FT : Disclosures show Ark has removed limits on company ownership

Disclosures show Ark has removed limits on company ownership
Previously the ETFs could invest only up to 30% of their assets in a single company amounting to no more than 20% of its outstanding shares

Ark Investment Management has removed restrictions from its exchange traded funds that limited how much the funds could hold in a single company, recent disclosures show.

Previously, the manager allowed its ETFs to hold up to 30 per cent of their assets in a single company, prospectuses show. The funds were also prohibited from owning more than 20 per cent of a single company’s outstanding shares.

But Ark removed those limits, effective immediately, the firm disclosed at the end of March.

Ark also removed language prohibiting its actively managed ETFs from investing more than 35 per cent of their assets in depository receipts, including American depository receipts used by foreign companies, and other types of securities, filings show. It also removed a limitation capping active funds’ investments at 10 per cent of assets in unsponsored ADRs that are traded over the counter.

None of Ark’s funds' investments are close to the previous limit on fund assets held in a single company, disclosures on the Ark website showed on April 5. The products’ biggest bet was in Tesla, which made up 10.78 per cent of the $21.5bn Ark Innovation ETF, 10.7 per cent of the $6.7bn Ark Next Generation Internet ETF and 10.41 per cent of the $3.2bn Ark Autonomous Technology and Robotics ETF.

Overall, 7.36 per cent of Ark’s ETF assets were in Tesla as of December 31, according to FactSet, a data provider. The manager’s ETFs had $34.8bn in assets under management as of that date, the database shows.

The removal of limits on ADRs may have the biggest impact, especially for Ark’s flagship Innovation ETF, said Robby Greengold, a Morningstar strategist.

However, the Innovation ETF’s strong performance and inflows have “made it more difficult than before for the ETF to make meaningful investments in the kind of innovative small and microcap companies that have historically been prominent in the portfolio”, Greengold said.

Investors added $15.8bn to the Innovation ETF over the year ended March 29, according to FactSet data. The fund returned 152.51 per cent in 2020, Ark’s website showed.

Ark executives have also said they saw more opportunities to invest in foreign companies, Greengold added. The company last year hired an analyst who focuses exclusively on innovation in Asian investments.

But Greengold said he would be surprised to see Ark’s ETFs invest substantially more than 10 per cent of their assets in any one company.

Cathie Wood, Ark’s chief executive and lead portfolio manager, had previously said that her company’s funds had a “self-imposed” restriction on investing more than 10 per cent of assets in a single company.

Top positions in Ark’s funds have historically maxed out at 12-13 per cent, Greengold said.

At the end of 2020, Ark’s ETFs owned more than 20 per cent of the outstanding shares of Compugen and Statasys, according to FactSet data. But those positions were spread out across its different funds, Greengold noted.

Ark earlier in March published a white paper outlining a new price target for Tesla, predicting that the company’s share price could hit $3,000 by 2025.

Other funds have attracted criticism for even larger bets on Tesla. Morningstar in January downgraded its rating for the $7bn Baron Partners Fund from bronze to neutral because the fund had allowed its position in Tesla to balloon to 47 per cent of assets as of December 31. That share had fallen to 39.5 per cent by the end of February, according to Baron Funds’ website.

US mutual fund concentration and diversification rules require funds to disclose if they will hold more than 25 per cent of their portfolio in a given sector or more than 5 per cent of their portfolio in a single security. But an appeals court ruled in 2019 in a case against the Sequoia Fund that a fund could exceed those thresholds if they were caused by market movements.

Like other transparent ETFs, Ark’s funds publicly disclose their holdings each day. Investors can also sign up to receive notifications of any trades that the firm makes in its actively managed ETFs.

Ark also last month added language to the prospectus disclosing the risks of investing in special purpose acquisition companies, or Spacs — so-called blank-cheque companies designed to take private companies public through mergers or acquisitions.

