Kainos has notched up pretax returns
of more than PS15million, a 7% hike on the previous year.
Comparing after-tax returns to pretax returns
can also be eye-opening.
This article examines the historical trend in community bank returns on equity (ROE) over the last 10 years and highlights the gap between current and historical pretax returns
The answer will depend on several key variables, including the future of the tax code, the growth rate of the assets under consideration, and the tax efficiency of those returns (in other words, how much of their pretax returns
investors get to keep).
Researchers in both public finance and financial economics have studied whether tax rules have a pronounced effect on asset pricing and the pretax returns
on various financial assets.
A tax-exempt investor is indifferent between the three types of bonds only if the expected pretax returns
Brennan's (1970) model of these tax effects indicates that risk-adjusted pretax returns
should be positively correlated to dividend yields.
Since most fund managers look to maximize pretax returns
, they don't even consider the tax impact of their trading frequency.
Lyon advocates reducing or eliminating tax preferences that do not produce social returns in excess of their pretax returns
as the most direct alternative to the corporate AMT for improving efficiency.
As Figure 2 shows, production businesses can deliver from 45 percent to 135 percent pretax returns
on equity, depending upon the leverage ratio of the company and the all-in cost of production.
Planning suggestion: Corporations subject to the AMT may want to encourage dividend-paying companies in which they own 20% or more of the outstanding shares to sell their tax-exempt securities and invest in fully taxable securities that produce higher pretax returns
The Garland results found that the typical investor received only 41% of the preexpense, pretax returns
of the index.