Kamala Harris’ economic strategies are unlikely to change significantly if she secures the Democratic presidential nomination, according to insights from Goldman Sachs.
Following a subpar debate performance against former President Donald Trump, President Biden announced on Sunday that he would withdraw from the Democratic race. He subsequently endorsed Vice President Harris, who expressed her intent to advance her candidacy and received notable backing from California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, experts believe that policy changes will be minimal.
Goldman Sachs analysts, led by chief economist Jan Hatzius, indicated that they do not anticipate substantial shifts in the Democratic fiscal and trade policy agenda if Harris becomes the nominee. Their analysis suggests that the likelihood of a Democratic victory in the upcoming presidential election has increased slightly but remains below 40%.
Research from Goldman previously highlighted that tax policy would be a critical focus in the coming year, particularly due to the impending expiration of personal income tax provisions from the Tax Cuts and Jobs Act at the end of 2025. The next administration will play a crucial role in deciding how much of these tax cuts will be maintained and whether new taxes or cuts will be implemented.
Key predictions regarding fiscal policy under a Biden administration include:
– 39.6%: The proposed tax rate for individuals earning $400,000 or more, an increase from the current rates of 35% and 37%.
– 28%: The suggested corporate tax rate, an increase from the current 21%. Goldman expresses skepticism regarding Congress’s agreement on this rate, suggesting that a 25% rate is more likely. In contrast, Republican nominee Donald Trump intends to reduce this rate to 20%.
– 5%: The proposed tax rate for Social Security and Medicare on incomes over $400,000, increased from the current 3.8%.
Should Harris become the nominee, prediction markets indicate that the top candidates for her vice presidential pick include Governors Shapiro of Pennsylvania, Roy Cooper of North Carolina, Andy Beshear of Kentucky, and Senator Mark Kelly from Arizona.