Equity markets tend to overreact to the potential for major political policy changes, but a new report by UBS analyst Steven Milunovich indicates that some of the biggest U.S. companies could be facing a real possibility of major tax bills if a Republican is elected president in 2016.

According to Shane Lieberman, Federal Affairs Manager in the U.S. Office of Public Policy for UBS Americas, companies with large hordes of cash overseas, such as Apple Inc. AAPL 0.69% and Alphabet Inc GOOGL 1.14% GOOG 0.88% may have a lot more riding on the election than investors realize.

“Tax legislation is important to tech investors because (1) a lower tax rate incenting repatriation of overseas cash would be significant for companies such as Apple that have over 90 percent of cash outside the US— that cash can be returned to shareholders or reinvested in the business, and (2) the European Commission is questioning the tax rates in Europe of leading tech companies like Apple and Google,” Milunovich explained.

Lieberman told…

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