S&P 500 could see 5% earnings hit from Harris' proposed tax reforms, says Goldman Sachs

US Vice President and Democratic presidential candidate Kamala Harris' proposed corporate tax hike ahead of the November Presidential elections could lower earnings for companies on the benchmark S&P 500 index by about 5 per cent, analysts at Goldman Sachs said.

Last month, Harris proposed raising the corporate tax rate to 28 per cent from 21 per cent and ensure "big corporations pay their fair share," if she wins the election against Republican rival Donald Trump.

Goldman estimated that at a 28 per cent taxation rate earnings of S&P 500 companies would take a 5 per cent hit.

Adding taxation of foreign income and an increase in the alternative minimum tax rate to 21 per cent from 15 per cent could reduce earnings by as much as 8 per cent, the analysts said.

On the other hand, Trump's proposed relief on the federal statutory domestic corporate tax rate to 15 per cent from the current 21 per cent would "arithmetically" boost S&P 500 earnings by about 4 per cent.

"The current US statutory corporate tax rate on domestic income is 26 per cent, but the total effective tax rate paid by the typical S&P 500 company is 19 per cent," the brokerage added.

Goldman projected with each 1 percentage point change in the US statutory domestic tax rate the shift in S&P 500 earnings per share (EPS) would be slightly less than 1 per cent or about $2 of S&P 500 EPS.

Harris' rise to the top of the Democratic ticket has re-energized a Democratic campaign that had harbored doubts about Joe Biden's chances.

Polls showed that Trump had built a lead over Biden but Harris has since edged ahead of the Republican candidate in some national opinion polls.