Investing.com — Reforms to the U.S. corporate tax code after November’s presidential election could change the earnings outlook for companies, Goldman Sachs analysts said.
Both presidential candidates, Democrat Kamala Harris and Republican Donald Trump, have proposed possible changes to the corporate tax structure.
Harris has outlined plans to raise the corporate tax rate to 28% to 21% as part of an effort to find a “fiscally responsible way to put money back in the pockets of working people and ensure that billionaires and bigwigs companies pay their fair share.”
Trump, meanwhile, has promised to make a “permanent” cut in the corporate tax rate to 21% from 35%, which was introduced when he was president. The discount expires next year.
In June, Trump said he would like to cut taxes “even further” if he wins the Nov. 5 election, though he did not offer a specific plan to offset the potential drop in revenues.
In a note to clients on Wednesday, the analysts estimated that a one percentage point change in the statutory domestic tax rate would shift S&P 500 companies’ earnings by “just under 1%,” or about $2 of earnings per share in 2025. all else equal.”
“A tax cut scenario in which the federal statutory domestic corporate tax rate falls from 21% to 15% would mathematically boost S&P 500 earnings by about 4%,” the analysts said. “A tax increase scenario where the rate rises to 28% would reduce revenues by about 5%.”
However, Goldman Sachs analysts noted that such changes “are not a given,” adding that because the candidates are not expected to preside over a U.S. Congress fully controlled by their own party, “campaign proposals do not always translate into legislative measures.” reality.”
Recent polls have suggested that Harris has built a narrow lead over Trump in some national polls. Trump had previously held a narrow lead over US President Joe Biden, the former Democratic candidate.
