Stock market investors don’t seem to mind higher taxes – maybe they should

Stock market investors don't seem to mind higher taxes - maybe they should

“This is certainly a risk for equities across the board,” said BofA U.S. equity strategist Jill Carey Hall on Yahoo Finance Live. Hall said any tax hike could be more impactful to U.S.-focused companies within the small-cap Russell 2000 and S&P 500. The Wall Street Journal reported Monday that House Democrats soon plan to propose lifting the corporate tax rate to 26.5% from 21% currently. That’s below the 28% rate President Biden has championed, but would still deal a blow to corporate bottom lines. Meantime, the WSJ reports House Democrats are considering raising the minimum tax on U.S. corporate foreign income to 16.5% from 10.5%.  As for Goldman’s Kostin, he said he has baked in a “scaled down” version of the Biden tax plan into his S&P 500 earnings forecasts. 

The S&P 500 has set new highs on 41% of the trading days in the third quarter, the highest rate since the first quarter of 1998, per Kostin’s research. Further, there have been 213 trading days since the last S&P 500 5% decline. That marks the ninth longest such stretch in the past 90 years, points out Kostin. The proof that investors are ignoring the tax hike is seen all over the market. 

However, investors may want to reacquaint themselves with the tax code and discounted free cash flow analysis. “The market appears to be only partially pricing an increased tax rate in 2022,” said Goldman Sachs chief U.S. equities strategist David Kostin in a research note on Monday. “Prediction markets currently indicate a 62% chance of a statutory corporate rate hike next year.”

Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, YouTube, and reddit Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

“Relative to current policy, we estimate that a hike in the domestic statutory corporate tax rate to 25% and the passage of about half of the proposed increase to tax rates on foreign income will reduce S&P 500 earnings by 5%. As a result of incorporating tax reform into our model, our 2022 EPS forecast is 3% below the bottom-up consensus estimate of $220, which embeds an effective tax rate of 19%, compared with a realized effective rate of 18% since the 2017 tax cuts,” Kostin explains.  Story continues

The News Highlights

  • Stock market investors don’t seem to mind higher taxes – maybe they should
  • Check the latest News news updates and information about business, finance and more.
Disclaimer: If you need to edit or update this news from compsmag then kindly contact us Learn more

For Latest News Follow us on Google News


Latest Headlines
  • Show all
  • Trending News
  • Popular By week
City administration justifies debt restructuring to Harrisburg financial oversight board
City administration justifies debt restructuring to Harrisburg financial oversight board
Under the deal, Ambac also would lower the city’s interest rate from 6.75% to 5% for up to three years on its remaining debt of about $25 million. According to ...
Theranos founder Elizabeth Holmes is on trial. Here’s what you need to know
Theranos founder Elizabeth Holmes is on trial. Here’s what you need to know
Mattis, in a San Jose federal courtroom, described believing so much in the promise of the company’s mission to test for a range of conditions with just a ...
Chromebook that no longer receives security updates, Frequently Asked Questions
Chromebook that no longer receives security updates, Frequently Asked Questions
—Julie O’Brien, St. Paul, Minn. Q: My HP Chromebook is going to reach Auto Update Expiration in September. I use it only rarely, but I would like to be able ...
German Official Squashs Online ‘Incitement’ After Mask Killing
German Official Squashs Online ‘Incitement’ After Mask Killing
A Twitter account linked to the suspect followed several prominent far-right politicians, including senior members of the Alternative for Germany party. ...
NJ Proclaims $1.25M in Funding to Expand Small Business Exporting
NJ Proclaims $1.25M in Funding to Expand Small Business Exporting
Financial awards will be given out on a first-come, first-served competitive basis to eligible New Jersey small businesses that are new to export, as well as ...
Official YouTube integration is being tested by Discord.
Official YouTube integration is being tested by Discord.
Discord didn’t have much to say about the test when we reached out to the company. “As a company founded in innovation, we’re always experimenting and ...
Xiaomi to launch an all-new ‘Civi’ smartphone series on September 27
Xiaomi to launch an all-new ‘Civi’ smartphone series on September 27
Xiaomi is yet to share the details of the Xiaomi Civi smartphone. It is speculated that the company will be replacing its CC series with the Civi lineup. The ...
Former US defense secretary testifies at Holmes fraud trial
Former US defense secretary testifies at Holmes fraud trial
A few months after retiring from the military in 2013, Mattis joined the Theranos board and also invested some of his own savings in the startup. In 2017, ...
Dakota  News Lending Receives $30 Million New Markets Tax Credit
Dakota News Lending Receives $30 Million New Markets Tax Credit
“While the New Markets Tax Program has been around for a number of years nationally, the Fargo-Moorhead area has had somewhat limited access to this ...
This November, the ‘Disney Classic Games Collection’ will include The Jungle Book and SNES Aladdin
This November, the ‘Disney Classic Games Collection’ will include The Jungle Book and SNES Aladdin
As spotted on the French publisher Just For Games’ website, a new collection is said to be arriving this November, delivering both previously mentioned ...
Show next
Compsmag - Latest News from tech, business and health
Logo