.

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