Vice President Kamala Harris’ economic policies are not expected to significantly diverge from those of President Biden if she secures the Democratic presidential nomination, according to Goldman Sachs analysts.
Following a lackluster debate performance against former President Donald Trump, President Biden announced on Sunday that he would not seek re-election. Amid growing pressure for him to step down, he endorsed Harris, who expressed her intention to continue her campaign. She has already garnered notable endorsements from California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, experts believe the shift in leadership will not lead to major changes in policy.
Goldman Sachs analysts, led by chief economist Jan Hatzius, stated that they do not anticipate significant alterations to the Democrats’ fiscal and trade policy agenda should Harris become the nominee. While this transition raises odds slightly for the Democrats winning the White House, they remain below 40%.
Looking ahead, Goldman researchers have previously indicated that tax policy will be a central focus next year, particularly with the planned expiration of personal income tax provisions from the Tax Cuts and Jobs Act at the end of 2025. The outcome of the upcoming election will ultimately determine the fate of these cuts and potential new tax measures.
Here are some key fiscal policy projections should Biden win another term:
– 39.6%: The proposed tax rate Democrats are considering for individuals earning $400,000 or more, an increase from the current rates of 35% and 37%.
– 28%: Biden’s suggested corporate tax rate, elevated from the current 21%, although Goldman expresses skepticism about Congress agreeing to such a rate, predicting a more realistic outcome would be around 25%. In contrast, Trump has pledged to lower the corporate tax to 20%.
– 5%: Proposed tax rate for Social Security and Medicare on incomes exceeding $400,000, up from the current 3.8%.
Should Harris be nominated, speculation points to several potential candidates for the vice presidential slot, including Governors Shapiro (Pennsylvania), Roy Cooper (North Carolina), Andy Beshear (Kentucky), and Senator Mark Kelly (Arizona).