Kamala Harris’ economic policies are unlikely to differ significantly from President Biden’s should she secure the Democratic presidential nomination, according to analysts at Goldman Sachs.
Following President Biden’s announcement on Sunday that he would withdraw from the Democratic race after facing intense pressure following a lackluster debate performance against Donald Trump, he endorsed Vice President Harris. She has confirmed her intention to continue her candidacy and has garnered endorsements from notable figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, the anticipated shift in leadership is not expected to lead to substantial changes in policy.
Goldman Sachs analysts, led by chief economist Jan Hatzius, noted that they do not foresee a significant alteration in the Democrats’ fiscal and trade policy agenda with Harris as the nominee. While this change in nomination slightly increases the likelihood of a Democratic victory in the presidential election, projections suggest it remains under 40%.
The firm has indicated that tax issues will be a central focus in the upcoming year, especially with the expiration of the personal income tax provisions from the Tax Cuts and Jobs Act set for the end of 2025. This critical decision will fall to the election winner, influencing both potential tax extensions and future tax cuts.
Among the key fiscal policy forecasts provided by Goldman Sachs if Biden were to win reelection include:
– A proposed tax rate of 39.6% for individuals earning $400,000 or more, an increase from the current rates of 35% to 37%.
– A suggested corporate tax rate of 28%, up from the current 21%. However, Goldman expressed skepticism that Congress would support this, proposing a 25% rate as more feasible. In contrast, Donald Trump has promised to lower the rate to 20%.
– An increase in the Social Security and Medicare tax rate on incomes over $400,000, proposed at 5%, up from the current 3.8%.
If Harris secures the nomination, prediction markets indicate that Pennsylvania Governor Shapiro, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, or Arizona Senator Mark Kelly are the top contenders for the vice presidential slot.