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Local businesses may benefit from possible corporate tax cut




President Trump delivers opening remarks during a meeting with (from left) Wendell Weeks of Corning, Alex Gorsky of Johnson & Johnson, Michael Dell of Dell Technologies and other business leaders in the Roosevelt Room at the White House on Monday.
President Trump delivers opening remarks during a meeting with (from left) Wendell Weeks of Corning, Alex Gorsky of Johnson & Johnson, Michael Dell of Dell Technologies and other business leaders in the Roosevelt Room at the White House on Monday.
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President Donald Trump has promised a series of tax reforms will be announced on Wednesday. Today, the Wall Street Journal reported what they expect to be the centerpiece of his plan: cutting the corporate tax rate to 15 percent.

"It looks like a huge change, but it may not be as big as it sounds," said Bhagwan Chowdhry, Professor of Corporate Finance at the UCLA Anderson School of Management.

He told Take Two's A Martinez that the average corporate tax rate currently sits at 35 percent, that doesn't necessarily mean all corporations are paying that. "Many corporations, especially multinationals, are able to shield their profits by putting their profits and subsidies in other parts of the world."

Chowdhry believes that if this tax cut becomes a reality, local businesses stand to gain a lot. "If you are a simple business that's not a multinational ... that does not use an army of lawyers and accountants to shield your taxes, you get to benefit from it because this creates an even field," Chowdhry said.

"Imagine there's a corporation that has operations in the Netherlands and other parts of the world They, in fact, are paying much lower taxes, even much lower than 15 percent. Whereas if I'm a simple business I don't have subsidiaries abroad, I'm probably paying closer to 35. This would create an even level playing field and would give an advantage to those who are more local and have a much simpler tax status. "

To hear the full conversation, click the blue player above