Some of Ark’s ETFs invest in Spacs. As of April 5, the $3.2bn Ark Autonomous Technology & Robotics ETF held 0.42 per cent of its assets in Atlas Crest Investment Corp, a Spac that went public last year and announced in February it would acquire electric airline company Archer. Another 0.24 per cent of the fund’s assets were in Jaws Spitfire Acquisition Corp, a Spac backed by Serena Williams that last month agreed to take 3D printer Velo3D public.

Investors added $36.5bn to Ark’s ETFs collectively over the year ended February 28, according to data from Morningstar Direct. The firm was the ninth-largest ETF issuer at the end of last month, with $51.3bn in assets, Morningstar data shows.

>>> What to look at today - 2nd to 6th of April 2021

Most Asian stocks fell Tuesday as concern China is curtailing loan growth hurt sentiment after U.S. stocks hit a record on optimism about the rebound in the world’s largest economy. Treasuries and the dollar ticked up.
An Asia-Pacific share gauge dipped for the first day in four, led by losses in Japan. S&P 500 stock futures were slightly in the red, while European contracts pointed higher. The U.S. index reached an all-time high Monday with most of its major groups advancing. Megacap U.S. technology stocks rallied, including a surge by Facebook Inc. to a new peak as the Nasdaq 100 jumped 2%.
In China, the central bank asked the nation’s major lenders to curtail loan growth for the rest of this year, according to people familiar with the matter. Australia’s monetary authority left its key policy settings unchanged and said it’s monitoring trends in housing borrowing as home prices rise.
Meanwhile, oil pared some of its overnight slide, which was sparked partly by delays in Europe’s reopening due to rising virus cases.
US After Hours Softbank to acquire 40% stake in AutoStore; ILMN +11.2% jumps on guidance; UCTT -5.3% falls on stock offering

Nikkei -1.16% Hang Seng Closed CSI -0.68% Shanghai -0.26% Shenzen -0.09%

Eur$ 1.1810 CNH 6.5544 CNY 6.5501 JPY 110.20 GBP 1.3917 CHF 0.9373 RUB 76.35 TRY 8.1151 WTI$ 59.15 +0.87% GOLD 1,737.4 +0.53% BTC 58,8880 -100

S&P -0.17% NAsdaq -0.02% EuroStoxx +0.72% FTSE +0.28% Dax +1.05% SMI +0.53%

Macro :
- World Economy Risks ‘Dangerously Diverging’ Even as Growth Booms
- Archegos Shows Need to Monitor Family Offices, Berkovitz Says
- German Practitioners to Start Vaccinations Next Week: Ministry
- Australia Finds 1 Case of Clotting Following Astra Vaccination
- Jordan Former Crown Prince Under House Arrest in Crackdown (2)

Spacs :
- SPAC Called 5G Edge Wants to Go Public Under Ticker ‘ARK’
- SPAC in Pact With Lottery.com Jumps on Push Into Sports Betting
- SPAC IPOs Raise $35.1 Billion in March, 2nd-Highest on Record

