Chart: The effects of Biden’s proposed corporate tax changes

[ "Blog: Latest Insights" ]
[ "Equity", "Grow Assets" ]
[ "Columbia Threadneedle Investments" ]
  • Chart on the Go

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Our latest chart demonstrates how various sectors could be impacted by Biden’s tax proposal.

  • Our fundamental analysts looked at how Biden’s proposed corporate tax changes would impact corporate earnings, specifically his proposals to hike the corporate tax rate from 21% to 28%, increase the global intangible low tax income (applicable to companies with offshore subsidiaries) and set a minimum 15% book tax rate.

 

  • Analysts scored the impact to companies' earnings per share on -2 to +2 scale. At the sector level, real estate and utilities (which can pass increases on to customers) were the relative winners. Companies with a greater percentage of profits in foreign subsidiaries may see the greatest tax headwind. In total, we estimate that the proposal could have a -7% effect on S&P 500 profits.

 

  • This bottom-up analysis is not intended to support a bet on one sector versus another. Managers with an active approach will consider the prospective impact of tax changes as they conduct their company-specific fundamental analysis.

 

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