Ask a Fool: Which Companies Would Benefit the Most From Tax Reform?
Broadly speaking, there are three main ways companies could potentially benefit from tax reform.
Most obviously, if the corporate tax rate is reduced, it could benefit companies that currently pay high effective tax rates. For example, Southwest Airlines generates virtually all of its sales inside the U.S. and pays a 38% effective tax rate. CVS Health pays an even higher effective tax rate of 39%. If the federal tax rate were to be reduced from 35% to 20% as is being proposed, these companies could be big winners.
Another way companies could benefit is from the proposed repatriation tax break. It currently costs businesses 35% to bring foreign profits back home, and a temporarily low repatriation rate of 10% or so could be part of a tax reform package. This would certainly help companies like Apple and Microsoft, just to name a couple, which have nearly $400 billion in overseas cash between the two.
Source: Fool.com
