Kamala Harris’ economic strategies are expected to remain largely unchanged if she secures the Democratic presidential nomination, according to Goldman Sachs.
Following a week of mounting pressure due to President Biden’s unsatisfactory debate performance against former President Donald Trump, Biden announced he would withdraw from the race for the Democratic nomination. He subsequently endorsed Vice President Harris, who expressed her commitment to continue her candidacy and garnered support from notable figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, analysts do not anticipate significant shifts in policy.
Goldman Sachs, under the leadership of chief economist Jan Hatzius, indicated that the Democratic approach to fiscal and trade policies is likely to remain consistent if Harris becomes the nominee. They estimated the chances of a Democratic victory in the upcoming election have increased slightly, now standing at just under 40%.
The analysts previously noted that taxes would become a primary focus in the coming year, particularly with the imminent expiration of personal income tax provisions from the Tax Cut and Jobs Act set for the end of 2025. The future administration will play a crucial role in determining the fate of those tax cuts, including potential new taxes or adjustments.
Goldman provided several key predictions regarding fiscal policy should Biden remain the candidate:
– The proposed tax rate for individuals earning over $400,000 is projected to increase to 39.6% from the current 35%/37%.
– Biden’s suggested corporate tax rate aims to rise to 28%, up from 21%, although Goldman expressed skepticism about Congress approving this rate, estimating a 25% rate to be more likely. In contrast, Trump has pledged to reduce this rate to 20%.
– The proposal to raise Social Security and Medicare tax on incomes exceeding $400,000 from 3.8% to 5%.
If Harris is nominated, speculation about her vice presidential pick includes governors such as Shapiro, North Carolina’s Roy Cooper, Kentucky’s Andy Beshear, and Arizona Senator Mark Kelly.