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Justin Fox

Tax Bill Will Deliver a Corporate Earnings Gusher

Things are about to get weird.


Photographer: Eric Piermont/AFP/Getty Images

The tax bill that President Donald Trump signed into law last week is going to generate some really strange numbers in the next round of corporate earnings reports.

You may have already heard about the negative numbers: Financial institutions and other companies that had near-death experiences during the financial crisis are going to have to take big charges against earnings as the value of their "deferred tax assets" -- past losses that can be used to defray future tax bills -- goes down with the corporate tax rate. That rate is being reduced to 21 percent from 35 percent, which, all else being equal, amounts to about a 40 percent tax cut.