Some com­pa­nies will win big

Q: Who would ben­e­fit most from tax re­form?

USA TODAY US Edition - - MONEY - Matthew Frankel

A: There are three main ways com­pa­nies could po­ten­tially ben­e­fit from tax re­form.

If the cor­po­rate tax rate is re­duced, it could ben­e­fit com­pa­nies that cur­rently pay high ef­fec­tive tax rates. For ex­am­ple, South­west Air­lines gen­er­ates most of its sales in­side the U.S. and pays a

38% ef­fec­tive tax rate. CVS Health pays an ef­fec­tive tax rate of 39%. If the fed­eral tax rate were to be re­duced from 35% to

20% as is be­ing pro­posed, these com­pa­nies could be big win­ners.

An­other pos­si­ble ben­e­fit is from the pro­posed repa­tri­a­tion tax break. It cur­rently costs busi­nesses 35% to bring for­eign prof- its back home, and a tem­po­rar­ily low repa­tri­a­tion rate of 10% or so could be part of a tax re­form pack­age. This would help com­pa­nies such as Ap­ple and Mi­crosoft, which have nearly $400 bil­lion in overseas cash be­tween the two.

Fi­nally, com­pa­nies that rely on con­sumer spend­ing could ben­e­fit from lower per­sonal in­come tax rates. Ama­, for ex­am­ple, could reap the re­wards of higher con­sumer spend­ing, as could pay­ment pro­ces­sors such as Amer­i­can Ex­press. How­ever, pre­dict­ing the big win­ners of in­di­vid­ual in­come tax re­form is a bit trick­ier.

Teresa Ker­sten is an em­ployee of LinkedIn and is a mem­ber of The Mot­ley Fool’s board of direc­tors. LinkedIn is owned by Mi­crosoft. Matthew Frankel owns shares of AXP and AAPL. The Mot­ley Fool owns shares of and rec­om­mends Ama­zon and AAPL. The Mot­ley Fool rec­om­mends AXP and CVS Health.

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