Elizabeth Warren ‘Soak-the-Rich’ Tax Plan Would Slash S&P 500 Earnings, Experts Say

Warren's proposed rollback of Trump Administration tax cuts would mean 'cataclysmic change'

Democratic presidential hopeful Elizabeth Warren speaks during the second Democratic primary debate of the 2020 presidential campaign at the Fox Theater in Detroit, Mich., on July 30, 2019. Photo: Brendan Smialowski/AFP/Getty Images

As Senator Elizabeth Warren (D-Mass.) emerges as a genuine frontrunner for the Democratic nomination, voices on Wall Street have cautioned against some of the tax hikes she proposes, suggesting their implementation could lead to a significant stock market reversal.

A report by Business Insider quotes industry leaders saying that rollbacks of Trump Administration tax cuts could reduce the bank’s earnings per share estimates by 11 percent. According to David Kostin, Goldman Sachs U.S. Chief Equity Strategist, “Increasing the effective tax rate by eight percentage points from 18 percent back to 26 percent would reduce our 2021 S&P 500 earnings per share estimate by $21 (11 percent) to $164, assuming the legislation applies retroactively to the start of 2021.”