Kamala Harris’ economic plans are expected to remain largely unchanged if she secures the Democratic presidential nomination, according to analysts at Goldman Sachs.
Following mounting pressure for President Biden to withdraw from the race after a lackluster debate performance against Donald Trump, he announced on Sunday that he would no longer pursue the Democratic nomination. Shortly thereafter, Biden endorsed Vice President Kamala Harris, who confirmed her intent to run. She has also garnered support from prominent figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, Goldman analysts suggest that there will be little significant change in policy direction.
In a note released on Sunday, chief economist Jan Hatzius and his team indicated that they do not expect a meaningful shift in the Democratic fiscal and trade policy agenda if Harris becomes the nominee. Their analysis also noted that the odds of a Democratic victory in the White House have increased slightly but remain just below 40%.
Goldman researchers previously highlighted that taxation will be a major focus in 2024, particularly with the impending expiration of certain personal income tax provisions from the Tax Cut and Jobs Act at the end of 2025. This development means that the next administration will play a critical role in determining whether these tax cuts are extended and if new taxes or reductions are implemented.
The firm outlined several fiscal policy predictions under a potential Biden victory:
– 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 corporate tax rate increase to 28%, up from the current 21%. Goldman expressed skepticism about Congress agreeing on this proposal, suggesting that a more realistic rate could be around 25%. In contrast, Donald Trump, the presumptive Republican nominee, has pledged to lower the corporate tax rate to 20%.
– An uptick in the Social Security and Medicare tax rate on incomes above $400,000 from 3.8% to 5%.
Should Harris gain the nomination, there are high expectations that the vice presidential position would likely go to one of several governors: Pennsylvania’s Josh Shapiro, North Carolina’s Roy Cooper, Kentucky’s Andy Beshear, or Arizona Senator Mark Kelly.