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Financial report / equity strategy analysis
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674 KB
Summary
This document is page 25 of a 'Equity Strategy Focus Point' report produced by Bank of America Merrill Lynch, dated January 29, 2017. The text outlines methodologies for calculating the financial impact of changes in corporate tax rates and interest deductibility on company earnings, specifically mentioning calculations for the S&P 500. The document bears a 'HOUSE_OVERSIGHT' Bates stamp, indicating it was part of a document production for a congressional investigation.
Organizations (3)
| Name | Type | Context |
|---|---|---|
| Bank of America Merrill Lynch |
Logo and text in footer indicating the source of the report.
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| S&P 500 |
Referenced in the context of calculating the impact of lower corporate tax rates on earnings.
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| House Oversight Committee |
Implied by the Bates stamp 'HOUSE_OVERSIGHT_023093'.
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Key Quotes (2)
"The impact of a lower corporate tax rate on company earnings is directly proportional to the difference between the current domestic tax rate and the proposed tax rate."Source
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Quote #1
"We estimate the cost associated with the removal of the net interest expense deduction from taxable income by multiplying the net interest expense by the tax rate."Source
HOUSE_OVERSIGHT_023093.jpg
Quote #2
Full Extracted Text
Complete text extracted from the document (895 characters)
year from the median calculation. For companies with normalized tax rates of more than 75%, we assume 35%.
The impact of a lower corporate tax rate on company earnings is directly proportional to the difference between the current domestic tax rate and the proposed tax rate. The impact is calculated by taking the difference between the current tax rate and the proposed tax rate, and dividing it by (1-current tax rate).
To calculate the impact of a lower corporate tax rate on the S&P 500 earnings, we can divide the change in the effective tax rate by (1 – the current effective tax rate).
Interest deductibility impact
We estimate the cost associated with the removal of the net interest expense deduction from taxable income by multiplying the net interest expense by the tax rate.
We estimate the cost associated with the removal of the net interest expense deduction from taxable income by multiplying the net interest expense by the tax rate.
Bank of America Merrill Lynch
Equity Strategy Focus Point | 29 January 2017 25
HOUSE_OVERSIGHT_023093
Equity Strategy Focus Point | 29 January 2017 25
HOUSE_OVERSIGHT_023093
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