In a recent analysis, Goldman Sachs indicates that Kamala Harris’ economic strategies are unlikely to differ significantly from President Biden’s should she become the Democratic presidential nominee.
Biden announced on Sunday that he would no longer be pursuing the Democratic nomination, following intensified calls for him to withdraw after a lackluster debate performance against former President Donald Trump. He subsequently endorsed Vice President Harris, who expressed her intent to continue her campaign. She has also gained several notable endorsements, including those from California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, Goldman Sachs suggests that the change in leadership will not lead to substantial alterations in policy.
Goldman analysts, under the guidance of chief economist Jan Hatzius, noted that they do not anticipate a significant change in the Democrats’ fiscal and trade agendas if Harris secures the nomination. They estimate that the chances of Democrats winning the presidency have slightly increased to just under 40%.
The report further highlights the upcoming expiration of personal income tax provisions from the Tax Cut and Jobs Act at the end of 2025, indicating that tax policy will be a central issue in the next election. The outcome will determine whether current tax cuts are extended or if new taxes or cuts are introduced.
Key fiscal policy projections under a potential Biden victory include:
– A proposed tax rate of 39.6% for individuals earning $400,000 or more, an increase from the current rate of 35%/37%.
– A suggested corporate tax rate of 28%, up from the existing 21%, although Goldman expressed doubts about Congress agreeing to this, suggesting a 25% rate as more realistic. In contrast, Donald Trump has pledged to reduce the corporate tax rate to 20%.
– An increase in the Social Security and Medicare tax rate on incomes exceeding $400,000 to 5%, up from the current 3.8%.
If Harris ultimately becomes the nominee, speculation suggests that potential candidates for the vice-presidential slot could include governors Shapiro, Roy Cooper of North Carolina, Andy Beshear of Kentucky, or Senator Mark Kelly of Arizona.