Goldman Sachs suggests that Vice President Kamala Harris’ economic policies would not significantly differ from those of President Joe Biden if she secures the Democratic presidential nomination.
Following a rocky debate performance against former President Donald Trump, Biden announced on Sunday that he would not pursue re-election. He subsequently endorsed Harris, who expressed her intention to continue her candidacy. Harris has since received support from notable figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. Despite the transition, analysts believe there will be little change in policy direction.
Goldman Sachs, in a report led by chief economist Jan Hatzius, stated that they do not foresee any meaningful shift in the fiscal and trade policy agenda should Harris become the nominee. Currently, the likelihood of Democrats winning the White House under her leadership has improved slightly to just under 40%, according to the firm.
The report indicates that fiscal policy will pivot around taxes next year, particularly as the personal income tax cuts from the Tax Cuts and Jobs Act are set to expire at the end of 2025. This means the victor of the upcoming election will play a critical role in determining the future of these tax cuts and possible additional tax adjustments.
Goldman’s projections for Biden’s fiscal policies include:
– A proposed tax rate of 39.6% for individuals earning $400,000 or more, up from the current rates of 35% and 37%.
– An increase in the corporate tax rate to 28%, from the current 21%, though Goldman expresses doubt that Congress would approve such a hike, suggesting a more plausible outcome would be a 25% rate. In contrast, Trump has pledged to lower the corporate tax rate to 20%.
– A proposed Social Security and Medicare tax rate of 5% on incomes exceeding $400,000, up from 3.8%.
Should Harris secure the nomination, political analysts believe the vice presidential candidates could include Governors Shapiro, Roy Cooper of North Carolina, Andy Beshear of Kentucky, or Arizona Senator Mark Kelly.