Kamala Harris’ economic strategy is expected to remain largely unchanged if she secures the Democratic presidential nomination, according to an analysis from Goldman Sachs.
On Sunday, President Biden declared that he would not seek a second term, amid increasing pressure for him to step aside following a weak debate performance against former President Donald Trump. Shortly after, Biden endorsed Vice President Harris, who has expressed her intention to continue her campaign and has garnered endorsements from notable figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. Nevertheless, analysts suggest that this change in leadership will not significantly alter the party’s policies.
Goldman Sachs analysts, led by chief economist Jan Hatzius, noted that the Democratic fiscal and trade policy agenda is not expected to shift considerably if Harris becomes the nominee. They indicated that the likelihood of Democrats winning the White House has increased slightly but remains just under 40%.
The firm previously highlighted that taxation will become a central fiscal concern in the upcoming year, particularly as the personal income tax provisions from the Tax Cuts and Jobs Act are set to expire at the end of 2025. This means the incoming administration will determine the fate of these cuts and whether new taxes will be implemented.
Goldman’s forecasts for potential fiscal policies under a Biden administration include:
– A proposed tax rate of 39.6% for individuals earning $400,000 or more, an increase from the current rates of 35% and 37%.
– A suggested corporate tax rate of 28%, up from the present 21%, though Goldman expressed skepticism that Congress would agree, suggesting a more realistic rate of 25%. In contrast, Trump has pledged to reduce the corporate rate to 20%.
– A proposed increase in the Social Security and Medicare tax rate on incomes over $400,000 to 5%, up from the current 3.8%.
Should Harris become the Democratic nominee, speculation surrounds who may be selected as her running mate, with the highest odds given to Governors Shapiro, Roy Cooper of North Carolina, Andy Beshear of Kentucky, and Senator Mark Kelly of Arizona.