Goldman Sachs has indicated that Vice President Kamala Harris’ economic policies will likely not differ significantly from those of President Biden if she becomes the Democratic presidential nominee.
Following President Biden’s announcement on Sunday that he would withdraw from the Democratic nomination amid mounting pressure after a shaky debate against former President Donald Trump, he endorsed Harris, who has expressed her intention to run. She has garnered support from several prominent figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, Goldman Sachs believes this transition in leadership will not lead to considerable changes in policy.
According to analysts from Goldman Sachs, led by chief economist Jan Hatzius, the Democrats’ fiscal and trade agenda is expected to remain consistent under a Harris nomination. The likelihood of the Democrats retaining the White House has increased slightly, now estimated at just under 40%.
Goldman previously noted that taxation will become a focal point in fiscal policy discussions next year, particularly with the impending expiration of the personal income tax provisions from the Tax Cuts and Jobs Act at the end of 2025. This means that the next president will need to decide on the future of these tax cuts and the introduction of new tax measures.
The firm outlined some predictions for fiscal policy should Biden secure a victory in the upcoming election:
– A proposed tax rate of 39.6% on individuals earning $400,000 or more, an increase from the current rates of 35%/37%.
– A suggested corporate tax rate of 28%, up from the current 21%. However, Goldman expresses skepticism that Congress will agree to this increase, projecting a more likely outcome of a 25% rate. In contrast, Donald Trump has committed to reducing the corporate tax rate to 20%.
– An increase in the Social Security and Medicare tax on incomes exceeding $400,000 to 5%, up from the existing 3.8%.
If Harris secures the nomination, analysts predict that the most likely candidates for the vice presidential position will include governors Shapiro of Pennsylvania, Roy Cooper of North Carolina, Andy Beshear of Kentucky, and Senator Mark Kelly of Arizona.