(Reuters) – A rise in the U.S. domestic corporate tax rate to 25% and passage of roughly half a proposed increase in tax rates on foreign income would reduce the S&P 500’s profits by 5% in 2022, according to analysts at Goldman Sachs .
Reuters reported Sunday that the US House of Representatives Democrats would propose raising the corporate tax rate from 21% to 26.5% as part of a comprehensive plan that includes tax increases for the wealthy, businesses and investors.
After incorporating tax reform into their models, Goldman analysts said they expect the S&P 500 to earn $ 212 per share in 2022, below the consensus estimate of $ 220.35 for Wall Street, which shown by refinitive IBES data.
The bank’s analysts said the market appears to be only partially pricing in an increased tax rate in 2022 or allowing for a capital gains tax hike, although they added that Goldman analysts were only expecting a scaled-down version of the proposals.
(Reporting by Medha Singh in Bengaluru; editing by Patrick Graham)