Goldman Sachs suggests that Kamala Harris’ economic proposals would not significantly differ if she becomes the Democratic presidential nominee.
President Biden announced on Sunday that he would withdraw from the race for the Democratic nomination amid increasing calls for him to step aside following a shaky debate performance against Republican candidate and former President Donald Trump. In his statement, Biden endorsed Vice President Kamala Harris, who expressed her intention to pursue the candidacy and has already garnered high-profile endorsements from figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, Goldman analysts predict there will be minimal changes in policy.
Analysts led by chief economist Jan Hatzius noted that the Democrats’ fiscal and trade policy agendas are unlikely to shift substantially if Harris is nominated. While the odds of a Democratic victory in the upcoming election have increased slightly to just under 40%, the overall fiscal landscape is expected to remain similar.
Tax policy will be a significant focus in the next year, as the personal income tax provisions from the Tax Cuts and Jobs Act are set to expire at the end of 2025. This will present the next administration with decisions on extending tax cuts or introducing new taxes.
Goldman’s forecasts for potential fiscal policy under a Biden victory include:
– A tax rate of 39.6% for individuals earning $400,000 or more, an increase from the current rates of 35% or 37%.
– A proposed corporate tax rate of 28%, up from 21%. However, Goldman expresses skepticism that Congress will approve this rate, suggesting that a 25% rate might be more realistic. In contrast, Donald Trump, the presumptive Republican nominee, has pledged to reduce the corporate tax rate to 20%.
– An increase in the tax rate for Social Security and Medicare on incomes exceeding $400,000, which Biden proposes to raise to 5% from the current 3.8%.
If Harris secures the nomination, speculation surrounds potential vice presidential candidates, with governors Shapiro (Pennsylvania), Roy Cooper (North Carolina), Andy Beshear (Kentucky), and Senator Mark Kelly (Arizona) among those considered likely contenders.