Goldman Sachs has indicated that if Vice President Kamala Harris becomes the Democratic presidential nominee, her economic policies are expected to remain largely similar to those of President Biden.
This statement follows President Biden’s announcement on Sunday that he is withdrawing from the Democratic nomination race amid increasing pressures for him to step aside after a challenging debate against former President Donald Trump. Biden has since endorsed Harris, who has expressed her intent to continue her candidacy and has garnered support from notable figures, including California Governor Gavin Newsom and Pennsylvania Governor Josh Shapiro.
Despite the leadership change, Goldman Sachs analysts, led by chief economist Jan Hatzius, believe that the Democratic agenda on fiscal and trade policies will not see significant changes. The analysts estimated that the chances of the Democrats securing the White House have slightly improved but remain under 40%.
Looking ahead, Goldman researchers have pointed out that taxes will be a major topic in the upcoming year, especially given that the personal income tax provisions of the Tax Cuts and Jobs Act are set to expire at the end of 2025. The outcome of the upcoming election will determine whether any of these tax cuts are extended or if new taxes are introduced.
In their forecasts, Goldman Sachs has noted key aspects of fiscal policy under a potential Biden victory:
– A proposed tax rate of 39.6% on individuals earning $400,000 or more, an increase from the current rates of 35% and 37%.
– A suggested corporate tax rate of 28%, which is higher than the current 21%. However, they remain skeptical that Congress would agree to this, suggesting a more likely outcome could be around 25%. In contrast, Donald Trump has promised to reduce the corporate tax rate to 20%.
– An increase in the Social Security and Medicare tax rate for incomes over $400,000, proposed at 5%, up from the current 3.8%.
If Harris secures the nomination, speculation about potential vice presidential picks includes Governors Shapiro, Roy Cooper of North Carolina, Andy Beshear of Kentucky, or Senator Mark Kelly from Arizona.