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
Ryan Evans

Inboard – Disrupting Urban Transportation | Ryan Evans

  About Ryan Evans Ryan Evans is the CEO and Co-founder of Inboard Technology. Ryan has always liked being outside, action sports, and business. When the opportunity to came to start Inboard, he jumped at the chance to build his career on these three passions. Ryan and his friend, Theo Cerboneschi, founded Inboard Technology in…

David Cline

How to Ensure Success in Your Career | David Cline

About David Cline David Cline is one of two founding partners of Global Allies. David is a seasoned veteran with over 30 years of experience in the hospitality and home furnishings industry. David along with his partner, Isaac Kubryk are committed to providing a higher level of product quality and service to the hospitality industry.…

Mandy Barton

Step One Jump! | Mandy Barton

  About Mandy Barton Mandy Barton found her purpose, to increase the good of life around her. That’s it. One simple premise, one strong principle that has sprouted an empire built to better yourself, better others and in turn better the world around you. That’s what Mandy Barton believes in. From the moment she decided…

Insynctive | Gary Goldstein

Insynctive | Gary Goldstein

Transcript, Insynctive | Gary Goldstein Alan Welcome back. I’m visiting here today with Gary Goldstein. And Gary is the founder of instinctive. Gary, welcome to today’s show, Gary Hey thanks Alan! I appreciate you having me here today. Alan So Gary, for the listeners, can you give me your background and how you got to…