Kamala Harris’ economic plans are not expected to differ significantly if she becomes the Democratic presidential nominee, according to analysts at Goldman Sachs.
On Sunday, President Biden announced that he would withdraw from the race for the Democratic nomination amid mounting pressure for him to step down following a lackluster debate performance against Republican candidate Donald Trump. In his statement, Biden endorsed Vice President Harris, who has confirmed her intention to pursue her candidacy. She has garnered several notable endorsements from high-profile figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. Nevertheless, the shift in leadership is not anticipated to lead to major policy changes.
Goldman Sachs analysts, led by chief economist Jan Hatzius, stated that they do not foresee any significant changes in the Democrats’ fiscal and trade policy agenda should Harris become the nominee. They indicated that replacing Biden with Harris might increase the Democrats’ chances of winning the White House slightly, although it remains just under 40%.
The firm previously noted that the focus on taxes will intensify next year, particularly as the personal income tax provisions of the Tax Cuts and Jobs Act are set to expire at the end of 2025. The outcome of the next election will largely dictate whether these tax cuts are extended and if any new taxes are introduced.
Goldman Sachs provided some key forecasts for fiscal policy under a potential Biden victory:
– 39.6%: The tax rate under consideration by Democrats for individuals earning $400,000 or more, an increase from the current rates of 35%/37%.
– 28%: The proposed corporate tax rate by Biden, up from the current 21%. Goldman expressed skepticism that Congress would agree to this rate, suggesting a more realistic outcome might be a 25% rate. In contrast, Trump has stated a goal of reducing the corporate tax rate to 20%.
– 5%: The proposed tax rate for Social Security and Medicare on incomes over $400,000, increased from the current rate of 3.8%.
If Harris secures the nomination, prediction markets suggest that the vice presidential candidates could include Governors Shapiro of Pennsylvania, Roy Cooper of North Carolina, Andy Beshear of Kentucky, or Senator Mark Kelly of Arizona.