Goldman Sachs "Corporate Net Profit to Decrease by 9% if Tax Increase Occurs"

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[Asia Economy Reporter Yujin Cho] Goldman Sachs analyzed that the corporate tax rate increase policy promoted by U.S. President Joe Biden could reduce corporate profits by 9%.

According to CNN Business on the 22nd (local time), it reported that President Joe Biden will face significant resistance in his efforts to reverse former President Donald Trump's tax cuts.

The Biden administration will unveil an infrastructure investment bill expected to be worth $3 trillion (approximately 3,385 trillion KRW) this week. This amount is about 13% of the U.S. Gross Domestic Product (GDP), and the plan is to raise a substantial portion of the funds through tax increases such as corporate tax hikes to invest in infrastructure.

In a report released the day before, Goldman Sachs stated, "If the Biden administration's pledge to raise the corporate tax rate from 21% to 28% materializes, it will significantly impact corporate earnings," and forecasted that "the expected net profits of S&P 500 companies next year will be cut by 9%."

Goldman Sachs also predicted that Biden's tax increase ambitions are unlikely to materialize due to political resistance.

Goldman Sachs said, "Republicans will collectively oppose President Biden's tax increase plan, and some moderate Democratic lawmakers may also agree."

They further anticipated that even if the corporate tax rate is raised, the increase will likely be capped at 25%, and the resulting decline in corporate profits will be limited to 3%.

Goldman Sachs' analysis suggests, according to CNN, that Wall Street's focus is shifting from the $1.9 trillion stimulus package and economic reopening to funding infrastructure investments.

Goldman Sachs noted that while the market is paying attention to interest rates and inflation, Wall Street's gaze is fixed on the tax increase plan, stating, "Stock investors will soon shift their focus from rising interest rates to tax hikes."

Meanwhile, the Business Roundtable (BRT), a gathering of major corporate CEOs, expressed a stance of "active opposition" to the Biden administration's corporate tax increase.

This content was produced with the assistance of AI translation services.