It will sound like bad news.
Over the next few weeks, some of the world’s biggest companies, household names including Microsoft, Google and Johnson & Johnson, are likely to warn that their financial results will be severely dented, if not altogether wiped out, by huge tax bills that they have to pay to the Internal Revenue Service.
Don’t be fooled.
The big one-time losses are a prelude to even bigger profits — a paradox caused by the tax cuts that recently zoomed through Congress and that largely benefit corporations.
A couple of provisions in the tax package are prompting many companies — those based in the United States as well as some foreign corporations with big American presences — to pay the taxman while anticipating huge savings for decades to come.
The biggest factor, by far, is the requirement that American companies bring back money that they claimed to have earned via overseas subsidiaries, most of them in tax havens such as Luxembourg, Grand Cayman and Bermuda.
Until now, companies generally didn’t have to pay federal income taxes on such earnings, at least not immediately, as long as those profits stayed overseas. But if the companies brought the money back to the United States, they would face a 35 percent tax rate (minus whatever they had already paid tax collectors in other countries).
