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Will The Biden/Yellen Multinational Tax Proposal Sink Apple, Amazon, Microsoft, Alphabet And Facebook?


  • The Biden Administration is seeking payback for the trillions spent to help the markets during the COVID-19 Pandemic.
  • With five stocks making up 24.1% of the S&P 500 Index it could have a serious negative impact on Wall Street and Main Street.
  • Only Ireland and The Netherlands are standing in the way of this tax proposal becoming a reality.
  • This idea was discussed in more depth with members of my private investing community, Friedrich Global Research. Learn More »
Tax concept with up and down arrows.
Photo by gesrey/iStock via Getty Images

The current market capitalization of the S&P 500 Index is $33.62 trillion...

S&P 500 Market Cap 33.62T USD for Mar 2021Y-Charts

... and one major reason as to why it is that large is because the top five largest stocks in that index (by market capitalization) account for 24.1% of it.

At Friedrich Global Research, we stick to the numbers. We do analysis like what you saw in this article, but for 20,000 stocks from 36 counties around the world. We also provide model portfolios ranging from ultra conservative to aggressive growth, so you can apply our research to your investing easily.

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This article was written by

Mycroft Friedrich profile picture
Friedrich is the name given to our algorithm for analyzing companies that trade on the global stock markets. In creating Friedrich we concentrated on analyzing each company’s Main Street operations through various established ratios, along with our own unique ratios that we developed over the last 30 years. What we came up with is a final "Main Street" price per share based on Generally Accepted Accounting Principles (GAAP), which is a framework of accounting standards, rules and procedures defined by the professional accounting industry, which has been adopted by nearly all publicly traded U.S. companies. We feel that our Main Street price result is what each company would need to trade at in order to be attractive to a businessperson on Main Street looking to buy at a bargain.

Since the only constant in the universe is change, the results for each company fluctuate by varying degrees. No company is an island unto itself, but each operates in a world of constant change and at times in areas where Chaos is the norm. By analyzing a company’s Main Street operations over time, Friedrich is able to give the potential investor a decade long analysis (opinion) as well as offering a Trailing Twelve Month (TTM) analysis (opinion), as well. Thus our readers will not only get as close to a real time view of operations on Main Street as is possible, but then can measure the consistency of the company’s operations over time to determine if s/he should invest or not.

Through our Friedrich algorithm we can analyze ten years of Balance Sheet, Income Statement and Cash Flow Statement data for each company all at once and generate one final result in seconds. Friedrich was designed to be ultra-conservative and thus will cut zero slack to any company under analysis and will do so with zero emotion. Companies must be exceptional in order to get an attractive Main Street valuation and the ideal investments according to our backtesting are the ones that have been consistent over time.

By being so ultra conservative Friedrich is designed to identify bargains that Wall Street investors may have overlooked. Companies shares may trade on the stock market but the companies themselves operate on Main Street, so Friedrich is designed to generate a Main Street price per share first and only then does he go to Wall Street and see the price for which Benjamin Graham’s “Mr. Market” is offering the shares.

Analyst’s Disclosure: I am/we are long AAPL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

DISCLAIMER: This analysis is not advice to buy or sell this or any stock; it is just pointing out an objective observation of unique patterns that developed from our research. Factual material is obtained from sources believed to be reliable, but the poster is not responsible for any errors or omissions, or for the results of actions taken based on information contained herein. Nothing herein should be construed as an offer to buy or sell securities or to give individual investment advice

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (90)

It would also be good to distinguish between the impact of a minimum global tax rate for corporations of 21% and an effective minimum global tax rate for corporations. In the Netherlands for example, the tax rate for corporations is 25% already. However, a minimum global tax rate wont solve the problem (if you consider a lower effective tax rate as a problem). As long as the allocation of taxation rights are not harmonized on a global level, the effective minimum global tax rate will, in principle, always be less than the statutory tax rate.
Chart Rider profile picture
No. Megacaps don’t pay any taxes.
Definitely a subject worth noting and discussing.
My thanks to the author.

