Kamala Harris’ economic policies are expected to remain largely unchanged if she secures the Democratic presidential nomination, according to analysts at Goldman Sachs.
This assessment follows President Biden’s announcement on Sunday that he will not be seeking the Democratic nomination. This decision comes amidst escalating calls for him to step aside after a challenging debate performance against former President Donald Trump. Shortly after his declaration, Biden endorsed Vice President Harris, who expressed her commitment to continue her candidacy. She has since gained support from prominent figures including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, significant shifts in policy are not anticipated.
Goldman analysts, led by chief economist Jan Hatzius, noted that there is unlikely to be a meaningful change in the Democrats’ fiscal and trade policy agenda if Harris becomes the nominee. The likelihood of a Democratic victory in the upcoming presidential election has increased slightly, though it remains just below 40%, according to their analysis.
The firm previously highlighted that tax policy will be a key focus next year, particularly with the expiration of certain personal income tax provisions set to take place at the end of 2025. The outcome of the election will determine whether any tax reductions are extended and if new taxes will be introduced.
Goldman Sachs provided specific forecasts regarding fiscal policy should Biden win, including:
– A proposed tax rate of 39.6% on individuals earning $400,000 or more, an increase from the current 35% and 37%.
– A suggested corporate tax rate rise to 28%, up from 21%, though Goldman is skeptical this will pass, predicting a more likely outcome of 25%. In contrast, Trump has promised a reduction to 20%.
– An increase in the proposed Social Security and Medicare tax rate on incomes above $400,000 from 3.8% to 5%.
If Harris is nominated, several potential candidates are predicted to be in consideration for the vice presidency, including Pennsylvania’s Governor Shapiro, North Carolina’s Roy Cooper, Andy Beshear of Kentucky, and Arizona Senator Mark Kelly.