Tax Trouble

Tax Trouble With the stimulus package done, now comes a proposed $3 trillion infrastructure bill, and importantly, tax hikes to help pay for some of this spending. Assuming the corporate tax rate rises from 21% to 28%, and assuming P/E ratios remain unchanged, which is optimistic, corporate earnings would decline 8% and equity prices 7%. Assuming the rate rises to 25%, the earnings hit would be 5%, and equities would decline 3%.