Vice President Kamala Harris’ economic strategies are expected to remain largely consistent with those of President Biden if she secures the Democratic presidential nomination, according to insights from Goldman Sachs.
In a significant political move, President Biden announced on Sunday that he would withdraw from the race for the Democratic nomination amid rising pressure following a lackluster debate performance against former President Donald Trump. Shortly thereafter, Biden endorsed Harris, who has expressed her commitment to continue her campaign. She has already garnered several prominent endorsements, including those from California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, analysts at Goldman Sachs predict that the transition in leadership will not result in significant changes in policy.
Goldman Sachs’ analysts, led by chief economist Jan Hatzius, expressed that they do not anticipate a noteworthy shift in the fiscal and trade policies under a potential Harris candidacy. The firm’s analysis indicated that the likelihood of a Democratic victory in the upcoming presidential election currently stands slightly below 40%.
The financial analysts previously noted that tax policy will be a central focus in the coming year, particularly as the provisions of the Tax Cut and Jobs Act are set to expire at the end of 2025. The outcome of the election will be pivotal in determining whether tax cuts will be extended or if new tax measures will be introduced.
Goldman Sachs provided several projections for fiscal policy should Biden win re-election:
– 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 suggested corporate tax rate of 28%, up from the current 21%. Analysts expressed skepticism about Congress agreeing to this rate, suggesting a more feasible outcome would be around 25%. In contrast, Trump has promised to lower the corporate tax rate to 20%.
– An increase in the Social Security and Medicare tax rate on incomes above $400,000, proposed at 5%, an increase from the previous rate of 3.8%.
If Harris emerges as the Democratic nominee, speculation about potential vice presidential candidates includes governors such as Josh Shapiro of Pennsylvania, Roy Cooper of North Carolina, Andy Beshear of Kentucky, and Senator Mark Kelly from Arizona.