Kamala Harris’ economic strategy is expected to remain largely unchanged if she becomes the Democratic presidential nominee, according to analysts at Goldman Sachs.
This follows President Biden’s announcement on Sunday that he is stepping aside from the race for the Democratic nomination after facing mounting pressure to do so, particularly after a recent debate against Donald Trump, the Republican candidate and former president.
In a statement shortly after, Biden endorsed Vice President Harris, who subsequently expressed her commitment to pursue her candidacy. She has also garnered support from notable figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. Despite this change in leadership, Goldman Sachs does not anticipate significant alterations in the party’s policy direction.
Goldman analysts, led by chief economist Jan Hatzius, indicated that they do not foresee a substantial shift in the Democrats’ fiscal and trade agenda if Harris becomes the nominee. Although the transition has slightly increased the likelihood of a Democratic victory in the upcoming election, it remains just under 40%.
Previous analyses by Goldman Sachs suggested that tax policy will take center stage next year, especially as the provisions of the Tax Cut and Jobs Act are set to expire at the end of 2025. This means the next president will play a crucial role in determining whether to maintain existing cuts or introduce new tax measures.
Key tax proposals under a potential Biden administration include:
– A tax rate of 39.6% for individuals earning $400,000 or more, up from the current rates of 35% to 37%.
– An increase in the corporate tax rate to 28%, elevated from the current 21%, although analysts express doubt about congressional approval, suggesting a more realistic rate of 25%. In contrast, Trump has promised to reduce the corporate rate to 20%.
– An increase in the Social Security and Medicare tax rate for incomes exceeding $400,000 to 5%, up from the current rate of 3.8%.
Should Harris secure the nomination, market predictions indicate strong chances for governors Shapiro, Roy Cooper of North Carolina, Andy Beshear of Kentucky, or Senator Mark Kelly of Arizona to be considered for the vice presidential position.