Link here.
The effect of eliminating corporate interest deductibility might be even more profound. While companies pay an effective tax rate of 30.8 percent on equity-financed investments today, according to the Council on Foreign Relations, the tax cut of debt funding is actually -7.4 percent. Naturally, companies now favor equity over debt. Under Trump's plans, both equity and debt-financed investments will incur a tax rate of about 10 percent. Corporate debt issuance will sink like a stone. So will share buybacks, though they may get a short-term bump from money brought back under any U.S. tax holiday. The math of borrowing in bond markets to buy back shares will get a lot less pretty. That could hurt share prices.
Submitted January 12, 2017 at 11:17AM by Bizkitgto http://ift.tt/2jApeDw
