Corporate taxes dropped for consumer companies, among others, following the passage of the 2017 tax reforms championed by President Donald Trump. A Joe Biden presidency, meanwhile, promises to roll back many of the Trump tax cuts while keeping rates below where they sat under previous administrations.

Part of Biden's tax plan includes increasing the statutory corporate rate to 28% from the 21% enacted by President Donald Trump in late 2017. Prior to Trump's tax reform plan, the corporate tax rate sat at 35%.

During Trump's presidency, consumer companies paid much less in taxes compared to 2016. In 2019, the median effective tax rate, calculated as income tax expense as a percentage of earnings, for the companies in the S&P 500 Consumer Discretionary was 22.2%, compared to 32.6% in 2016. Similarly, the median effective tax rate for the S&P 500 Consumer Staples index was 21.0%, compared to 29.8% in 2016. Companies include federal, state, local and foreign taxes, in addition to any tax breaks, when reporting their calculated effective tax rates.

Consumer companies did pay a higher tax rate in 2017, when Trump's tax reform was signed into law. During that time, many U.S. corporations began bringing cash held overseas from the earnings of foreign subsidiaries back to the United States.

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Among consumer staples corporations, Walmart Inc.'s effective tax rate for 2019 was 24.4%, compared to 30.3% in 2016, while The Coca-Cola Co. and PepsiCo Inc. recorded effective tax rates of 16.7% and 21.0%, respectively. Four of the five largest publicly traded consumer staples companies reported lower tax rates in 2019 as compared to 2016, with The Procter & Gamble Co. being the exception.

Similarly, the five largest consumer discretionary companies also paid lower tax rates in 2019. Amazon.com Inc.'s effective tax rate for 2019 was 17.0%, compared to 37.5% in 2016. Home Depot Inc.'s effective tax rate for 2019 was 23.6%, while Nike Inc. and McDonald's Corp. had effective tax rates of 14.4% and 24.9%, respectively.

During recent years, consumer-focused stocks, along with the broader market, soared. The S&P 500 Consumer Discretionary index recorded a year-to-date total return of 26.6% as of Oct. 22, on top of its 27.9% return in 2019. Similarly, the S&P 500 Consumer Staples index returned 6.1% year-to-date in 2020, and 27.6% in 2019.