Goldman Sachs outlines that if Kamala Harris becomes the Democratic presidential nominee, her economic policies are likely to remain consistent with those of President Biden.
Following a less-than-stellar debate performance against former President Donald Trump, President Biden announced on Sunday that he would withdraw from the race for the Democratic nomination, responding to increasing pressure to step aside. Shortly after, he endorsed Vice President Kamala Harris, who has expressed her intention to continue her candidacy, garnering support from notable figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, analysts suggest that there will be little significant change in policy direction.
Goldman Sachs analysts, led by chief economist Jan Hatzius, stated in a report that they do not anticipate a meaningful shift in the fiscal and trade policy agenda if Harris becomes the nominee. They also indicated that the transition could marginally increase the likelihood of a Democratic victory in the upcoming election, raising it slightly below 40%.
The report emphasized that tax policy will be a crucial focus in the upcoming year, particularly with the looming expiration of personal income tax provisions from the Tax Cuts and Jobs Act at the end of 2025. The incoming administration will have significant decisions to make regarding tax extensions and potential new tax measures.
Some of Goldman Sachs’ fiscal policy projections under a potential Biden re-election include:
– A proposed tax rate of 39.6% for individuals earning $400,000 or more, an increase from the current 35%/37%.
– An increase in the corporate tax rate proposed by Biden to 28%, up from the current 21%. However, Goldman expressed skepticism about Congress agreeing to this rate, suggesting a more feasible outcome might be around 25%. Conversely, Trump has promised to lower the rate to 20%.
– An increase in the tax rate for Social Security and Medicare on incomes above $400,000 to 5%, up from 3.8%.
Should Harris be nominated, speculation about her running mate includes potential candidates such as Governors Shapiro of Pennsylvania, Roy Cooper of North Carolina, Andy Beshear of Kentucky, or Senator Mark Kelly of Arizona.