WSJ What’s News - What Would a Harris or Trump Presidency Mean for Corporate Taxes?

Episode Date: August 27, 2024

P.M. Edition for Aug. 27. The U.S. presidential election could bring a change to the corporate tax rate, as Kamala Harris and Donald Trump signal their tax proposals. Reporter Jennifer Williams explains how finance chiefs are trying to figure out their investment and growth plans. Meanwhile, companies looking to make their stock-market debuts are facing a critical decision: whether or not to hold off until 2025. WSJ IPO reporter Corrie Driebusch explains. Plus, Eli Lilly is offering a new way for patients to take its popular new weight-loss drug Zepbound. Reporter Peter Loftus has more. Francesca Fontana hosts. Sign up for the WSJ's free What's News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

What does possible sound like for your business? It's having to spend to power your scale with no preset spending limit. Redefine possible with Business Platinum. That's the powerful backing of American Express. Terms and conditions apply. Visit mx.ca.com. Special counsel Jack Smith has filed a new criminal indictment against Donald Trump in his January 6th case. And what would a Harris or Trump presidency mean for the corporate tax rate? Finance chiefs are on the lookout for signs ahead of the November election.

Even after the election, there's still going to be some unknowns about where the rate will land, which is why they're trying to get a sense for what's a good middle ground to model for now. Plus, why companies are putting their plans to go public in 2024 on ICE. It's Tuesday, August 27th. I'm Francesca Fontana for the Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that move the world today. Special counsel Jack Smith has filed a new criminal indictment against

Donald Trump for trying to undo his 2020 election loss, saying the case remains largely intact even after the Supreme Court's July ruling that former presidents have sweeping immunity for acts they take while in office. With the new indictment, Trump faces the same four federal offenses he was originally charged with related to efforts to overturn the 2020 election, which With the new indictment, Trump faces the same four federal offenses he was originally charged with related to efforts to overturn the 2020 election, which culminated in the January 6, 2021 attack on the U.S. Capitol. But Smith said the government refashioned the case to conform to the Supreme Court's

holding that presidents may not be prosecuted for exercising their core constitutional powers. Smith said Trump's alleged actions outlined in the new indictment, such as pressuring state officials to pursue false claims of election fraud and seeking to undermine state voting outcomes, don't constitute official presidential responsibilities. The IPO market is getting cold feet. Companies looking to make their stock market debuts are facing a critical decision. Pull the trigger soon so they can launch their deals before the end of the year or hold off

until 2025. So far this year, companies going public in the US via traditional IPOs raised about $25 billion, according to Dealogic. That's below the $55 billion annual average over the past decade. I spoke with Wall Street Journal IPO reporter Corey Driebusch about what's below the $55 billion annual average over the past decade. I spoke with Wall Street Journal IPO reporter Corey Dreebush about what's causing the market to cool down. For one, the U.S. stock market is still pretty choppy. Look at how much stocks have swung just over the last few weeks.

Companies that are looking at going public, they want to see more consistency in the market before they launch a roadshow. Also, we have a couple other things happening this year. Interest rates are finally set to go down, but there's sometimes some volatility around when that starts happening. And finally, it's an election year. Think about our last presidential election. There were a lot of surprises, a lot of just little market noise going on in the weeks leading up to the November election. So what can we expect to see this September, which is usually the busy month for IPOs? Yeah, the last couple of years, September has been one of, if not the busiest month

for IPOs in the U.S. This year, there was some hope that StubHub might go public in September. That's a big ticketing marketplace. And now sources are telling me that that's likely to be in 2025. So we're not going to see any of the blockbuster IPOs we have in past years, which is probably a little disappointing for IPO reporters as well as investors. And what about 2025? We're hearing the new drumbeat of that's going to be the year.

And it all sounds great talking to bankers about how companies are asking them to prepare pitches to be their advisors and their IPOs for 2025. So it's all sounding good, but it's hard not to be a little cynical or skeptical as I heard the same thing last year this time for 2024. But ideally 2025, we will have had maybe a couple of rate cuts. The stock market should have hopefully quieted down. It has the potential to be huge, too, when you think of all the private companies that are on deck,

that eventually you would assume will raise money. You think of like the big Databricks, which is one of the very large private companies. You think of fintech company Stripe, that's also private still, or Canva. These are huge companies that all their IPOs would be huge. That was WSJ IPO reporter, Corey Dreebush. In other corporate news, Eli Lilly is offering a new way for patients to take its popular

