Kamala Harris’ economic plans are expected to remain largely consistent if she becomes the Democratic presidential nominee, according to Goldman Sachs.
On Sunday, President Biden announced he would withdraw from the race for the Democratic nomination amid increasing pressure following a lackluster debate performance against former President Donald Trump. He subsequently endorsed Vice President Kamala Harris, who expressed her intention to proceed with her candidacy and garnered support from notable figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, analysts predict minimal changes in policy direction.
Goldman Sachs analysts, led by chief economist Jan Hatzius, indicated that they do not anticipate a significant shift in the Democrats’ fiscal and trade policy agenda if Harris becomes the nominee. The chances of a Democratic victory in the upcoming election have increased slightly but are still projected to remain under 40%.
The firm highlighted that next year, taxes will be a critical point of focus, particularly with the scheduled expiration of personal income tax provisions from the Tax Cuts and Jobs Act by the end of 2025. The upcoming election will determine the future of these tax cuts as well as potential new tax initiatives.
Goldman provided the following forecasts for fiscal policy under a Biden win:
– 39.6%: The tax rate being considered by Democrats for individuals earning $400,000 or more, an increase from the current range of 35% to 37%.
– 28%: Biden’s proposed corporate tax rate, up from the current 21%. Goldman analysts believe a 25% rate is more likely, as they doubt Congress will support Biden’s proposal. In contrast, Trump has promised to reduce the corporate tax rate to 20%.
– 5%: Biden’s suggested increase in the Social Security and Medicare tax rate on incomes over $400,000, up from the current 3.8%.
If Harris secures the nomination, prediction markets indicate a strong likelihood that the vice presidential slot could go to either Pennsylvania Governor Josh Shapiro, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, or Arizona Senator Mark Kelly.