Goldman Sachs has assessed that Kamala Harris’ economic policies are unlikely to diverge significantly from those of President Biden if she becomes the Democratic presidential nominee. This analysis came in the wake of Biden’s announcement on Sunday that he is withdrawing from the race for the Democratic nomination, following growing pressure for him to step aside after a challenging debate against former President Donald Trump.
After Biden’s statement, he endorsed Vice President Harris, who then expressed her commitment to continue her campaign. She has since received endorsements from notable figures including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, Goldman Sachs analysts, led by chief economist Jan Hatzius, predict that the shift to Harris will not lead to substantial changes in the Democratic Party’s fiscal and trade policies.
According to Goldman, while the likelihood of Democrats securing the presidency has increased slightly, it remains below 40%. The firm also indicated that taxes are expected to become a primary focus in 2024, especially with the looming expiration of personal income tax cuts from the Tax Cut and Jobs Act at the close of 2025. The next president will play a critical role in determining the future of these tax cuts.
Goldman outlined projections for fiscal policy in the event of a Biden win, highlighting potential changes in tax rates, including:
– A proposed tax rate of 39.6% for individuals earning $400,000 or more, up from the current rates of 35% and 37%.
– A corporate tax rate increase to 28%, up from the present 21%. However, Goldman expressed doubt that Congress would agree to this, suggesting a 25% rate as more feasible. In contrast, Trump has pledged to lower the rate to 20%.
– An increase in the Social Security and Medicare tax rate for incomes over $400,000, which Biden has proposed to raise from 3.8% to 5%.
Should Harris secure the nomination, speculation is growing regarding potential vice presidential candidates. The highest odds are reportedly in favor of Governors Shapiro (Pennsylvania), Roy Cooper (North Carolina), Andy Beshear (Kentucky), or Senator Mark Kelly (Arizona).