Lawmakers have proposed tax bills that would reduce corporate tax rates domestically and free up offshore earnings. However, many tech companies conduct business globally, meaning their domestic tax rates aren’t very high. According to Mr. Sacconaghi, 24 major tech companies represent about $550 billion in foreign cash.
Although technology and healthcare companies often have lower tax rates, retail and transportation companies are subject to higher rates, according to S&P Global Ratings from earlier this month, CNBC noted.
“If you look at the tax rate for tech today as a sector, its tax rate is about 19.5 percent. The rest of the market is at 24.6 percent. So if you end up having a lower tax rate, something that’s 20 [percent] — or, on a global basis, going to be less than 20 — then tech’s simply not going to benefit as much because it’s starting from an existing lower tax rate,” Mr. Sacconaghi told CNBC‘s “Fast Money: Halftime Report.”
The companies that are going to benefit less are those with already low tax rates that have little to no cash offshore, Mr. Sacconaghi said. These include IBM, HP and Hewlett Packard Enterprise.
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