Goldman Sachs has analyzed the potential economic plans of Vice President Kamala Harris in the context of her candidacy for the Democratic presidential nomination, indicating that there would not be significant changes in fiscal and trade policies if she were to become the nominee.
This follows President Biden’s announcement on Sunday that he would step aside from the race, amid increasing pressure for him to withdraw after a tumultuous debate with former President Donald Trump. Shortly after his statement, Biden endorsed Harris, who has expressed her intention to proceed with her campaign. She has received backing from notable figures, including governors Gavin Newsom of California, Josh Shapiro of Pennsylvania, and Phil Murphy of New Jersey.
Goldman analysts, led by chief economist Jan Hatzius, suggested that Harris’ nomination would not drastically alter the Democratic fiscal agenda. They estimated that the likelihood of a Democratic victory in the upcoming presidential election improved slightly with Harris as the candidate, but still remains under 40%.
According to earlier reports from Goldman Sachs, tax policy is poised to become a central issue due to the pending expiration of certain provisions from the Tax Cuts and Jobs Act by the end of 2025. The outcome of the election will determine whether the current cuts will be extended or if new taxes will be introduced.
Specific projections include:
– A potential tax rate of 39.6% for individuals earning $400,000 or more, increased from the current 35%/37%.
– A proposed corporate tax rate of 28% by President Biden, an increase from the current 21%, although Goldman expressed doubts about Congressional approval for this rate, suggesting a more likely outcome of 25%. In contrast, Trump has promised to reduce the corporate tax rate to 20%.
– An increase in the Social Security and Medicare tax rate on incomes exceeding $400,000 from 3.8% to 5%.
Moreover, if Harris secures the nomination, speculation regarding her choice for vice presidential candidates includes Governors Shapiro of Pennsylvania, Roy Cooper of North Carolina, Andy Beshear of Kentucky, and Senator Mark Kelly of Arizona.