Kamala Harris’ economic plans will likely align closely with current Democratic policies if she becomes the Democratic presidential nominee, according to Goldman Sachs.
Goldman analysts, led by chief economist Jan Hatzius, stated they do not expect significant changes in the Democrats’ fiscal and trade policy agenda should Harris take the nomination. The recent political shift comes after President Biden announced he is stepping out of the Democratic race following increased calls for his withdrawal after a shaky debate performance against former President Donald Trump.
After Biden made his decision public, he endorsed Vice President Kamala Harris, who announced her intention to continue her candidacy. Harris received endorsements from prominent political figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. Despite the change in candidacy, the overall policy direction is expected to remain steady.
Goldman Sachs noted that the odds of a Democratic victory have increased slightly with Harris’ nomination but remain below 40%.
Looking ahead, taxes are expected to be a key fiscal focus, with the Tax Cut and Jobs Act’s personal income tax provisions set to expire at the end of 2025. The winner of the election will have significant influence over decisions regarding tax extensions and potential new taxes.
Goldman Sachs previously outlined some fiscal policy forecasts under a Biden administration:
– Democrats are contemplating a 39.6% tax rate on individuals earning $400,000 or more, up from the current range of 35% to 37%.
– President Biden proposed raising the corporate tax rate to 28%, though Goldman predicts a more plausible outcome would be a 25% rate. Republican nominee Donald Trump has pledged to lower the rate to 20%.
– Biden also proposed increasing the Social Security and Medicare tax rate on incomes over $400,000 from 3.8% to 5%.
If Harris secures the nomination, potential candidates for the vice presidential position include Pennsylvania Governor Josh Shapiro, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, or Arizona Senator Mark Kelly.