Goldman Sachs suggests that if Kamala Harris becomes the Democratic presidential nominee, her economic plans are unlikely to differ significantly from those of President Biden.
Biden announced he would withdraw from the race for the Democratic nomination following criticism of his debate performance against former President Donald Trump. Subsequently, he endorsed Vice President Harris, who confirmed her candidacy and gained support from notable figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. Despite this change, Goldman analysts, led by chief economist Jan Hatzius, predict minimal shifts in the Democratic fiscal and trade policy agenda.
An analysis indicated that the likelihood of Democrats winning the White House increases slightly with Harris’s nomination, though confidence remains just below 40%. It was noted that taxes will be a significant focus next year as the personal income tax provisions from the Tax Cuts and Jobs Act are set to expire at the end of 2025, setting the stage for whoever wins the election to define tax policies moving forward.
Key forecasts for fiscal policy under a Biden victory include:
– A proposed tax rate of 39.6% for those earning $400,000 or more, an increase from the current rates of 35% or 37%.
– A corporate tax rate proposed by Biden at 28%, compared to the current 21%, although Goldman expressed skepticism about its passage and suggested a more realistic outcome would be a rate around 25%. Conversely, Trump has promised to lower the corporate tax rate to 20%.
– A proposed increase in the Social Security and Medicare tax rate to 5% on incomes exceeding $400,000, up from 3.8%.
Should Harris secure the nomination, there is speculation regarding potential vice presidential candidates, with governors Shapiro, Roy Cooper of North Carolina, Andy Beshear of Kentucky, and Arizona Senator Mark Kelly being top contenders.