Rumblings in the market suggest that some tax equity investors are preparing for the possibility that the 2017 marginal corporate federal income tax rate may be much lower than the current 35 percent.  Such tax equity investors are concerned that this could result in them having insufficient tax appetite in 2017 to make tax equity investments.  Such a concern is unfounded.

First, broad tax reform measures (like changes in corporate rates) are never effective in the year they are enacted.  Businesses, the IRS and tax professionals need time to implement the new rules. This includes financial planning, but also includes the IRS drafting new forms and tax preparation companies updating their software.

Further, since 1954 the only instance of tax reform being passed in the first year a new President was in office was Ronald Reagan in 1981.  (And again, those changes were effective starting in 1982.)

Below is a chart I prepared summarizing the timeline of major federal income tax reform legislation since 1954: