President Donald Trump is heading to Davos, Switzerland for the World Economic Forum not to woo U.S. CEOs, but instead to sell foreign executives on his agenda.
Of the items on the agenda, there appears to be a lot buzz around the recently passed tax reform.
Bank of America (BAC) CEO Brian Moynihan told Yahoo Finance editor-in-chief Andy Serwer that he was surprised by the enthusiasm from foreign CEOs.
“What’s interesting, from international companies, who already thought the US of being very attractive because of talent, because of the rule of law, and the understanding that if you have an energy-related production requirement, the raw materials and the energy are right there and well-priced. They’re saying, ‘Hey, this tax thing now adds another major benefit that I’m coming with more production,'” Moynihan said.
According to Moynihan, foreign companies view tax reform as an opportunity to expand further in the U.S. These companies can come in with more production, take advantage of a lower tax rate, and not have to deal with a myriad of tariffs.
“I think there’s an added level of enthusiasm that frankly, I haven’t really thought through versus the American companies, which is understandable. We needed a competitive tax rate. We needed a territorial system because our tax code didn’t work for corporations that way and this accomplished that. I was surprised by international CEOs being so enthusiastic about the tax cut change,” Moynihan said.
Tax reform has been viewed as a positive in the corporate community in the U.S. To date, close to 200 U.S. companies have announced wage hikes and bonuses, according to a list compiled by Yahoo Finance’s Melody Hahm. Bank of America announced $1,000 bonuses for its 145,000 U.S. employees.
During the fourth quarter, Bank of America took an upfront charge of nearly $2.9 billion on deferred tax assets stemming from losses dating back to the financial crisis. The bank will see its effective tax rate drop from the high 20s to the low 20s.
“We’re getting a partial benefit back. We still pay a lot of taxes and will continue to do so,” Moynihan said.
Julia La Roche is a finance reporter at Yahoo Finance. Follow her on Twitter.