Goldman Sachs believes that if Kamala Harris becomes the Democratic presidential nominee, her economic plans will likely align closely with those of President Biden.
On Sunday, President Biden officially announced that he is withdrawing from the race for the Democratic nomination, prompted by intense pressure following a lackluster debate performance against former President Donald Trump.
Following this announcement, Biden endorsed Vice President Kamala Harris, who expressed her intent to continue her candidacy. She quickly garnered support from prominent figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, Goldman Sachs indicated that this change in leadership would not significantly alter the party’s policy direction.
According to Goldman analysts led by chief economist Jan Hatzius, the fiscal and trade policy agendas for the Democrats are not expected to change dramatically with Harris at the helm. The firm’s analysis suggested that the odds of a Democratic victory in the upcoming election have increased slightly, remaining just under 40%.
Goldman Sachs previously noted that taxation will become a key focus in 2024, particularly with significant provisions of the Tax Cut and Jobs Act expiring at the end of 2025. The election outcome will heavily influence decisions about extending these tax cuts and the potential introduction of new taxes.
In terms of specific fiscal policy predictions under a potential Biden win, Goldman outlined several possibilities:
– A proposed tax rate of 39.6% for individuals earning $400,000 or more, up from the current rates of 35% or 37%.
– A corporate tax rate proposed by Biden of 28%, an increase from the current 21%. Goldman expressed skepticism about Congress agreeing to this, suggesting a 25% rate is more likely. In contrast, Donald Trump has pledged to reduce the rate to 20%.
– A rise in the Social Security and Medicare tax rate for incomes over $400,000, proposed to increase from 3.8% to 5%.
If Harris secures the nomination, analysts foresee several contenders for the vice presidential slot, including Governors Shapiro of Pennsylvania, Roy Cooper of North Carolina, Andy Beshear of Kentucky, and Senator Mark Kelly of Arizona.