CNN – Even as some business groups cry foul over the tax provisions of the Cut Inflation Act, Goldman Sachs economists say the landmark bill will barely slash massive corporate profits.
To pay for historic climate investments, legislation passed in the Senate on Sunday imposes a minimum corporate tax of 15% and a 1% tax on share buybacks.
But the fallout from these tax provisions will be minimal, according to Goldman Sachs. The buyout tax and minimum corporate tax will reduce earnings per share next year among S&P 500 companies by just 1.5%, according to a Goldman Sachs analysis released early Sunday.
Businesses that pay low effective tax rates — such as healthcare and technology companies — would be hit harder, the bank said.
Overall, Goldman Sachs said the net fiscal impact of the Cut Inflation Act “appears very modest,” translating to less than 0.1% of GDP over the next few years. That’s because new spending and new taxes “roughly offset it,” the bank said.
The findings contrast with warnings from some major business groups who have argued that the new tax provisions will backfire.
The Business Roundtable, an influential CEO lobby, said in a statement on Saturday that while it supports the bill’s policies to encourage clean energy, the corporate minimum tax would suppress domestic investment and “undermine the competitiveness of US exporters”.
“Imposing more than $300 billion in tax increases during a recession is the wrong policy at the wrong time,” Business Roundtable CEO Joshua Bolten wrote in the statement, noting that the U.S. economy has coped to two consecutive quarters of falling GDP and “remains at risk”. of a prolonged economic decline.”
The American Petroleum Institute, the largest oil and gas trading group, said this weekend it was “encouraged” by the extension and expansion of carbon capture tax credits and provisions on onshore and offshore lease sales.
However, API said much-needed permit reform was “conspicuously absent” from the bill and criticized its tax provisions.
“We remain opposed to policies that raise taxes and discourage investment in U.S. oil and natural gas,” said API CEO Mike Sommers.
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