new weight loss drug, ZepBound. The pharmaceutical giant will start offering the drug in vials, in addition to the standard injection pen devices, at about half the price of the original for certain doses. Lilly is rolling out the vials largely to help boost overall supplies and to take aim at lower-cost knockoffs sold by compounding pharmacies. These pharmacies are allowed to make alternative versions of prescription drugs when the original brand is in short supply, like ZipBound has been. WSJ reporter Peter Loftus explains. Eli Lilly's doing this to address a couple of issues, and one is the tight supply of this drug and other drugs like it. For the most part, it's come in these

injection pens, which are sort of these specialized devices. By now adding a presentation in vials, they're actually tapping into other manufacturing capacity that could help them better keep up with demand. And by selling it at the prices they're offering, they're making it more affordable for patients who don't have insurance coverage. It does add some steps and parts to the process because the injector pen is sort of an all-in-one device that contains the drug and the needle and you kind of just press a button and inject it into yourself. With the vial, you would have to use a separate syringe and needle to draw it out of the vial and then inject into yourself.

To purchase the new ZetBound option, patients will need a valid prescription for the FDA-approved use of the drug. And Walmart is amping up its logistics competition with Amazon.com by opening its fulfillment services to merchants who want to fill orders from customers on platforms outside Walmart's own marketplace. Walmart's marketplace, which the company started to compete with Amazon, allows third-party sellers to list their items on Walmart's website. The move by the country's largest retailer by revenue will let third-party sellers use Walmart's warehousing, delivery, and return services to fill orders placed on platforms like Target, Etsy, and even Amazon.

Walmart said these orders placed through other platforms will be shipped in plain brown boxes rather than Walmart-branded packaging, and the new services will launch on September 10th. U.S. stock indexes closed up slightly today, with investors awaiting this week's main event, NVIDIA earnings, tomorrow afternoon. The S&P 500 and NASDAQ Composite advanced, with each adding 0.2 percent. The Dow Jones Industrial Average ended flat, up 10 points. Coming up, what are Kamala Harris and Donald Trump planning for corporate tax rates? And how are companies preparing ahead of the election? That's after the break.

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info on Kraken's undertaking to register in Canada. November's U.S. presidential election could bring a change to the corporate tax rate. As each candidate, Vice President Kamala Harris and former President Donald Trump, signal their tax proposals, finance chiefs are trying to figure out their investment and growth plans. My colleague, WSJ reporter Jennifer Williams joins us with more. Jennifer, let's start with Kamala Harris. What are her proposals on the corporate tax rate? So Kamala Harris has endorsed increasing the tax rate.

She is currently behind what the Biden administration has proposed, which is taking it up to about 28% from the current 21% rate. And what about Donald Trump? He's told executives that he wanted around a 20% rate, but he has floated a levy as low as 15%, and neither one may get what they want if they don't gain full power in Congress in order to get the rate that they're now floating. So that could change up or down depending on

how much of Congress pairs with the party that's elected for president. You mentioned in your story that a higher corporate tax rate now would be more punishing than it would have been 10 years ago. Why is that? So that's because the tax rate that was set with a 2017 law which cut the rate to 21%, broadened the tax base, meaning that more income is taxed at the certain threshold. So if we go up to 28%, let's say, that's going to be on more income.

You know, bigger picture, the 2017 law is set to expire without congressional action at the end of next year and so this will be a big undertaking for either presidential candidate. How are executives adjusting their plans based on all of this ahead of the election in November? They're trying to get a sense for what rate to model for because there is so much uncertainty and tax advisors that I spoke with said their response currently is around 25%. So they're modeling for that and thinking through if it goes as high as 28% what will that mean for our investment and

growth plans. I talked to Vera Bradley CFO and they have a lot of store growth planned for the next year and they may have to pull back on that. The CFO, and they have a lot of store growth planned for the next year, and they may have to pull back on that, the CFO said, if their tax bill goes higher. How will executives know how or when to start really fine-tuning those models? So that's a good question, and I think a lot of what I heard is uncertainty about when that point comes. Even after the election there's still going to be some unknowns about where the rate will land, which is why

they're trying to get a sense for what's a good middle ground to model for now. A CFO I spoke with said they're thinking it could trickle down to consumer prices because if they have a higher tax bill they may want to offset that by charging more for the products that consumers buy from this company. That was Jennifer Williams, WSJ Reporter. Jennifer, thanks so much. Thank you. Many school districts around the country are banning cell phones in classrooms. Is your district one of them? What's your reaction? And what questions do you have about what this means for your kids? Send a voice memo to wnpod at wsj.com or leave a voicemail with your name and location at 212-416-4328. We might use it on the show.

And that's What's News for this Tuesday afternoon. Today's show was produced by Pierre Bienemet and Anthony Banzi, with supervising producer Michael Kosmitis. I'm Francesca Fontana for The Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.