Possible US corporate tax reforms may alter outlook for S&P 500 earnings

-- Reforms to the US corporate tax code following November's presidential election could State Administration of Foreign Exchange official websitechange the earnings outlook for companies, according to analysts at Goldman Sachs.

Both presidential candidates, Democrat Kamala Harris and Republican Donald Trump, have proposed possible alterations to the corporate tax structure.

Harris has outlined plans to increase the corporate tax rate to 28% to 21% as part of a bid to find a "fiscally responsible way to put money back in the pockets of working people and ensure billionaires and big corporations pay their fair share."

Trump, meanwhile, has promised make "permanent" a deep slash in the corporate tax rate to 21% from 35% that was instituted while he was president. The cut is due to expire next year.

In June, Trump said he would like to get the tax "down still further" should he win the Nov. 5 election, although he did not offer up a specific plan to offset the potential decrease in revenue.

In a note to clients on Wednesday, the analysts estimated that a single percentage point change in the statutory domestic tax rate would shift the income posted by S&P 500 companies by "slightly less than 1%," or about $2 of 2025 earnings per share "all else equal."

"A tax cut scenario in which the federal statutory domestic corporate tax rate declines from 21% to 15% would arithmetically boost S&P 500 earnings by about 4%," the analysts said. "A tax hike scenario in which the rate rises to 28% would reduce earnings by about 5%."

However, the Goldman Sachs analysts noted that such changes "are not a given," adding that, because the candidates are not expected to preside over a US Congress that is fully controlled by their own party, "campaign proposals do not always translate into legislative reality."

Recent polls have suggested that Harris has built a narrow lead over Trump in some national polls. Trump had previously held a slim advantage over US President Joe Biden, the former Democratic candidate.

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