Biden’s new corporate tax hike won’t be ‘material’ to most U.S.

Business advocacy groups lobbied hard against the 15% minimum tax rate for large corporations that just passed Congress as part of the the Inflation Reduction Act, saying it was “terrible policy” that would reduce economic growth and make America “poorer.”

Wall Street analysts, however, say the legislation won’t dramatically affect company earnings or their future investments.

Companies that make more than $1 billion a year will now have to pay a minimum tax rate of 15% as well as 1% on stock buybacks. Those tax reforms, aimed mostly at the largest U.S. corporations like Google parent Alphabet, JPMorgan Chase and Facebook parent company Meta, will reduce the federal deficit by an estimated $300 billion over the next decade.

While the new taxes are “generally not positive for stocks,” the 15% corporate minimum tax won’t be “material,” Wells Fargo analysts wrote in an Aug. 9 research note that called the new taxes “modest.”

Just over 170 companies in the S&P 500 paid less than 15% in taxes last year, according to a new analysis by Credit Suisse. Of those corporations, less than half would likely see a tax hike for 2023 since the legislation allows companies to use adjusted earnings, which can be massaged in a number of ways, the analysis found.

“In general, the impacts could be somewhat minimal overall and at this point, complicated to truly understand,” Credit Suisse accounting strategist with