Keep an eye on :
- AGS BB : Ageas Sees RPN(I) Effect Boosting 1Q Net by EU1.7 Million
- AIR FP : JAL Says It Retired All B777 Planes With P&W Engines in FY2020
- AF FP : EU Commission Approves EU4 Billion Recap Plan for Air France
- ALO FP : Alstom Acquires Helion Hydrogen Power, No Financial Terms
- APPS SM : Applus Says Malware Attack Disrupted U.S. Vehicle Inspections
- AT IM : ASTM Offer Approved by Market Regulator, to Run April 13-May 10
- AZN LN : UK Saw 25 New Blood Clot Cases Linked to AstraZeneca Vaccine: FT
- AZN LN : Fauci Says U.S. May Not Need AstraZeneca Covid-19 Shots: Reuters
- BESI NA : BE Semiconductor Says First-Quarter Orders Reached EU327 Million
- BA US : Pratt Signals Long Wait Until 777 Engine Checks Are Completed
- FBAVP BB : BNP Paribas Fortis to Take Over Rest of Bpost Bank by Year-End
- CNE LN : Cairn Is in Talks to Buy Stake in Israel Gas Reserve: TheMarker
- CGG FP : CGG Issues $500M Notes, EU585M Notes Due 2027
- COIN US : Coinbase Files for Direct Listing, Shares to Trade on April 14
- CVAL IM : Petrus Says Credit Agricole Bid Fails to Adequately Value Creval
- CBK GY : Commerzbank Will Record $550 Million Charge for Job Cuts
- CSGN SW : Credit Suisse Effort to Recoup Greensill Loans Faces Roadblock
- CSGN SW : Credit Suisse Weighs Replacing Risk Chief After Month of Miscues
- CSGN SW : Credit Suisse Takes $4.7 Billion Archegos Hit, Replaces Warner
- ROO LN : Deliveroo Snubbed US Approach Ahead of Disastrous Float
- DBK GY : Italy’s Bank Fund Hires Deutsche Bank to Advise on Carige Sale
- DIA IM : DiaSorin, Lumos Diagnostics to Collaborate on Liaison IQ Launch
- DIE BB : Belgian March Car Registrations Rise 56%; D’Ieteren Has 22.7%
- EUCAR FP : Hertz Chooses Plan Backed by Centerbridge, Warburg, Dundon
- FB US : Facebook Data on 533 Million Users Reemerges Online for Free
- FB US : Barrons cover Story, 20% Upside, not crazy for FB...
- FB US : U.K. May Make Facebook Allow Police Access to Messages: Guardian
- RACE IM : Ferrari Overtaken by Rivals to End Years in Market Fast Lane
- GRF SM : Grifols Drug Trial Evaluating Covid Treatment Fails to Meet Goal
- IIA AV : Immofinanz: Transfer of Shares in RPPK Not Done, Pecik Still CEO
- 3298 JP : Invesco Office J-REIT Says It Will Analyze Starwood’s Bid
- IG IM : Italgas, Energie Rete Gas in Gas Network Accord in Valle D’Aosta
- LHA GY : Lufthansa Supervisory Board Chairman Opposes Bonus Ban: Spiegel
- MMT FP : European TV Channels Want to Merge to Fight U.S. Rivals
- MRNA US : FDA Revises Moderna COVID-19 Vaccine’s EUA to Boost Doses
- NESN SW : Nestle Plans More Acquisitions in Coming Years, CEO Tells FuW
- OSE FP : OSE Immunotherapeutics Covid Vaccine Trial Gets Belgian Approval
- PSH NA : Pershing Square Holdings March Net Performance +0.6%
- PXD US : Pioneer to Buy DoublePoint for $6.4 Billion Amid Permian Push
- ALPIX FP : Second Sight Terminates Business Combination With Pixium Vision
- PAH3 GY : Porsche Rises as Goldman Sets Street-High PT With 40% Upside
- RYA ID : Ryanair, Wizz Air Said to Get Slots at Linate Airport: Corriere
- SAN SM : Santander Taps Deloitte to Sell NPL Portfolio: El Confidencial
- SPM IM : ENI, Cassa Depositi Nominate Caio as Saipem CEO
- SON PL : Sonae Unit SFS Signs Partnership Agreement With Banco CTT
- STLA US : FCA US: 5% Increase in 1Q U.S. Total Sales
- STLA IM : Honda to Restart Production at North American Plants Next Week
- SXS LN : Spectris Buys Concurrent Real-Time for $166.7m in Cash
- SEV FP : France’s AMF Says Suez Actions Go Against Public Offer Rules
- SEV FP : Suez Reaches Conditional Pact to Sell Unit to Cleanaway
- TGYM IM : Peloton Completes Precor Acquisition
- FP FP : Total Must Maintain Myanmar Output to Protect Workers, CEO Says
- FP FP : Mozambique Retakes Town From Militants; Total Quits LNG Site
- UAL US : United Airlines Will Soon Begin Hiring Hundreds of Pilots: CNBC
- VLA FP : Valneva Has Positive Covid Vaccine Data, to Start Phase 3 Trial
- VIE FP : Veolia: Suez Must Enter Dialogue, Deactivate Poison Pill
- VOW3 GY : The Next Electric-Car Battery Champion Could Be European (1)
- WZZ LN : Ryanair, Wizz Air Said to Get Slots at Linate Airport: Corriere

