The 1% tax on share repurchases passed by Democrats earlier this year begins in January, but many companies say they remain unfazed by the new penalty.
Gas prices are seen on an Exxon Mobil gas station sign on June 09, 2022 in Houston, Texas.
Businesses including Exxon, Lowe's and MasterCard have expanded programs or announced new ones in recent days to repurchase their stock, the Journal reported. "We don’t like the tax; nobody likes it," Michael Mullican, chief financial officer at sporting goods retailer Academy Sports & Outdoors told the Journal. "But it’s not significant enough to where it would sway our thinking."
The Democrats' spending bill – dubbed the Inflation Reduction Act – also imposes a 15% minimum tax on corporations based on profits they publicly report on their financial statements to shareholders. The minimum book tax would only apply to companies that reported more than $1 billion in income. Democrats said the levy would affect around 200 of the country's largest corporations with profits exceeding $1 billion and that pay less than the current 21% rate for businesses.
UBS strategists led by Solita Marcelli, meanwhile, projected the new taxes would have a "very minimal 1% drag on S&P 500 earnings per share, although some companies will be more affected than others."
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