Making the Most of Corporate Tax Reform

shutterstock_612496793

 

Although nothing major has happened yet, rest assured that corporate tax reform is on the way. The Trump administration has made big promises and at some point they are coming. So far, the president has proposed reducing the corporate tax rate from 35 percent to 15 percent, while republican leaders in Congress have proposed a slightly more modest reduction to 20 percent.

Either way, the cut would represent a significant reduction form the current rate of 35 percent and corporations would see a huge boost. For example, if the effective tax rate dropped to 8.4 percent, then S&P companies would see the amount of pretax income they keep jump to about 85 percent from the current amount of about 76 percent.

The president has also proposed a repatriation rate of only 10 percent. In other words all the corporate income that companies are currently holding overseas in order to avoid the 35 percent U.S. corporate tax rate would only be charged a 10 percent rate if it were brought home to the U.S. There could also be a removal of the interest-deductibility, which could actually hurt earnings, but the tax breaks would far outweigh the losses.

Therefore, if you add it all up you get a lower corporate tax rate that would boost earnings by about 11 percent combined with a repatriation rate that would boost earnings another 2 percent. Removing the interest-deductibility would lower earnings by 2 percent, therefore leaving a net boost of 11 percent to S&P 500 earnings.

Posted in
The Finanseer | Megan Lathrop

The Finanseer | Megan Lathrop

The Finanseer | Megan Lathrop Alan Welcome back. I’m here today with Megan Lathrop. Megan is a finanseer. Megan, what is a and finanseer? Megan Yeah great question. I will obviously it’s a play on words from an actual finanseer, but I spell it seer, which means I help people see and illuminate their unconscious…

Omni Channel Entrepreneurship | Alexandra Mysoor

Omni Channel Entrepreneurship | Alexandra Mysoor

Episode Transcript of: Omni Channel Entrepreneurship | Alexandra Mysoor Alexandra Mysoor What omni channel really means is taking a holistic approach to your brand. It’s not being channel agnostic. It’s not just being an ecommerce distribution platform or bricks and mortar or even in some cases catalog Believe it or not, it’s still a very…

Stanford University-School Of Engineering | Richard Dasher

Stanford University-School Of Engineering | Richard Dasher

Stanford University-School Of Engineering | Richard Dasher   Alan Welcome back. I’m here today with Richard Dasher. He’s a PhD from Stanford University where he serves the roles of director of the US Asia Technology Management Center. And he’s also the executive director at the Center for Integrated Systems and consulting. Welcome to the show.…

Situational Leadership | Tim Kearin

Situational Leadership | Tim Kearin

Episode Transcript of: Situational Leadership | Tim Kearin Alan In the book, you turn you talk about learning to apply situational leadership. Now, my understanding is that as you and can begin working together with all the leadership books that he wrote, you didn’t really realize what this was about. Can you expand on that?…