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⚠️ Another law against monsters or inflation protection⠀
🥊 American corporations are preparing for a tax attack: the new Inflation Reduction Act is supposed to add at least $750 million in tax deductions to the budget. Large public companies, which report an average of more than $1 billion in pre-tax earnings over three years, are being hit.
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Officially, the new law calls for cuts in health care spending and combating climate change. For example, corporations such as Tesla (NASDAQ: TSLA) or Amazon (NASDAQ: AMZN) will pay a minimum cash income tax of 15%. This tax is expected to raise an additional $222 billion over 10 years and $35 billion as early as 2023.
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Investment analysts at Wolfe Research screened 35 US companies with an income tax rate of less than 15%. The list of potential “victims” includes Shopify (NYSE: Shop), UBS Group (NYSE: UBS), American International Group (NYSE: AIG), and Nvidia (NYSE: NVDA). Advanced Micro Devices (NASDAQ: AMD).
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Most of these companies now pay taxes in the 8% to 5.2% range, although even Moderna (NASDAQ:
MRNA), which pays a cash rate of just 3.6%, is reporting earnings of over $1 billion.
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According to the note, for companies with foreign parent companies, the tax will be applied at the level of US subsidiaries if consolidated profits are $1 billion, with $100 million of profits to be recorded in the US.
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The impact of the new law on the dynamics of shares is still difficult to assess. The first result can be seen only in the reporting for the first quarter of next year, but companies are already starting to optimize their financial flows. Various options are being considered for restructuring and moving production outside the US tax jurisdiction
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We recommend that you compile your watchlist of the companies that you think will be the most “affected” by the new tax and carefully monitor all information. And then you will be able to react in time if speculators dare to hype on this topic.
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Profits to y’all!