Cathie Wood Urges Trump Administration for Tax Cuts

By Suzanne McGee

U.S. tech investor Cathie Wood is urging Donald Trump’s upcoming administration to enhance economic growth by backdating corporate and personal tax cuts to January 1, 2025, as reported by Reuters.

Wood's ARK Innovation (NYSE:ARKK) fund has risen 17% since Trump's electoral victory. Notable stocks in Wood's portfolio, such as Tesla (NASDAQ:TSLA) and Coinbase (NASDAQ:COIN), have increased by 54% and 7%, respectively, since November 6. In the same timeframe, the S&P 500 has only grown about 1.7%.

Besides Tesla and Coinbase, ARKK's top holdings include Robinhood (NASDAQ:HOOD) and Block, which Wood believes will also benefit from favorable crypto and AI policies.

Wood supports Trump’s economic framework, including reducing bureaucratic barriers and promoting innovation. Tax policy was pivotal in the election, with Trump promising to lower corporate tax rates, and Wood calls for further precision on potential tax cuts.

In an interview, Wood stated, "We’re going to cut taxes but we will make them retroactive to Jan. 1, 2025. That would be very helpful for market certainty."

Wood is cautious about tariffs, seeing them as tax hikes, but understands Trump’s threats may serve as negotiation tools.

As the Republican-controlled Congress is anticipated to pursue tax reform, Trump plans to initiate an innovation-friendly agenda through executive orders following his inauguration. Although Wood did not financially support Trump in the 2024 cycle, she’s connected with influential figures like Elon Musk and Senator Cynthia Lummis, who are shaping Trump’s policies.

With 16% of ARKK's $6.4 billion assets in Tesla, Wood remains optimistic about technologies converging, especially AI's role in driving investment returns. To diversify, she is reallocating some Tesla shares to companies like Archer Aviation, which develops autonomous aircraft.

ARK Investment Management is also pushing for crypto innovation, launching a spot bitcoin ETF in January. Wood indicated that the crackdown on crypto under Biden jeopardized the U.S.'s position in global innovation, but the new administration will likely favor innovation.

Despite some volatility post-election, Wood believes that the initial market gains will broaden over time, favoring innovation and sectors that faced regulatory challenges in recent years. Investors, however, have withdrawn roughly $3.5 billion from ARKK over the past two years, with $300 million exiting recently.

Wood acknowledges the inherent volatility in her funds but maintains that they offer a unique investment perspective in innovation.

> "Even with supportive policies, we will still experience volatility," Wood stated.

Conclusion

Cathie Wood is advocating for tax cuts to stimulate economic growth and support innovation, while navigating the complexities of market volatility and regulatory environments.