>>> Europe : Brokers Upgrades & Downgrades - 2nd to 6th of April

>>> Up
* Dustin Raised to Buy at SEB Equities; PT 101 kronor
* Freeport Raised to Outperform at Raymond James; PT $41
* Harbour Energy PLC Raised to Hold at Peel Hunt; PT 21 pence
* Hikma Raised to Overweight at Morgan Stanley; PT 2,600 pence
* Leonardo Raised to Overweight at Morgan Stanley; PT 8.30 euros
* Mapfre Raised to Overweight at JPMorgan; PT 1.98 euros
* Tesla Raised to Outperform at Wedbush; PT $1,000
* TF1 Raised to Buy at Goldman; PT 10.20 euros

>>> Down
* Apple’s PT Cut at Morgan Stanley on Peer Valuation Compression
* Atos Cut to Hold at Deutsche Bank; PT 57 euros
* Atos Cut to Hold at HSBC; PT 68 euros
* B2Holding Cut to Hold at Pareto Securities; PT 9 kroner
* Chevron Cut to Neutral at Goldman; PT $113
* Elettra Investimenti Cut to Hold at UBI Banca; PT 10.60 euros
* Elisa Cut to Hold at SEB Equities; PT 56 euros
* Grupo Catalana Occidente Cut to Neutral at JPMorgan; PT 35 euros
* Gulf Keystone Petroleum Cut to Hold at Berenberg; PT 190 pence
* ITV Cut to Neutral at Goldman; PT 135 pence
* Mitchells & Butlers Cut to Neutral at JPMorgan; PT 310 pence
* Solutions 30 Cut to Neutral at Oddo BHF; PT 17 euros
* Telenor Cut to Equal-Weight at Barclays; PT 160 kroner
* Vestas Cut to Hold at Deutsche Bank; PT 1,400 kroner
* YIT Cut to Hold at Handelsbanken; PT 4.80 euros

>>> Initiation
* AB InBev ADRs Rated New Buy at Northeast Securities; PT $74.22
* Banco BPM Reinstated Buy at SocGen; PT 2.85 euros
* BPER Banca Reinstated Hold at SocGen; PT 2 euros
* Horizonte Minerals Rated New Buy at Cormark Securities
* Tryg Reinstated Buy at Nordea; PT 185 kroner
* VW Rated New Overweight at Guotai Junan Sec

>>> Call
* AB InBev Momentum Building, Stock Not Expensive: Jefferies
* Electrolux Valuation Full, Market Close to Peaking, Citi Says
* Hikma Upgraded at Morgan Stanley on Upcoming Launch Catalysts
* Leonardo De-Leveraging Potential Gets Upgrade at Morgan Stanley

>>> US After Hours Summary: Softbank to acquire 40% stake in AutoStore; ILMN +11

After Hours Summary: Softbank to acquire 40% stake in AutoStore; ILMN +11.2% jumps on guidance; UCTT -5.3% falls on stock offering

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: ILMN +11.2% (guides Q1 and FY21 revs above consensus), ICAD +9.9% (guides Q1 revs above consensus; also announces that CFO will be leaving the co), SPNE +5.4% (guides Q1 and FY21 revs above consensus), DCT +2%, PSXP +0.5%

Companies trading higher in after hours in reaction to news: CARA +10.1% (to join S&P SmallCap 600), NVAX +1.2% (initiates crossover arms in clinical trial of NVX-CoV2373), WTTR +0.6% (names new COO), KTOS +0.5% (completes XQ-58A Valkyrie's sixth flight)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: BCEI -3.1%, MRVI -1.4% (guides Q1 revs above consensus; also announces stock offering)

