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Washington corporate tax hikes could hurt S&P 500 earnings growth in 2022, Goldman Sach's David Kostin told CNBC on Thursday.
The chief US equities strategist said the S&P 500 would see earnings growth of about 2 if President Biden's entire plan were passed to raise the corporate tax rate from 21% to 28% and fight corporations, offshore profits move% in 2022.
That's less than quarterly earnings growth of 22% in the first quarter of 2021 and earnings growth of 6% in 2020, according to Bloomberg.
However, Kostin's team believes that only parts of the plan will be passed and taxes may only be increased to around 25%. In this scenario, the S&P 500 could see earnings growth of 9% over the next year.
He added that applying the current tax law for 2022, earnings growth in 2022 would be around 12%.
"2%, 9%, 12%. Somewhere in this range is earnings growth likely to be in 2022 for the market," said Kostin. "And make no mistake, all conversations with customers right now are about the prospect of profit in 2022."
The chief strategist added that it may be too early to act on the tax proposals because the details of the plan have not been clarified by lawmakers.
Goldman has set a year-end price target of 4,300 for the S&P 500, an increase of around 5% from current levels.