Goldman Sachs has analyzed Vice President Kamala Harris’ potential economic plans if she becomes the Democratic presidential nominee, suggesting they will likely remain similar to those proposed by President Joe Biden. This assessment follows Biden’s announcement that he will withdraw from the race for the Democratic nomination due to increasing pressure after a challenging debate performance against former President Donald Trump.
Biden’s endorsement of Harris was swiftly followed by support from notable figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, Goldman Sachs analysts, led by chief economist Jan Hatzius, indicated that the Democratic Party’s fiscal and trade policies are not expected to experience significant changes should Harris take the lead.
According to Goldman, the probability of the Democrats securing the White House has increased slightly with Harris at the helm, but still remains just below 40%. The firm also highlighted that taxes are projected to be a primary fiscal focus in the upcoming year, particularly as the personal income tax provisions of the Tax Cuts and Jobs Act are set to expire at the end of 2025. Upcoming elections will determine how the tax cuts will be addressed.
Goldman provided specific forecasts regarding fiscal policy under a Biden victory:
– A proposed tax rate of 39.6% for individuals earning $400,000 or more, up from the current rates of 35% or 37%.
– A suggested increase in the corporate tax rate to 28%, up from the current 21%, although Goldman expressed doubts about Congress agreeing to this and suggested a more realistic outcome of 25%. In contrast, Trump has promised to reduce the rate to 20%.
– A proposed increase in the Social Security and Medicare tax rate on incomes exceeding $400,000 to 5%, up from the current 3.8%.
If Harris emerges as the nominee, speculation about potential vice presidential candidates includes Pennsylvania Governor Josh Shapiro, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, and Arizona Senator Mark Kelly.