The corporate tax hike to 28% from 21% proposed by the US Vice President and Democratic presidential candidate could reduce earnings by 5% for companies listed on S&P 500, according to analysts at Goldman Sachs.
The Democratic candidate last month said that she will ensure that “big corporations pay their fair share,” if she emerges victorious against the Republican candidate Donald Trump, in the upcoming Presidential elections.
Additionally, the analysts said that the impact on S&P 500 companies’ earnings could be as high as 8% if additional measures, such as the taxation of foreign income and an increase in the alternative minimum tax rate from 15% to 21%, were implemented alongside the corporate tax hike.
Meanwhile, former US President Trump’s proposal to lower the federal statutory domestic corporate tax rate from 21% to 15% would potentially lead to a 4% boost in S&P 500 earnings, according to Goldman’s calculations.
The brokerage pointed out that while the current US statutory corporate tax rate on domestic income stands at 26%, the typical S&P 500 company pays an effective tax rate of 19%.
Goldman’s projections suggest that for every 1 percentage point change in the US statutory domestic tax rate, the corresponding shift in S&P 500 earnings per share (EPS) would be slightly less than 1%, or approximately $2 of S&P 500 EPS.
Kamala's corporate tax hike proposal may cut S&P 500 earnings by 5%: Goldman Sachs
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