Goldman Sachs has observed that Kamala Harris’ economic strategies are unlikely to differ significantly if she becomes the Democratic presidential nominee.
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On Sunday, President Biden announced that he would no longer pursue the Democratic nomination amid increasing calls for him to step down following a weaker-than-expected debate performance against former President Donald Trump.
Shortly after his announcement, Biden endorsed Vice President Kamala Harris, who expressed her intent to continue her candidacy. She received endorsements from notable figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, the policy implications of this shift are expected to be minimal.
Goldman Sachs analysts, led by chief economist Jan Hatzius, noted that there are unlikely to be significant changes in the Democrats’ fiscal and trade policies if Harris becomes the nominee. Although the change in leadership raises the likelihood of a Democratic victory in the presidential race, the chances remain slightly below 40%.
Looking ahead, Goldman Sachs had anticipated that taxes would become a central issue next year, particularly with the personal income tax provisions of the Tax Cut and Jobs Act set to expire at the end of 2025. The outcome of the election will determine which parts of the tax cuts may be extended and whether new taxes or cuts will be implemented.
Goldman’s forecasts for fiscal policy under a potential Biden win include:
– A proposed tax rate of 39.6% on individuals earning $400,000 or more, an increase from the current 35%/37%.
– A suggested corporate tax rate of 28%, up from 21%, although Goldman analysts are doubtful that Congress will approve this, predicting a more likely outcome of 25%. In contrast, Trump has proposed reducing the rate to 20%.
– An increase in the Social Security and Medicare tax rate to 5% for incomes above $400,000, up from the current rate of 3.8%.
If Harris becomes the nominee, speculation about potential vice presidential candidates includes Pennsylvania Governor Josh Shapiro, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, and Arizona Senator Mark Kelly.