Goldman Sachs suggests that Vice President Kamala Harris’ economic plans would not vary significantly if she becomes the Democratic presidential nominee. This follows President Joe Biden’s announcement on Sunday that he would withdraw from the Democratic nomination race, amid mounting pressure after a lackluster debate performance against former President Donald Trump.
Biden swiftly endorsed Harris, who has shown her commitment to pursuing her candidacy, garnering notable endorsements from figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, analysts at Goldman, led by chief economist Jan Hatzius, anticipate minimal changes in fiscal and trade policies should Harris secure the nomination.
Goldman’s analysis indicates that while the chances of a Democratic win in the presidential election increased slightly with Harris as the nominee, they remain just under 40%. The firm previously indicated that tax policy will be a significant focus next year as provisions from the Tax Cut and Jobs Act are set to expire at the end of 2025. This situation will require the next administration to determine how to manage the existing cuts and any potential new taxes.
In terms of specific fiscal policy predictions under a Biden administration, Goldman calculates the following potential changes:
– A proposed tax rate of 39.6% on individuals earning over $400,000, an increase from the current rates of 35% and 37%.
– An anticipated corporate tax rate of 28%, up from 21%, though Goldman expresses doubt that Congress would accept this, suggesting that a 25% rate might be more realistic. In contrast, Donald Trump, the expected Republican nominee, aims to reduce the rate to 20%.
– A proposed increase in the Social Security and Medicare tax rate on incomes exceeding $400,000 from 3.8% to 5%.
Should Harris become the nominee, prediction markets suggest that potential candidates for the vice presidential position include Pennsylvania Governor Shapiro, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, or Arizona Senator Mark Kelly.