Goldman Sachs has indicated that Vice President Kamala Harris’ economic policies are unlikely to differ significantly should she become the Democratic presidential nominee. This follows President Biden’s announcement on Sunday that he will not seek re-election, responding to increasing pressure for him to withdraw after a lackluster debate performance against former President Donald Trump.
Upon making his exit official, Biden endorsed Harris, who confirmed her intention to pursue the presidency. She has garnered support from prominent figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, analysts at Goldman Sachs believe that policy changes will be minimal.
In a statement, economist Jan Hatzius and his team noted that they do not anticipate any significant changes to the Democrats’ fiscal and trade agenda if Harris becomes the nominee. Goldman Sachs estimates that the odds of a Democratic victory in the presidential election have increased slightly but remain under 40%.
The firm previously indicated that taxes will be a key issue in the upcoming election, particularly with provisions from the Tax Cut and Jobs Act set to expire at the end of 2025. The next president will have to decide on extending these tax cuts or implementing new taxes.
Some key fiscal policy predictions from Goldman Sachs are as follows:
The potential tax rate for individuals earning $400,000 or more could rise to 39.6%, up from the current rates of 35% and 37%.
There is a proposal for a corporate tax rate of 28%, an increase from the current 21%. However, Goldman Sachs expressed doubt regarding Congressional approval and suggested that a more feasible rate might be 25%. In contrast, Trump has pledged to lower the corporate tax rate to 20%.
Biden has also proposed raising the Social Security and Medicare tax on incomes exceeding $400,000 to 5%, up from the current 3.8%.
If Harris wins the nomination, speculation about her potential running mate includes Governors Shapiro of Pennsylvania, Roy Cooper of North Carolina, Andy Beshear of Kentucky, and Senator Mark Kelly from Arizona.