U.S. election rattles U.S. stocks! Goldman warns: Harris' tax plan may cause S&P 500 companies' earnings to drop 5%

Analysts at Goldman said that a proposal by U.S. Vice President and Democratic presidential candidate Kamala Harris to raise corporate taxes ahead of the November presidential election could shave about 5% off earnings for S&P 500 companies. Last month, Harris proposed raising the corporate tax rate to 28% from 21%, and ensuring “big companies pay their fair share,” if she defeated Republican rival Donald Trump in the election. Goldman estimated that a 28% rate would hit earnings for S&P 500 companies by about 5%. The bank estimated that an increase in the tax on foreign income, and raising the alternative minimum tax to 21% from 15%, could shave up to 8% off corporate earnings. On the other hand, Trump has proposed cutting the federal statutory corporate tax rate to 15% from the current 21%, which would boost S&P 500 companies’ earnings by about 4%. “U.S. statutory income tax on domestic income is currently 26%, but the typical S&P 500 company pays a total effective tax rate of 19%,” Goldman added. Goldman expects a 1 percentage point change in the U.S. statutory rate to change S&P 500 EPS by slightly less than 1%, or about $2. Some polls show Harris slightly ahead of Trump.