NEW YORK (AP) -- Goldman Sachs is expecting a $5 billion hit to profits during the fourth quarter because of the tax overhaul signed into law last week.
The New York bank said Friday that two thirds of the $5 billion are due to changes in repatriation taxes, when funds are returned from overseas. The remainder includes the "effects of the implementation of the territorial tax system and the remeasurement of U.S. deferred tax assets at lower enacted corporate tax rates."
U.S. companies had found ways to legally park money overseas to avoid the higher U.S. corporate tax. It has been expected that changes in the law would prompt those companies to return money to the U.S., potentially $2.5 trillion or more.
Lower taxes in the U.S., however, will mute the overall economic effect.