La ‘Trumpformación’ fiscal de EE.UU.

Greg Venizelos y Varun Ghotgalkar, AXA IM - Martes, 07 de Marzo

• 
• 
• 
• 
• • 
  • 
  • 

Corporate tax trumpformer  What’s on the cards for corporate America from tax reforms? [if !supportLists]§  [endif]In this note we attempt to estimate the impact of the long awaited US corporate tax reform (CTR) on company metrics and its implications for equity and credit markets.

While the scale and scope of CTR is yet to be finalised, four key pillars appear to be under consideration: (i) a lower statutory tax rate; (ii) interest non-deductible and capex deductible up front; (iii) switch to a destination-based system with a border adjustment tax (BAT) as a key component; and (iv) cash repatriation amnesty.

While the tax rate reduction would be a boost to earnings, the loss of interest deductibility would act as a drain, albeit one offset by upfront capex expensing. The BAT component would have a very different impact across sectors, favouring those with a domestic cost-base and disadvantaging import-dependent ones.

The deployment of repatriated cash for equity buybacks would likely boost earnings per share (EPS) by over 1%. Bond buybacks could reduce gross debt by up to 3%.

Overall, our simulations of all four pillars suggest a net positive impact of 13% to EPS for the aggregate market ex-financials. Telecom, Technology and Utilities would reap the highest earnings boost. Consumer goods would be the sector showing significant downside risk.

[Volver]