Goldman Sachs predicts that Vice President Kamala Harris’ economic policies will not differ significantly from those of President Biden if she becomes the Democratic presidential nominee. This analysis comes in the wake of Biden’s announcement that he will not seek reelection, following pressure to step down after a difficult debate with Donald Trump.
After Biden’s endorsement of Harris, she expressed her commitment to the candidacy and garnered support from notable figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, analysts at Goldman Sachs believe that a transition to Harris would not greatly alter the Democratic fiscal and trade policy agenda.
In a report, chief economist Jan Hatzius and his team mentioned that the likelihood of a Democratic victory in the upcoming election has slightly increased to just below 40%. They had earlier highlighted that taxes will become a focal point next year, as key provisions of the Tax Cut and Jobs Act are set to expire at the end of 2025. The upcoming administration will need to navigate decisions regarding these tax cuts and potential new taxes.
Projected fiscal policies under a potential Biden administration include:
– A proposed tax rate of 39.6% for individuals earning $400,000 or more, an increase from the current rate of 35%/37%.
– A corporate tax rate proposed by Biden at 28%, up from 21%. However, Goldman expressed skepticism that Congress would agree to this, suggesting a more likely outcome of a 25% rate, especially as Trump is anticipated to push for a reduction to 20%.
– An increase in Social Security and Medicare tax rates on income over $400,000, proposed at 5%, up from 3.8%.
Should Harris secure the nomination, potential candidates for the vice presidential seat may include Governors Shapiro, Roy Cooper of North Carolina, Andy Beshear of Kentucky, and Senator Mark Kelly of Arizona.