Companies trading lower in after hours in reaction to news: ARES -6.1% (stock offering), UCTT -5.3% (commences $175 mln stock offering; also files for mixed securities shelf offering), NTST -3% (stock offering), TPTX -2.7% (reports clinical data from TPX-0046 study), USAT -2.2% (files for $100 mln mixed securities shelf offering; also files for 5.73 mln offering by selling shareholders), NBR -1.7% (files for mixed securities shelf offering), VRNT -0.6% (convertible notes offering), AT -0.3% (receives FERC approval for I Squared transaction), LNN -0.2% (increases dividend), ET -0.1% (XOM sues ET over disputed payments, according to Reuters)

>>> US Close Dow +1.13% S&P +1.44% Nasdaq +1.67% Russell +0.49%

Closing Stock Market Summary

The S&P 500 (+1.4%) and Dow Jones Industrial Average (+1.1%) rallied to fresh record highs on Monday, as the market keyed off strong employment and non-manufacturing data for March and positive momentum. The Nasdaq Composite performed slightly better with a 1.7% gain, while the Russell 2000 increased just 0.5%. 

Last week when the stock market was closed for Good Friday, the March employment report showcased 916,000 additions to nonfarm payrolls (Briefing.com consensus 627,000) and a 6.0% unemployment rate (Briefing.com consensus 6.0%), versus 6.2% in February. Today, the ISM Non-Manufacturing Index increased to a record 63.7% in March (Briefing.com consensus 58.5%) from 55.3% in February.

Both growth and value stocks reacted positively today, but interestingly, it was the growth stocks that set the pace and the mega-caps that provided influential leadership. The S&P 500 information technology (+2.0%), communication services (+2.3%), and consumer discretionary (+2.3%) sectors, which contain the mega-caps, rose about 2%.

The energy sector (-2.4%), on the other hand, was a noticeable pocket of weakness and was the only sector that closed lower. Energy stocks ran into profit-taking interest amid a sharp decline in oil prices ($58.69/bbl, -2.72, -4.4%). 

In the mega-cap domain, Tesla (TSLA 691.05, +29.30, +4.4%) reported a record quarter for Q1 deliveries while the Supreme Court ruled in favor of Alphabet (GOOG 2225.55, +87.80, +4.1%) in a copyright dispute with Oracle (ORCL 74.16, +2.35, +3.3%). The Vanguard Mega Cap Growth ETF (MGK 214.70, +4.53) advanced 2.2%.

Aside from the big economic reports, there were other indicators that suggested the economic reopening is gathering momentum.

For example, the White House COVID-19 Data Director said there was an average of more than 3 million doses per day over the past week. Norwegian (NCLH 29.71, +1.99, +7.2%) outlined plans to resume cruise operations from U.S. ports in July. Morgan Stanley upgraded MGM Resorts (MGM 41.70, +2.00, +5.0%) to Overweight from Equal-Weight on upbeat Las Vegas channel checks.  

In the Treasury market, activity was more reserved following an abbreviated session on Friday. The 10-yr yield increased one basis point to 1.72% (up four bps from Thursday's settlement), and the 2-yr yield was unchanged at 0.18% (up three bps from Thursday's settlement). The U.S. Dollar Index decreased 0.5% to 92.60. 