So are large ships with a small and somewhat ineffective rudder better than having no rudder at all?
Corporations have gotten away with every kind of money flim-flamery imaginable as it has been part of our system from day one.

And they pay up mega$$ as their dues for all the privileges, power, and influence that they get and fully exercise - to the wrong people of course.

So what if they were "encouraged ' to pay more of their payoffs to their consumers and fellow citizens (you know, the folks that legitimately make and keep them rich) instead of almost all to their lackeys in Congress, and other myriad associated power brokers, and dubious parasites here and abroad?

I have no sympathy for them in this regard, as they have impoverished too many in the work force already with their move of jobs overseas, the suppression of wages, their incessant lowering of quality/quantity while raising prices, and other devious tax evasive tactics and scams over the decades.

Adjustments always have repercussions, but some of them are necessary for the overall good. Like cleaner water, and air, and less toxins in our food and drink, better schools, infrastructure, etc.

Besides, don't recall any politician asking my opinion about this or any other subject anyway, so whomever is in power is going to do what they want to do if they can force it through.

Rah, Rah, for the Electoral College - Sis -boom - bah! - so why ever change when we've got it so made in the shade?
Opinions will differ - the body of above represents mine.
Other countries rarely acquiesce to countries with weak leadership . . . .
-=Prospero=- profile picture
Seems to me like an attempt at a scare article to get folks to sell. No thanks; these companies will be just fine and I'll keep making money. Nice try.
Ra$$taman profile picture
It's an American thing. Although even the least educated among us know deep down that a "great" country cannot be maintained without cost, somehow we demand greatness while at the same time refuse to pay for it. This is not unique to either political party but you could make the case that the Republicans are being somewhat less honest about the state of affairs in the sense that they claim all Republican proposals to be great and all Democrat proposals to be unmitigated disasters.
@Ra$$taman The current border crisis is certainly a disaster.
albertciampi profile picture
It will ultimately be passed on to consumers everywhere.
Let’s continue to punish innovation and successful businesses who employ millions.
Joe4888 profile picture
@albertciampi Tax cuts don’t automatically go to the consumer. Why would raising taxes automatically come from the consumer?
albertciampi profile picture
@Joe4888 tax cuts do keep costs down or at least slow the rate . What’s wrong with tax cuts accruing to the shareholders who took the risk by investing in a company? I’m a man of modest means but I admire risk takers, innovation and sheer hard work.
Chancer profile picture
This no big deal for these companies. Corporations pass on tax increases as price increases on their products and services. This hurts the middle and lower classes as higher consumer prices and a higher cost of living.
I can see the proposal to be a threat to the S&P but I don't see it as a threat to Main Street. Just like the Trump tax cut boosted the S&P a tax hike could lower the S&P. It didn't do much for business growth and CapEx.
A multi-lateral agreement on a corporate minimum tax rate seems unlikely to me. But keep your eye on the Biden Administration proposals to increase the US corporate rate and, perhaps more significantly, convert the GILTI tax from a 10.5% tax on intangible income to a 21% tax on a more comprehensive set of offshore profits.
No Guilt profile picture
“Pandemic has forced governments around the world to go deeply into debt.”

This is very limited thinking.
What is the total market cap of whole us stock market?
VoiceofSanitySometimes profile picture
It will happen that global governments better coordinate tax policy. But not anytime soon. It's not just Ireland and the Netherlands who are in the way. What's to stop Indonesia from saying "flow your money thru here and we'll only charge 5% tax"? Or Vietnam, or the Caymans, or Argentina (they certainly need the money). What is to stop China from saying "list on the the Shanghai exchange and we'll give you massive tax breaks for 20 years"?

Money can get moved around the globe in micro-seconds, and transfer pricing is a creative art, not a science.

Not to mention how cheaply pols can be bought compared to the taxes paid by the world's largest corporations.
Chancer profile picture

I agree. Big benefit to those nations who reject the minimal tax and more smaller nations can become tax havens.
flumeride profile picture
@VoiceofSanitySometimes The caymans already offer certain tax havens, but the rest of your past is naive. What Ireland has done is to give tax breaks based on the corporation having a presence in Ireland with a certain number of employees. Is a good deal for them. It lowers the unemployment rate, they gain income tax from those employees, etc. It works because they already had the infrastructure in place to support those jobs and they have a qualified workforce. It will take some other countries time to provide those things.

