Goldman Sachs has analyzed the potential economic plans of Vice President Kamala Harris, predicting they will closely resemble those of President Biden if she becomes the Democratic presidential nominee.
Following President Biden’s announcement on Sunday to withdraw from the race due to increased pressure for him to step aside after a challenging debate performance against former President Donald Trump, he endorsed Harris, who has confirmed her candidacy. She has also gained support from key figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. Despite this leadership change, significant policy shifts are not anticipated.
Goldman analysts, including chief economist Jan Hatzius, indicated in a statement that the Democrats’ fiscal and trade policy agenda is unlikely to change substantially under Harris. The firm also noted that the probability of a Democratic victory in the White House increased slightly but remains under 40%.
The analysts previously stated that tax policy will become a central issue in next year’s election, particularly with the impending expiration of the personal income tax provisions from the Tax Cuts and Jobs Act by the end of 2025. The outcome of the election will significantly influence decisions regarding the extension of tax cuts and potential new taxes.
Goldman Sachs provided specific forecasts regarding fiscal policy under a Biden administration:
– A proposed tax rate of 39.6% for individuals earning $400,000 or more, an increase from the current rates of 35% and 37%.
– A corporate tax rate of 28%, up from the current 21%, although Goldman expressed skepticism regarding Congressional approval, suggesting a more probable rate of 25%. In comparison, Donald Trump has promised to reduce the rate to 20%.
– An increase in the tax rate for Social Security and Medicare on incomes over $400,000 to 5%, from the current 3.8%.
If Harris secures the nomination, speculation arises regarding potential candidates for the vice presidential slot, with names such as Governor Shapiro of Pennsylvania, Roy Cooper of North Carolina, Andy Beshear of Kentucky, and Senator Mark Kelly from Arizona being considered.