Goldman Sachs said Wednesday that it doesn't expect tax reform until the first quarter of next year as Republicans continue efforts to pass health-care legislation.
In a note to clients, the investment bank said GOP leaders appear intent on trying to pass a repeal and replacement of Obamacare. Goldman said passage of a new health bill, however, seems unlikely and sees Republicans possibly moving on to other issues by June.
"The renewed focus on health care has once again delayed tax reform efforts, however," Goldman said. "We still believe tax legislation is likely to become law, but continued delays suggest that enactment is likely to slip to early 2018."
The prediction came after Treasury Secretary Steven Mnuchin, a former Goldman Sachs banker, told the Financial Times earlier this week that the Trump administration's timetable for tax reform could be delayed after setbacks in health care.
He told the newspaper the target of getting tax reform to President Donald Trump by Congress' August recess was "highly aggressive to not realistic at this point."
"It started as [an] aggressive timeline," Mnuchin said in the interview. "It is fair to say it is probably delayed a bit because of the health care."
Goldman also said that Trump's tax legislation is more likely to be a tax cut with "limited elements" of reform.
"Namely a 25 percent corporate rate with provisions allowing for low-tax repatriation of foreign profits, incremental base broadening, and no border adjusted tax," the bank said.