China is not going to offer cheap tax rate to be listed on the Shanghai index. China is not all about lower tax rates unless the government controls the company. The only way to trade on the Shanghai market is to have a Chinese bank account/broker. Now the Honey Kong exchange is a different story because it was established under British law. Even if an American company did the things to be listed on the Shanghai index it would have to pay American taxes unless the company moved its head quarters to China. That is not a likely scenario.

As far referring money in micro-seconds. That means nothing to move large sums of money you will not be able to hide that from the IRS.

All that said I don’t think the burden administration will pull off this tax scam.
SuperPac profile picture
The Biden-Harris admin is owned by Woke (Large) Capital. It represents their faction occupying the visible seat of Power in Washington.

Big Tech is the Leader of Woke Capital. They are going to reap huge benefits from the Biden-Harris admin. But optically several things will be done to keep up a mirage that the admin is being neutral and fair etc.

So don't get too worried about such articles with hysterical titles. If a correction occurs in Big Tech. buy more. Load up.

These are bad times. You have been locked up, restricted, humiliated, muzzled, your children's education pummeled to the ground. Your cultural heritage spat upon and torn down. Least you can do is make money off the state which printing so much money which fuels this insane rally.
@SuperPac you seem to be in direct conflict with your state... we are all in dire straits because of the pandemic, blame the government for printing money to keeps us from going into worst straits, but since we are in dire straits at least the govt should let us reap some rewards.

Our rewards are the economy didnt go into a black hole.
SuperPac profile picture

Thanks for your concern. I am enjoying great health, my portfolio is doing much better than I expected thanks to the insane monetarism. I did not panic nor gave into FOMO. And spent my spare time when restricted reading some great books which are all available free on internet, books like Gibbon's 18th century masterpiece ''The History of the Decline and Fall of the Roman Empire''.
How is Big tech going to reap benefits from Biden with his corporate tax hike?
SALT will be reversed regardless of the static from the President. CA and NY are the heart of the D's.
bluescorpion0 profile picture
¨Fiscal authorities have spent vast sums protecting their people and defending their economies from the wrath of the pandemic.¨

They did no such thing. It was plain stupidity for very little actual factual medical reason. This leads me to believe it is a planned conspiracy to create these debts to produce more modern day slavery.
No Guilt profile picture

The government will break your legs, hand you crutches and then tell you to be thankful.
Chancer profile picture

The Great Reset for collectivism, globalism, and one world government says:

1- The pandemic is the entry into the Great Reset.

2- Climate change is the sustainability of the Great Reset.

John Kerry at the WEF said that Biden is ALL IN for the Great Reset.
Chart Rider profile picture
@scorpion.north Fox News is slavery
The truth that all governments are thieves.
Though even libertarians have to tax something.
Not going to pass as proposed. Politics. Ultimate comprise will be absorbed by growth and operating leverage.
"The current US Administration seems to believe that since the global governments have helped corporations, by bailing them out and avoiding a deep depression, that it is now only fair for governments around the world to receive a payback in the form of increased tax revenue."

All corporations were not bailed out. Were the cruise companies bailed out? The airlines received plenty of cash subsidies. The Democrat/liberal playbook is to never let a crisis go to waste.
@msbreb1978 Agreed. I’m surprised the article said the below. This is nonsense. They aren’t spending all this money to help the markets. They are spending it on their friends, crony capitalism, bail out cities, and bribes to voters since they were smarter than McConnell to bribe the voters.

“The Biden Administration is seeking payback for the trillions spent to help the markets during the COVID-19 Pandemic.”
It is a Top profile picture
"The Democrat/liberal playbook is to never let a crisis go to waste."

Are you saying Trump is a Democrat? He was president during the whole mess.
@It is a Top and you, sir, are a complete idiot. Nikki
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