Kamala Harris’ economic proposals are expected to remain largely consistent if she becomes the Democratic presidential candidate, as suggested by analysts at Goldman Sachs.
This assessment follows President Biden’s announcement on Sunday that he would not seek re-election, amid growing pressure for him to step aside after a lackluster debate performance against former President Donald Trump. Shortly after, Biden endorsed Vice President Harris, who confirmed her intention to proceed with her candidacy. She has since garnered notable endorsements from figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, the expected policy shifts appear minimal.
Goldman Sachs analysts, led by chief economist Jan Hatzius, noted that the Democrats’ fiscal and trade policy agenda is unlikely to change significantly under Harris’s nomination. The analysts stated that while the likelihood of a Democratic victory in the upcoming election has increased marginally, it remains just below 40%.
Looking ahead, Goldman Sachs had previously indicated that tax policy will come into focus next year, particularly with the impending expiration of certain provisions from the Tax Cut and Jobs Act by the end of 2025. This expiration will present significant decisions for whoever wins the election regarding the extension of tax cuts and the introduction of new taxes.
The firm provided specific forecasts regarding fiscal policy under a potential Biden victory:
– A proposed tax rate of 39.6% on individuals earning $400,000 or more, an increase from the current 35%/37%.
– A corporate tax rate proposed at 28%, up from 21%, though Goldman expressed skepticism regarding congressional support, predicting a more likely outcome around 25%. In contrast, Trump has promised to reduce the corporate tax rate to 20%.
– An increase in the Social Security and Medicare tax rate on incomes over $400,000 from the current 3.8% to 5%.
If Harris secures the nomination, prediction markets suggest that the most likely candidates for the vice presidential role would include Governors Shapiro (Pennsylvania), Roy Cooper (North Carolina), Andy Beshear (Kentucky), or Senator Mark Kelly (Arizona).