Goldman Sachs analysts suggest that Vice President Kamala Harris’ economic policies would likely mirror those of President Biden if she secures the Democratic presidential nomination.
This commentary comes as President Biden announced he is stepping aside from the race, following mounting pressure for him to do so after a less than stellar debate performance against former President Donald Trump. In the wake of his decision, Biden has endorsed Harris, who is eager to advance her campaign and has garnered support from notable figures including California Governor Gavin Newsom and Pennsylvania Governor Josh Shapiro.
However, implications for policy remain limited. Goldman Sachs looked into potential changes, stating, “We would not expect the Democrats’ fiscal and trade policy agenda to shift meaningfully in the event that Harris is the nominee.” The firm estimated that the odds of the Democrats securing the White House would slightly improve, but still stay under 40%.
Looking ahead to next year, Goldman Sachs has predicted that taxes will become a central focus, particularly with the Tax Cut and Jobs Act’s personal income tax provisions set to expire in 2025. Consequently, the future president will influence whether these cuts get extended or if new tax measures are introduced.
Here are some key forecasts regarding fiscal policy should Biden win re-election:
– A proposed tax rate of 39.6% for individuals earning $400,000 or more, an increase from the current rates of 35% and 37%.
– An increase in the corporate tax rate to 28%, from the current 21%, although Goldman Sachs expressed doubts over Congress’s willingness to accept such a hike, suggesting a more feasible rate could be around 25%. Meanwhile, Trump has proposed lowering the rate to 20%.
– A rise in the Social Security and Medicare tax rate on incomes exceeding $400,000, proposed to increase to 5% from the current 3.8%.
If Harris secures the nomination, prediction markets indicate potential vice presidential candidates could include Pennsylvania Governor Shapiro, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, or Senator Mark Kelly from Arizona.