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Josh Elman, Consumer and Retail Analyst with Nasdaq Advisory Services, joined us this week to discuss the potential Border Adjustment Tax and how this could impact the market.
Watch the recap below or from the Nasdaq Facebook page >
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Key Highlights:
- Two major parts of the administration’s economic agenda are tax reform and an infrastructure plan, which some report will be in the vicinity of $1 trillion.
- Under the current U.S. tax code, companies can reduce their taxable profits by deducting the cost of imports from it revenue.
- Under a potential Border Adjustment Tax plan, companies wouldn’t be able to deduct the cost of imports from their revenue going forward, which could create a higher tax burden. Economists estimate $100 billion in annual revenue from the BAT.
- Several consumer/retail companies have benefitted from current tax policy by building business models around importing goods from overseas and selling them in the U.S.
- The National Retail Federation forecasts that prices could rise 15%, costing the average American family an extra $1,700 a year.
- Looking ahead, M&A and company-by-company fundamentals will be the driver of consumer stocks.
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