Goldman Sachs has indicated that Vice President Kamala Harris’ economic agenda would likely remain consistent with President Biden’s policies if she becomes the Democratic presidential nominee.
Following President Biden’s announcement on Sunday, in which he stepped aside from the presidential race amid mounting calls for him to withdraw after a difficult debate performance against former President Donald Trump, he endorsed Harris for the candidacy. Harris has expressed her intention to continue her campaign and has gained endorsements from numerous prominent figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy.
According to Goldman analysts, led by chief economist Jan Hatzius, the shift from Biden to Harris is not expected to significantly alter the Democrats’ fiscal and trade policy agenda. The analysts noted that the likelihood of Democratic success in the upcoming presidential election has increased slightly, with current estimates placing the odds of winning the White House at just under 40%.
In a previous analysis, Goldman researchers projected that taxation would become a key focal point in the coming years, especially with the expiration of personal income tax cuts from the Tax Cut and Jobs Act at the end of 2025. The outcome of the 2024 election will play a vital role in determining the future of these tax cuts and potential new tax reforms.
Some specific fiscal policy forecasts outlined by the firm include:
– A proposed 39.6% tax rate on individuals earning $400,000 or more, increased from the current 35%/37%.
– A suggested increase in the corporate tax rate to 28%, up from 21%, although Goldman expressed skepticism about congressional approval, positing that a more achievable target may be around 25%. In contrast, Donald Trump has promised to reduce the corporate tax rate to 20%.
– An increase to a 5% Social Security and Medicare tax rate on incomes exceeding $400,000, up from the current 3.8%.
Should Harris secure the nomination, speculation regarding potential vice presidential candidates includes Governors Shapiro of Pennsylvania, Roy Cooper of North Carolina, Andy Beshear of Kentucky, and Senator Mark Kelly of Arizona.