In a recent analysis by Goldman Sachs, the economic plans of Vice President Kamala Harris are expected to closely resemble those of President Biden, should she secure the Democratic presidential nomination. This insight comes as President Biden announced he would withdraw from the race, following widespread calls for his departure after a lackluster debate performance against former President Donald Trump.
Following Biden’s decision, he endorsed Harris, who has expressed her determination to pursue her candidacy. She has also garnered significant endorsements from prominent 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, suggest that the shift in leadership will not result in major changes to the Democratic fiscal and trade policies.
Goldman Sachs notes that the likelihood of a Democratic victory in the upcoming election has seen a minor increase, now estimated at just under 40%. The analysts pointed out that upcoming fiscal policies will heavily depend on the upcoming expiration of tax provisions from the Tax Cut and Jobs Act by the end of 2025. As a result, the incoming administration will be responsible for determining the fate of these tax cuts and any new tax measures.
The firm provided several key forecasts should Biden win the election, highlighting the following proposed changes to fiscal policies:
– The potential tax rate on individuals earning $400,000 or more might rise to 39.6%, an increase from the current 35%/37%.
– Biden’s proposal for the corporate tax rate could rise to 28%, up from the current 21%. However, Goldman expressed skepticism regarding Congress’s agreement to this proposal, suggesting a more feasible rate might be around 25%. In contrast, Trump has pledged to reduce the corporate tax to 20%.
– The proposed tax rate for Social Security and Medicare on incomes exceeding $400,000 could increase to 5%, up from the current 3.8%.
In anticipation of Harris potentially securing the nomination, speculation arises regarding her choice for a vice presidential running mate, with high odds for candidates such as Governor Shapiro of Pennsylvania, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, and Arizona Senator Mark Kelly.