The Ripple Effect of the New Tax Reform 

The Facts
As usual, companies should always be braced for change. The 30+ year drought since the last tax code overhaul is over. The bill slashes the corporate tax rate from 35% to 21%, and also includes massive changes to how income earned or kept offshore is treated.

Spiker Insight
A likely flurry of investments in short-term infrastructure upgrades could lay the foundation for the next big leap in digital disruption where powerful online access and sophisticated data-mining becomes so prevalent that customized, service-driven engagements are possible just about anywhere consumers are.

Retailers and telecommunications companies are among those who could take a hit from the bill as many carry a significant amount of debt, and the bill is likely to cap the amount of deductible debt interest at 30% compared to the 100% now allowed. This could undermine an already fragile brick-and-mortar retail sector.

The introduction of a territorial tax system, which the bill includes, means U.S.-based companies with overseas operations would no longer to required to pay U.S. corporate taxes on a portion of, or possibly all, foreign profits. As a result, some of the infrastructure investments could take place outside the U.S. as these companies look to bolster their international operations.