Goldman Sachs suggests that Kamala Harris’ economic plans are unlikely to diverge significantly from those of President Biden if she becomes the Democratic presidential nominee. This insight follows Biden’s announcement that he will not seek reelection amid increasing pressure for him to step aside, particularly after a challenging debate against former President Donald Trump.
In the wake of Biden’s decision, he endorsed Harris, who expressed her intent to pursue the nomination and received backing from prominent figures including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, expected policy changes are not anticipated to be drastic.
Goldman analysts, led by chief economist Jan Hatzius, stated in a recent note that they do not foresee a significant shift in the Democrats’ fiscal and trade policy agenda if Harris secures the nomination. The likelihood of a Democratic victory in the upcoming presidential election has increased slightly but remains just under 40%, according to their analysis.
With the expiration of certain provisions from the Tax Cut and Jobs Act at the end of 2025, taxation is set to become a central fiscal issue next year, regardless of who wins. Goldman researchers have previously highlighted the tax rate proposals being considered under a potential Biden victory, which include a proposed increase in tax rates for high earners and corporations.
Some key forecasts include:
– A proposed tax rate of 39.6% on individuals earning $400,000 or more, up from current rates of 35%/37%.
– An increase in the corporate tax rate to 28%, from the existing 21%, although Goldman expresses skepticism regarding Congress’s approval, suggesting that a 25% rate is more feasible. In contrast, Trump has promised to cut the corporate tax rate to 20%.
– A proposed tax rate of 5% on incomes exceeding $400,000 for Social Security and Medicare, an increase from the current 3.8%.
If Harris becomes the nominee, speculation about potential vice presidential candidates includes Pennsylvania Governor Shapiro, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, and Arizona Senator Mark Kelly.