{"id":11775,"date":"2021-07-11T15:29:53","date_gmt":"2021-07-11T21:29:53","guid":{"rendered":"https:\/\/fundamentalis.com\/?p=11775"},"modified":"2021-07-11T15:29:53","modified_gmt":"2021-07-11T21:29:53","slug":"global-tax-rate-debate-how-does-mega-cap-tech-stack-up","status":"publish","type":"post","link":"https:\/\/fundamentalis.com\/?p=11775","title":{"rendered":"Global Tax Rate Debate: How Does Mega-Cap Tech Stack Up ?"},"content":{"rendered":"<p>The push by the current Administration for a global minimum tax rate is gaining steam or has gained steam, so &#8211; as a number calculated on the valuation spreadsheets for mega-cap Tech holdings &#8211; I was curious as to how the &#8220;Big 5&#8221; in the SP 500 look in terms of their effective tax rate and if this could be partly the cause of the weakness seen in mega-cap Tech this Spring &#8217;21.<\/p>\n<p><em><strong>Apple: 6% market cap weight within SP 500\u00a0<\/strong><\/em><\/p>\n<ul>\n<li>4-quarter: 15% effective tax rate<\/li>\n<li>12-quarter: 15% effective tax rate<\/li>\n<li>20-quarter 18% effective tax rate (begins June &#8217;16)<\/li>\n<li>40-quarter: 22% effective tax rate (starts in 2010\/2011)<\/li>\n<\/ul>\n<p><em><strong>Microsoft: 5.7% market cap weight within SP 500\u00a0<\/strong><\/em><\/p>\n<ul>\n<li>4-quarter: 14% effective tax rate<\/li>\n<li>12-quarter: 13% effective tax rate<\/li>\n<li>20-quarter: 16% effective tax rate<\/li>\n<li>40-quarter: 18% effective tax rate<\/li>\n<\/ul>\n<p><em><strong>Amazon: 4.3% market cap weight within SP 500\u00a0<\/strong><\/em><\/p>\n<ul>\n<li>4-quarter: 12% effective tax rate (very lumpy)<\/li>\n<li>12-quarter: 13% effective tax rate<\/li>\n<li>20-quarter: 16% effective tax rate<\/li>\n<li>40-quarter: 4% effective tax rate (that is surprising)<\/li>\n<\/ul>\n<p><em><strong>Facebook: 2.27% market cap weight within SP 500<\/strong><\/em><\/p>\n<ul>\n<li>4-quarter: 13% effective tax rate<\/li>\n<li>12-quarter: 18% effective tax rate<\/li>\n<li>20-quarter: 19% effective tax rate<\/li>\n<li>since IPO: 29% effective tax rate<\/li>\n<\/ul>\n<p><em><strong>Alphabet: 4.6% A &amp; C class market weight within SP 500<\/strong><\/em><\/p>\n<ul>\n<li>4-quarter: 16% effective tax rate<\/li>\n<li>12-quarter: 13% effective tax rate<\/li>\n<li>20-quarter: 15% effective tax rate<\/li>\n<li>40-quarter: 17% effective tax rate<\/li>\n<\/ul>\n<p><em><strong>Summary \/ conclusion: <\/strong><\/em>There is always more to the discussion than the headlines, so any firm agreement will have to be parsed and we&#8217;ll have to see how the effective tax rates actually change if there is an agreement. Supposedly, Ireland has already opted out of the proposed G-20 plan since the Emerald Isle got the memo in the late &#8217;80&#8217;s, early 90&#8217;s and reduced effective tax rates sharply for those global companies that wanted to locate their manufacturing operations in Ireland. Intel and Merck and a number of other large-cap pharma companies promptly did relocate some manufacturing operations, and the Irish probably don&#8217;t want to disrupt that dynamic.<\/p>\n<p>If a 15% rate is agreed upon (and again, the fine print will have to be looked at) it appears there shouldn&#8217;t be that much impact on mega-cap tech or the Big 5 as they are otherwise known.<\/p>\n<p>The other issue is US corporate tax rate increases, which the Biden Administration so desires.<\/p>\n<p>Geeky stuff, but I was curious as to how the tech companies would fare.<\/p>\n<p>Take this all with a healthy grain of salt and substantial skepticism. Any US corporate income tax increase could supersede the global rate and could be harsher than the what the G-20 is contemplating.<\/p>\n<p>Thanks for reading.<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The push by the current Administration for a global minimum tax rate is gaining steam or has gained steam, so&hellip;<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[272],"tags":[],"class_list":["post-11775","post","type-post","status-publish","format-standard","hentry","category-effective-tax-rates"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"post_mailing_queue_ids":[],"_links":{"self":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/11775","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=11775"}],"version-history":[{"count":3,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/11775\/revisions"}],"predecessor-version":[{"id":11778,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/11775\/revisions\/11778"}],"wp:attachment":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=11775"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=11775"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=11775"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}