Making the Most of Corporate Tax Reform
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.
Corporate Governance | Dr. Douglas Y. Park
Transcript of: Corporate Governance | Dr. Douglas Y. Park Alan Welcome back. I’m here today with Dr. Douglas Park. He’s an attorney with the Ramone law firm located in Palo Alto. Doug, welcome to today’s show. Doug Thank you, Alan, I’m happy to be here. Alan Doug, can you tell us about your background,…
Patent Protection | Arlen Olsen
Episode Transcript of: Patent Protection | Arlen Olsen Alan Welcome to America Dreams right here on AM 1220 kdow, we got a great show coming up today the first segment we’re going to be having Arlen Olsen. He’s a patent attorney and talking about patent law. And you know why you should be thinking…
Legacy of Success | Doug Keyston
Episode Transcript of: Legacy of Success | Doug Keyston Alan Welcome back. I’m here today with Doug Keyston. And he’s a private wealth client advisor here in the San Francisco Bay Area. Welcome to today’s show. Doug Thanks very much Alan. Alan Doug. Can you give me your background? Doug I happy to do…
Entrepreneurs Journey | Steve Cho
Transcript, Entrepreneurs Journey | Steve Cho Alan Welcome back. We have with us today on the show Steve Cho. Steve is the founder of a custom software system. Here in Fremont, California called ASCC. Steve, welcome to today’s show Steve And thank you for having me. Alan So Steve, can you give us some your…