Goldman Sachs indicates that Kamala Harris’ economic policies are likely to remain largely consistent if she secures the Democratic presidential nomination.
After President Biden announced his exit from the race following pressure for him to step down due to a poor debate performance against Donald Trump, he quickly endorsed Vice President Harris. Harris expressed her intent to proceed with her candidacy, gaining endorsements from prominent figures like California Governor Gavin Newsom and Pennsylvania Governor Josh Shapiro. However, analysts at Goldman Sachs, led by chief economist Jan Hatzius, predict that this leadership change will not drastically alter the Democratic Party’s fiscal and trade policy agenda.
Even with Harris at the helm, Goldman analysts estimate only a minor increase in the Democrats’ chances of winning the presidency, predicting the odds to hover just below 40%. The firm has previously highlighted that tax policy will be a significant focus in the coming year, especially as the personal income tax provisions from the Tax Cut and Jobs Act are set to expire at the end of 2025. Consequently, the next president will face decisions regarding the continuation of these cuts as well as potential new tax initiatives.
Goldman Sachs presented several projections for fiscal policy should Biden emerge victorious, including:
– A proposed tax rate of 39.6% on individuals earning $400,000 or more, an increase from the current rates of 35% and 37%.
– A corporate tax rate envisioned at 28%, up from 21%, though Goldman is doubtful Congress would agree, suggesting a 25% rate is more feasible. In contrast, Trump has pledged to reduce this rate to 20%.
– An increase in the Social Security and Medicare tax rate on incomes above $400,000 to 5%, compared to the current 3.8% rate.
Should Harris become the Democratic nominee, there is speculation regarding her choice for vice president, with high odds for potential candidates including Pennsylvania Governor Josh Shapiro, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, or Arizona Senator Mark Kelly.