Analysts from Moody’s Investors Service are weighing in on President-elect Donald Trump’s proposal for a one-time tax holiday for U.S. companies including Apple to bring back overseas cash. In the report via MarketWatch, Moody’s suggests there could be a positive short-term impact from the potential one-time tax cut, but that deeper tax reform is needed to see long-term results.
Moody’s predictions appear to be influenced by the results of the last tax holiday in 2004, which was a 5% rate but came with restrictions that diminished U.S. company participation. Here are some details from 2004:
In light of these details it makes sense why Moody’s position is that more substantial tax reform and fewer restrictions would be necessary to make a long-term impact. In contrast to the weak participation from 2004, Moody’s analyst Richard Lane shares a positive prediction is these conditions are met.
It’s no surprise that Apple is in the spotlight along with Microsoft and Alphabet’s Google, as they hold the top three positions for U.S. companies with most cash on hand.
Whatever happens with Trump’s proposal, don’t expect to see results anytime soon. Based on Moody’s report, it may be a year or more before we see results of this initiative.
