Homebuilders and electric car producers were hit hard today by GOP tax reform proposals.

The lead-in image above is from the CNN article Homebuilder Stocks Rocked by Tax Reform Plan.

Earlier today I posted the tax plan details: Tax Code Overhaul Details: Homebuilders, Tesla, and Those With Lots of Kids Come Out Worse.

Mortgage Interest Deduction Reduced

The bill preserves the mortgage deduction for existing mortgages. But going forward you can only claim a deduction for interest on mortgage debt up to $500,000, down from $1 million today.

The Tax Policy Center estimates the percent of filers who claim the mortgage interest deduction would fall to 4% from 21% because of the higher standard deduction.

Energy Tax Credits

The bill will repeal electric car credits. Shares of Tesla were hit with the biggest decline ever.


Bloomberg reports Tesla plunged as much as 8.9 percent to $292.63, the lowest intraday since May 4. Mike Bishop, a Michigan Republican on the House Ways and Means Committee, told reporters his assumption was that the credits would be phased out immediately.

Those tax credits amount to as much as $7,500 per vehicle.

Flatter Tax

The tax overhaul is a step in the right direction. It would be better yet if the mortgage deduction vanished instead of being reduced.

I favor a small flat tax coupled with a consumption tax (not a VAT) on everything excluding food and medicine, and possibly cleaning supplies and clothing articles below a certain cost.

Everyone would be treated the same, and my proposal protects lower wage earners who tend to spend every penny on food and essential items.

Mike "Mish" Shedlock

Tax Code Overhaul Details: Homebuilders, Tesla, and Those With Lots of Kids Come Out Worse

GOP leaders finally unveiled key details in their tax overhaul plan. There are some winners and losers as always the case. Two losers are the homebuilders and Tesla. Part of the mortgage write-off goes away and the bill will repeal electric car credits. Families with lots of kids may lose as well.

"Tax Plan May Cost Citigroup $20 Billion"

Citigroup CFO warns of a big hit to earnings if the GOP tax plan passes. Deferred income is the primary reason.

Triple Tantrum: Stocks Sink, GOP & EU Outrage on Trump's Steel Tariffs

Trump announced sweeping new tariffs on steel and aluminum. The stock market threw a tantrum and so did GOP leaders.

Senators Rubio and Lee Threaten to Sink Tax Bill Over Child Tax Credit

Senator Marc Rubio demanded child tax credits be expanded. The committee complied, but questions remain.

GOP Tax Reform: How Does It Affect Me? You? Mish Alternative Proposal

People have asked me to comment on the GOP’s Unified Framework For Fixing Our Broken Tax Code. I will do so honestly. In the comments below I explain how the proposal benefits me personally, small business owners in general, and the average person.

Tesla Sinks After Hours: Model S Recalled, Bonds Collapse, Fraud Lawsuit Goes On

It's a beautiful trifecta for Tesla this evening, provided you are short. I have no position.

Significant Differences in Senate vs House Tax Overhaul Plan: Will Anything Get Done This Year?

There are significant differences between the House and Senate versions of the tax overhaul. Unlike the House, Senate Republicans cannot afford to lose more than two votes. Also unlike the House, the Senat has budget rules that must be met. Will the differences be resolved in reconciliation?

China Labels US Tax Plan a "Gray Rhino"

In response to US tax legislation, China plans measures to counter threats of increased capital flight.

Model 3 Assembly Line: Detailed Images of Tesla's "On the Fly" Manufacturing

The New York Times has an interesting set of images and comments on the Tesla Model 3 tent production line.