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Goldman sees higher taxes as the next big market worry with these stocks particularly vulnerable


President Joe Biden delivers remarks on the implementation of the American Rescue Plan in the State Dining Room at the White House in Washington, U.S., March 15, 2021.

Kevin Lemarque | Reuters

While the stock market appears to be pricing in a once-in-a-generation infrastructure plan from the Biden administration, it doesn’t yet seem concerned about the possibility of significant increase to tax levies to pay for it, according to Goldman Sachs.

In a note titled “The Taxman Cometh,” Goldman U.S. equity strategist David Kostin warned clients that the tax hikes Biden backed during his presidential campaign on corporate and personal income could curb S&P 500 per-share earnings by 9%.

“A looming macro issue is the next round of fiscal legislation, which will include corporate and personal tax hikes,” Kostin wrote in a note Friday.

“The eventual impact will depend on the specifics; our current 2022 EPS estimate assumes just a 3% drag from taxes,” he added. “Equities appear to be pricing infrastructure optimism but little concern about tax risk.”

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