Reviewing Monday's (and Friday's) economic data:

  • March nonfarm payrolls increased by 916,000 (consensus 627,000). March private sector payrolls increased by 780,000 (consensus 470,000). March unemployment rate was 6.0% (consensus 6.0%), versus 6.2% in February. 
    • The key takeaway from the employment report is that it was indicative of an economy that is gaining momentum from reopening activity.
  • The ISM Non-Manufacturing Index increased to 63.7% in March (consensus 58.5%) from 55.3% in February. The dividing line between expansion and contraction is 50.0%. The March reading marks the tenth straight month of growth for the services sector, and is the highest reading on record.
    • The key takeaway from the report is that it reflects some natural slowing after a long streak of monthly increases for factory orders. In turn, more current economic releases, like the ISM Manufacturing Index for March, will feed a belief that factory orders are destined to rebound in coming months.
  • Factory orders for manufactured goods decreased 0.8% m/m in February (consensus -0.5%) after increasing an upwardly revised 2.7% (from 2.6%) in January. This is the first time in ten months that factory orders have not increased.
  • The IHS Markit Services PMI for March was revised higher to 60.4 from 59.8 in the preliminary reading.

Investors will not receive any notable economic data on Tuesday. 

  • Russell 2000 +14.7% YTD
  • Dow Jones Industrial Average +9.5% YTD
  • S&P 500 +8.6% YTD
  • Nasdaq Composite +6.3% YTD

>>> US Early premarket gappers


Early premarket gappers

  • Gapping up:
    • NNOX +52.5%, DMYD +21.9%, TSLA +7.5%, SUPN +6.3%, OLED +4.6%, TIGR +3.3%, SONY +3.1%, LI +2.8%, GRA +2.5%, QDEL +1.7%, CTO +1.6%, CLBS +1.6%, TNXP +1.6%, VALE +1.6%, IWM +1.6%, NBSE +1.1%, MS +1.1%, EBS +0.8%, ABBV +0.7%, DIA +0.7%, DRIO +0.6%, SPY +0.6%
  • Gapping down:
    • GME -13.1%, FC -4.9%, ACAD -4.3%, GRFS -3.1%, VXX -2.4%, IMRA -1.3%, MRAM -1.3%, EYES -1.1%, CIO -0.9%, VNO -0.5%

WSJ : A 28% Tax Rate Will Cost Companies, but Not Equally

A 28% Tax Rate Will Cost Companies, but Not Equally
Tax bills would rise most for U.S.-focused firms that benefited more from 2017 tax cuts, offsetting some gains from stimulus spending

Corporations had ample warning—an entire presidential campaign—that tax increases were coming. But that doesn’t take the sting out of President Biden’s proposal to raise the corporate tax rate to 28% from 21%.

A tax increase, which would take effect as early as January 2022, would cut into corporate profits as the economy recovers, and the Biden plan could reduce the earnings of companies in the S&P 500 by at least 10%, said accounting analyst Dave Zion of the Zion Research Group.


“That’s a big drop in earnings and some companies get hit harder than others,” Mr. Zion said. Those with a high proportion of domestic earnings are directly affected by the rate increase while multinationals are likely to focus more on the changes to the minimum tax on foreign income.

Stock prices already assume some kind of an increase, Mr. Zion said. Republican lawmakers have signaled they won’t support an increase and resistance from moderate Democrats might make a hike to a 25% rate more realistic than 28%, Washington policy analysts say. The U.S. corporate tax rate was 35% before the 2017 tax overhaul. Many companies pay a far lower effective rate because of various deductions and credits.

“There’s no magic behind 28%,” James Lucier, a policy analyst with Capital Alpha Partners. “It is not a number that has any significance, it’s just a way to telegraph that the corporate rate needs to be higher.”

Critics warn that raising the tax rate would hurt U.S. companies’ ability to compete globally, a core driving idea behind 2017’s corporate rate cut, and would likely slow the economy’s pandemic rebound. The rate increase, when combined with state income taxes, would push the U.S. back toward the top of the list of statutory tax rates among major economies—potentially weighing on corporate profits, share prices and Americans’ investment and retirement-savings portfolios.

“President Biden is leading America in a race to the bottom of growth and productivity,” said Rep. Kevin Brady of Texas, the top Republican on the House Ways and Means Committee. “This is sabotaging the recovery.”

