Goldman Sachs believes that Kamala Harris’ economic policies will not significantly differ from President Biden’s if she becomes the Democratic presidential nominee. This comes as Biden has officially withdrawn from the race amid increased pressure to step down following a controversial debate against former President Donald Trump.
In a statement, Biden endorsed Vice President Harris, who expressed her intent to continue her candidacy. She has already secured endorsements from prominent figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. Despite the change in leadership, Goldman predicts little change in the Democrats’ fiscal and trade policies.
According to Goldman analysts, led by chief economist Jan Hatzius, the likelihood of Democrats winning the White House has increased slightly to below 40%. They have noted that the upcoming election will be crucial as the expiration of personal income tax provisions from the Tax Cut and Jobs Act occurs at the end of 2025. This transition will impact decisions on extending tax cuts or potentially introducing new taxes.
Goldman’s projections for fiscal policy under a Democratic victory include:
– A proposed tax rate of 39.6% for individuals earning $400,000 or more, up from the current rates of 35% and 37%.
– A suggested corporate tax rate of 28%, increased from 21%. However, Goldman doubts that Congress will agree to this and considers a 25% rate more likely, while Trump aims to reduce the rate to 20%.
– A proposed tax rate of 5% on incomes exceeding $400,000 for Social Security and Medicare, raised from 3.8%.
If Harris clinches the nomination, prediction markets indicate potential vice-presidential candidates could include governors Shapiro and Roy Cooper of North Carolina, Andy Beshear of Kentucky, or Senator Mark Kelly of Arizona.