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Will The Tax Code Overhaul Really Help Your Investments?

As Congress votes on the first major tax code overhaul in three decades, stock markets across the globe are in rally mode. After details of the final product came out it is clear that pass through tax benefits to real estate investors, like Mr. Trump, may be substantial. But will the tax code overhaul really help your investments? Apple may get a downgrade because analysists think the iPhone product cycle may be getting old. And, do all stocks benefit from changes in the tax code? The New York Times tallies up the winners and losers of the tax bill.

President Trump has called the $1.5 trillion tax cut that Republican lawmakers are on the verge of passing a Christmas present for the entire nation.

But the fine print reveals that some will get a much nicer gift than others, the benefits will change over time, and some will be left out in the cold. Real estate developers and technology companies could see big tax cuts, while low-income households and people buying health insurance could lose out.

With the bill finally headed to a vote this coming week, taxpayers are scrambling to determine whether the legislation renders them winners or losers.

If their analysis is correct real estate developers like the family of the president will make out well and perhaps the likes of Apple will get help in the event of a fading product cycle. Important parts of the tax code overhaul are the reduction of the corporate tax rate and the significant reduction of the tax on repatriated corporate profits. Shareholders of companies with billions of dollars stashed offshore may see increased dividends and soaring share prices as corporations take advantage of the new tax code and bring money back home to the USA. Who has the most offshore?

APPL: $216 Billion
MSFT: $128 Billion
CSCO: $68 Billion
QCOM: $30 Billion
AMGN: $36 Billion
ORCL: $48 Billion
GE: $35 Billion

Business Insider provided these numbers and writes that the tax plan could bring $250 Billion into the USA.

The repatriation tax holiday outlined in the plan, for which details were released on Thursday, is designed to incentivize US-based companies that do big business overseas to bring those profits back home.

By Goldman Sachs’ calculation, S&P 500 companies hold $920 billion of untaxed overseas cash, and the firm estimates that $250 billion of that would be repatriated. Looking at all US-based companies, Citigroup says there’s a whopping $2.5 trillion of capital stashed internationally.

Not all offshore cash will ever be repatriated because US multinationals have expenses in their offshore operations and it makes no sense to send money back to the USA to get taxed and then send it back offshore to pay wages or build new manufacturing and shipping facilities. And, while companies like Apple have huge stores of offshore cash there are smaller companies with only a billion or so for whom repatriation will be a much bigger deal for their investors.





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