Supporters say the tax increase cannot be looked at in isolation. Domestic companies and American workers stand to benefit from the Biden administration’s proposal to spend more than $2 trillion on infrastructure and other improvements, said Matt Gardner, a senior fellow at the progressive Institute on Taxation and Economic Policy.

“I don’t think you can claim with a straight face that these provisions are going to kill jobs without simultaneously thinking about what you’re building with these corporate tax revenues,” he said.

Retailers with heavily domestic income would ordinarily be likely to feel a tax rate rise the most, but they’ve already been hit hard by the pandemic as well as the broader rise of e-commerce.

“In theory, this will be bad for them, but everything’s already been bad for them,” said Stefanie Miller, fiscal-policy analyst for FiscalNote Markets. “They were going bankrupt before the pandemic.”

Whether a higher tax rate affects U.S. investment depends on more than the rate itself, said John Gimigliano, head of tax legislative services at accounting firm KPMG and a former Republican aide on the House Ways and Means Committee.

“There are so many moving pieces of the Biden proposal it’s not as simple as saying a higher tax rate in the U.S. by definition means less capital invested in the U.S.,” Mr. Gimigliano said. “For purely domestic companies, it’s more likely that a higher corporate rate reduces after-tax returns, unless offset by some other specific domestic tax incentive.”

Still, per-share earnings for the S&P 500 rose 3.8% in the fourth quarter—significantly better than analysts expected just a few weeks earlier, and results are expected to continue climbing rapidly during 2021, according to data collected by Refinitiv. And companies hardest-hit by the pandemic won’t be affected immediately by any tax increase, because businesses pay taxes only when they have profits. Companies can also carry forward their losses to offset future taxes.

Supporters of the tax increases, including Mr. Biden, say that they won’t cool the economy.

“For many, many Americans we have a long ways to go in the recovery, but corporate profits right now are not a place where there is concern,” said David Kamin, deputy director of the White House National Economic Council.

A higher tax rate would cost some companies more than others—essentially, the same firms that benefited most from 2017’s corporate-rate cut. That includes utilities, regional banks, many retailers and other companies that sell goods and services primarily in the U.S.

Large U.S. multinational companies paid an 8.8% tax rate on their world-wide income in 2018, down from 15.8% in 2017, according to data released recently by the congressional Joint Committee on Taxation.

AT&T Inc., where U.S. taxes made up about two-thirds of the company’s total tax expense in 2019, reported an effective tax rate of 18.9% in 2019, the year before the pandemic hit, almost half the 32.7% it reported in 2016. Defense contractor Lockheed Martin Corp. reported an effective income-tax rate of 14% in 2019, down from 23.2% in 2016. The tax rate at CVS Health Corp. , which is also heavily domestic, declined to 26.3% from 38.4%.

A spokesman said CVS used savings from the tax cut to increase employee wages and expand benefits. Lockheed Martin declined to comment and AT&T had no comment.

Tax-cut talks leading up to the 2017 rate reduction had included a 25% rate, before demands from then-President Donald Trump pushed it down, Ms. Miller of FiscalNote said. “Companies have shown they are able to exist in a world where the corporate rate was much higher,” she said.

The Biden plan also raises taxes on U.S. companies’ foreign income. It would create a 15% minimum tax on companies’ income as reported on financial statements—partly a response to companies that report profits to investors but use legal credits and deductions to reduce their tax bills.

That tax is likely to be scaled-back from the version Mr. Biden campaigned on; it would cover only about 200 companies and avoid clawing back the benefits of many tax credits, including those for corporate research.

For most big companies, a tax-rate rise of a few percentage points is unlikely to be dramatic. One senior tax executive at a major U.S. manufacturer said his company is more concerned about changes to U.S. taxes on international income.

“It’s far down the list in my mind—it’s costly to the company, but it’s just an obvious thing,” the senior tax executive said. Companies “won’t necessarily like it, because it decreases the bottom line,” this person added. “Other than that there isn’t a lot of anguish about it.”