The host of ‘Kudlow’ says Biden’s infrastructure plan includes massive sociopolitical spending
According to John Butters, senior earnings analyst at Factset, the upcoming first quarter reporting season, which begins Wednesday with JPMorgan and Wells Fargo, is possibly the strongest in more than a decade. But instead of popping the champagne, the finance chiefs are preparing to answer some tough questions about President Biden’s corporate tax plan.
Goldman Sachs found in a customer survey that its investors expect from CFOs, among other things, the “possible negative impact on the EPS if the new tax reform proposal by the Biden government is adopted,” according to the team, led by David Kostin, chief executive US market strategist. If it sails through Congress, earnings growth could fall from 12% to 5% in 2022, the company predicts.
“There’s a tremendous amount of uncertainty for businesses,” Deloitte’s director of taxation, Jon Traub, told FOX Business, as details of the plan, along with its future in Congress, remain uncertain. Even so, companies are still preparing for change. “CFOs are asking tax advisors to model different scenarios,” he said, noting that the effects do not affect every company in the same way. “It will be a small success for some companies and less so for others.”
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Biden’s plan in its current form would raise the corporate tax rate from 21% to 28%, the level then-President Trump set in 2017 when he lowered it from 35%.
Behind the scenes, many company chiefs beat the drum against the hike.
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“75 percent of CEOs said that an increased tax burden for US companies would negatively affect their company’s investments in research and development and innovation. 71 percent said it would negatively affect their ability to hire, and almost two-thirds said this would lead to a slowdown. ” Wage growth for US workers, “said Gregory Hayes, chief executive officer of Raytheon Technologies, in a poll released Monday.
Along with the defense giant, the BRT has Walmart, JPMorgan and Verizon among its numerous CEO members. The group has sales of $ 20 trillion and jobs for 20 million Americans.
Not everyone is against a higher corporate tax rate. Jeff Bezos, CEO of Amazon, said last week his company supports “a corporate tax rate hike,” as outlined in an open letter.
With the S&P 500 and Dow Jones Industrial Average at record highs, it’s unclear whether first-quarter earnings, even the stellar results, will keep stocks higher if companies don’t provide clear indications of the potential impact a higher tax rate.