Vice President Kamala Harris is likely to maintain similar economic policies if she becomes the Democratic presidential nominee, according to Goldman Sachs analysts.
President Joe Biden announced on Sunday that he would withdraw from the race for the Democratic nomination, following pressure for him to step aside after a challenging debate with former President Donald Trump. Shortly after this announcement, Biden endorsed Harris, who confirmed her intention to run for president. Several notable endorsements have come her way, including those from California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, analysts predict that there will not be significant changes to policy.
Goldman Sachs analysts, led by chief economist Jan Hatzius, stated that they do not anticipate a meaningful shift in the Democrats’ fiscal and trade policy if Harris becomes the nominee. Although her candidacy slightly improves the Democrats’ chances of winning the presidency to just under 40%, it does not indicate a drastic change in direction.
The firm highlighted that taxes will be a primary focus in the upcoming year, particularly with the end of the personal income tax provisions from the Tax Cut and Jobs Act set for expiration at the end of 2025. This places significant emphasis on who wins the election, as they will determine the fate of the tax cuts.
Goldman Sachs provided specific forecasts regarding fiscal policy if Biden were to win:
– A proposed tax rate of 39.6% on individuals earning $400,000 or more, up from the current 35%/37%.
– A proposed corporate tax rate of 28%, an increase from 21%. However, Goldman analysts are skeptical that Congress will approve this, suggesting a more feasible rate might be around 25%. In contrast, presumptive Republican nominee Donald Trump has promised to lower the corporate tax rate to 20%.
– A proposed increase in the Social Security and Medicare tax rate for incomes over $400,000 to 5%, up from the current 3.8%.
If Harris secures the nomination, speculation is that she may choose from several governors for her running mate, including Shapiro of Pennsylvania, Roy Cooper of North Carolina, Andy Beshear of Kentucky, or Arizona Senator Mark Kelly.