Goldman Sachs has indicated that Vice President Kamala Harris’ economic policies are unlikely to differ significantly from those of President Biden, should she secure the Democratic presidential nomination.
Following a lackluster debate performance against former President Donald Trump, President Biden announced on Sunday that he would not seek reelection. He endorsed Harris, who expressed her intention to continue her campaign and garnered support from notable figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. Despite this shift, analysts at Goldman Sachs expect the Democratic fiscal and trade policy agenda to remain largely unchanged.
In a note released on Sunday, chief economist Jan Hatzius stated that the likelihood of a Democratic victory in the upcoming presidential election has marginally increased, now hovering just below 40%.
Goldman Sachs has previously highlighted that tax policy will become a key focus next year due to the impending expiration of personal income tax provisions from the Tax Cuts and Jobs Act at the end of 2025. This means that the next administration will need to decide on the future of these tax cuts and any potential new taxation.
Analysts provided specific forecasts regarding fiscal policy under a potential Biden administration:
– A proposed tax rate of 39.6% for individuals earning $400,000 or more, increasing from the current 35%/37%.
– A suggested corporate tax rate of 28%, up from 21%, although Goldman expressed skepticism that Congress would agree to such an increase, predicting a more likely outcome of 25%. In contrast, Trump has promised to reduce the corporate tax rate to 20%.
– A proposed increase in the Social Security and Medicare tax rate on incomes exceeding $400,000 from 3.8% to 5%.
If Harris advances as the Democratic nominee, speculation about her vice presidential pick centers on governors including Shapiro, North Carolina’s Roy Cooper, Kentucky’s Andy Beshear, or Senator Mark Kelly of Arizona.