Biden wants to undo Trump’s tax cuts. That could rattle Wall Street

Biden wants to undo Trump’s tax cuts. That could rattle Wall Street
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New York (CNN Business) — A blue wave in November could wipe out the tax overhaul that padded Corporate America’s bottom line and set off a boom on Wall Street.

Joe Biden, the presumptive Democratic presidential nominee, has proposed lifting the corporate tax rate to 28%. That would reverse half of the cut from 35% to 21% that was enacted by President Donald Trump in late 2017.
Although Biden’s tax plan would raise much-needed revenue to pay down the tower of debt incurred to fight the recession, it would also eat into corporate profits. And that would be a negative for the surging stock market, which has been betting earnings will rebound sharply in 2021.
Goldman Sachs warns that Biden’s tax plan, combined with an expected drag on GDP, would lower next year’s S&P 500 per-share earnings by $20 to $150.
“Although the coronavirus has caused the sharpest decline in economic activity on record, in some ways tax policy represents a larger risk to earnings and consequently to equity prices,” David Kostin, chief US equity strategist at Goldman Sachs, wrote in a note to clients published Friday.

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