Technical memo on corporate tax rate impact and interest deductibility

year from the median calculation. For companies with normalized tax rates of more than 75%, we assume 35%. The impact of a lower corporate tax rate on company earnings is directly proportional to the difference between the current domestic tax rate and the proposed tax rate. The impact is calculated by taking the difference between the current tax rate and the proposed tax rate, and dividing it by (1-current tax rate). To calculate the impact of a lower corporate tax rate on the S&P 500 earnings, we can divide the change in the effective tax rate by (1 — the current effective tax rate). Interest deductibility impact We estimate the cost associated with the removal of the net interest expense deduction from taxable income by multiplying the net interest expense by the tax rate. Bankof America <> Merrill Lynch Equity Strategy Focus Point | 29 January 2017. 25 HOUSE_OVERSIGHT_023093