Goldman Sachs suggests that Vice President Kamala Harris’ economic agenda would not differ significantly from President Joe Biden’s if she secures the Democratic presidential nomination.
This statement follows President Biden’s announcement on Sunday that he is stepping aside from the race amid mounting pressure and criticism following a disjointed debate against former President Donald Trump. Shortly after making his decision public, Biden endorsed Harris, who has expressed her intention to continue her candidacy. She has garnered support from prominent figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy.
Goldman Sachs analysts, led by chief economist Jan Hatzius, indicated that the Democratic fiscal and trade policy framework is unlikely to change substantially should Harris become the nominee. Their analysis noted that the odds of a Democratic victory in the White House increased slightly but still linger at just under 40%.
Looking ahead, the firm highlighted that taxes will play a pivotal role in fiscal discussions next year, particularly as the personal income tax provisions of the Tax Cuts and Jobs Act are set to expire at the end of 2025. The outcome of the election will determine the future of these tax cuts, including the potential for new taxes or reductions.
The firm provided several specific projections regarding fiscal policy in the event of a Biden victory:
– A potential tax rate of 39.6% for individuals earning $400,000 or more, an increase from the current rates of 35% and 37%.
– A proposed increase in the corporate tax rate to 28%, raising skepticism about congressional approval, with a more realistic projection being a rate around 25%. In contrast, Trump aims to reduce the corporate tax rate to 20%.
– A proposed increase in the Social Security and Medicare tax rate on incomes above $400,000 to 5%, up from 3.8%.
In the context of Harris potentially taking the nomination, prediction markets suggest that the vice presidential slot could likely go to Pennsylvania Governor Shapiro, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, or Arizona Senator Mark Kelly.