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Why Tax Reform Changes Nothing — and Everything

May 14, 2018

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Companies in the U.S. were already sitting on piles of cash before tax reform passed in December 2017. Now, with a strengthening global economy and a tax overhaul that lowers the corporate tax rate from 35 to 21 percent and incentivizes U.S. companies to repatriate all their previously untaxed foreign earnings, those piles of cash are poised to grow substantially. Some estimate there may be more than US$330 billion in tax savings for corporations over the next 10 years, not including the trillions of dollars held overseas that may now come home. Already companies are reporting significant tax savings, including Berkshire Hathaway’s $29 billion and AT&T’s $3 billion. The big question is: What will companies do with this windfall?

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