Goldman Sachs has stated that Vice President Kamala Harris’ economic plans are unlikely to differ significantly from President Biden’s if she becomes the Democratic presidential nominee. This comes after President Biden announced on Sunday that he would withdraw from the race for the Democratic nomination following intense pressure to step down, especially after a difficult debate against former President Donald Trump.
In a statement following his announcement, Biden endorsed Harris, who expressed her intent to continue with her candidacy. She has already garnered support from several prominent figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. Nevertheless, analysts from Goldman Sachs indicated that the policy shift under Harris would not be substantial.
Goldman Sachs analysts, led by chief economist Jan Hatzius, noted that they do not expect a meaningful change in the Democrats’ fiscal and trade policy agenda if Harris becomes the nominee. They estimate that with Harris in the lead, the chances of Democrats winning the White House have increased slightly but remain just under 40%.
The firm had previously indicated that tax policy would be a major focus in the upcoming year, particularly as the Tax Cut and Jobs Act’s personal income tax provisions are set to expire at the end of 2025. This means that the next president will determine the fate of these tax cuts and whether new taxes will be imposed.
Goldman Sachs provided several fiscal policy forecasts 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 under Biden of 28%, up from the current 21%. However, Goldman expressed skepticism that Congress would agree to this, suggesting a more realistic outcome would be around 25%, while Trump has proposed lowering the rate to 20%.
– A proposed increase in the Social Security and Medicare tax rate to 5% for incomes above $400,000, up from the current 3.8%.
If Harris becomes the Democratic nominee, speculation about her choice for vice president has emerged, with high odds assigned to Pennsylvania Governor Shapiro, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, or Arizona Senator Mark Kelly.