Goldman Sachs has indicated that Kamala Harris’ economic policies are unlikely to diverge significantly from those of President Biden, should she become the Democratic presidential nominee.
This comes after President Biden announced on Sunday his decision to withdraw from the race, amidst mounting pressure for him to step aside following a less-than-stellar debate performance against former President Donald Trump. Shortly after his statement, Biden publicly endorsed Vice President Harris, who has expressed her commitment to continue her campaign, receiving backing from notable figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy.
Despite these developments, Goldman Sachs analysts, led by chief economist Jan Hatzius, suggest that the Democratic fiscal and trade policy agenda is not expected to change significantly if Harris takes the lead. The analysts note that while the shift may marginally increase the chances of a Democratic victory in the presidential race, estimates suggest they still stand at just under 40%.
Goldman Sachs had previously predicted that tax policy will be a central focus in 2024, particularly with the expiration of certain provisions of the Tax Cuts and Jobs Act set for the end of 2025. The future administration will thus face decisions regarding extensions of tax cuts and the introduction of new taxes or cuts.
Some key projections from Goldman for fiscal policy if Biden were to win include:
– A potential 39.6% tax rate for individuals earning $400,000 or more, an increase from the current rates of 35% and 37%.
– A proposed increase of the corporate tax rate to 28% from the current 21%, though Goldman expresses skepticism regarding Congressional approval for such a rise, suggesting a 25% rate is more realistic. In contrast, Trump has proposed a reduction to 20%.
– An increase in the tax rate for Social Security and Medicare on incomes above $400,000 to 5%, up from 3.8%.
If Harris secures the nomination, speculation surrounds potential vice presidential candidates, including Governors Shapiro, Roy Cooper from North Carolina, Andy Beshear from Kentucky, and Arizona Senator Mark Kelly.