Goldman Sachs suggests that the economic policies of Vice President Kamala Harris would not differ significantly from those of President Biden if she becomes the Democratic presidential nominee.
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Following a challenging debate face-off against former President Donald Trump, President Biden has announced that he will withdraw from the race for the Democratic nomination, amid increasing calls for him to step aside. Shortly thereafter, he endorsed Harris, who expressed her intention to continue her campaign forward. She has also garnered endorsements from prominent figures including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, Goldman Sachs indicates that policy shifts are likely to be minimal.
Goldman analysts, led by chief economist Jan Hatzius, noted in a recent report that they do not foresee significant changes to the Democratic fiscal and trade policy agenda in the event of Harris’ nomination. While the chances of the Democrats winning the White House with Harris have increased slightly, they remain below 40%.
The firm highlighted that taxes are expected to be a key focus in the upcoming year, with the expiration of personal income tax provisions from the Tax Cut and Jobs Act at the end of 2025. The outcome of the election will determine the future of these tax cuts as well as potential new taxes.
Goldman’s forecasts for fiscal policy under a potential Biden 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 increase in the corporate tax rate to 28%, from the current 21%, though the firm speculates that a more realistic outcome may be a rate of 25%. In contrast, Trump has pledged to lower the corporate tax rate to 20%.
– An increase in the Social Security and Medicare tax rate for incomes above $400,000 to 5%, up from 3.8%.
If Harris secures the nomination, speculation around her potential running mate includes Governors Shapiro of Pennsylvania, Roy Cooper of North Carolina, Andy Beshear of Kentucky, and Senator Mark Kelly of Arizona.