Kamala Harris’ economic policies are expected to closely resemble those of President Biden if she secures the Democratic presidential nomination, according to analysts at Goldman Sachs.
Following a rocky debate performance against former President Donald Trump, Biden announced on Sunday that he would withdraw from the race, amidst mounting pressure for him to step aside. Shortly after, he endorsed Vice President Harris, who has expressed her intent to continue her candidacy and has garnered support from prominent figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, observers suggest that this transition will not significantly alter the party’s policy direction.
Goldman Sachs analysts, led by chief economist Jan Hatzius, noted that they do not anticipate a meaningful change in the Democrats’ fiscal and trade policy agenda if Harris becomes the nominee. They indicated that the odds of a Democratic victory in the upcoming election have increased slightly, but remain under 40%.
The firm has highlighted that tax policy is set to become a focal point in the next fiscal discussions, particularly with the expiration of key provisions from the Tax Cuts and Jobs Act approaching at the end of 2025. This pivotal moment will give the incoming administration the opportunity to determine the future of tax cuts and potential new tax measures.
Goldman’s predictions for fiscal policies include the following key figures:
– 39.6%: A proposed tax rate for individuals earning $400,000 or more, an increase from current rates of 35% and 37%.
– 28%: The suggested corporate tax rate by Biden, up from the current 21%. Goldman expressed skepticism that Congress would agree to this rate, suggesting a more likely outcome of 25%. In contrast, Trump has promised to lower the corporate tax rate to 20%.
– 5%: An increase in the proposed Social Security and Medicare tax rate on incomes over $400,000, rising from the existing 3.8%.
If Harris becomes the nominee, prediction markets indicate that potential candidates for the vice-presidential slot may include Governors Shapiro, Roy Cooper of North Carolina, Andy Beshear of Kentucky, or Arizona Senator Mark Kelly.