Goldman Sachs analysts predict that Kamala Harris’ economic plans would largely mirror those of President Biden if she becomes the Democratic presidential nominee.
President Biden announced his withdrawal from the Democratic race on Sunday, following intense calls for him to step aside after a lackluster debate against Republican candidate Donald Trump. In his statement, Biden endorsed Vice President Harris, who expressed her intention to pursue her candidacy. She has gained notable backing from figures such as California Governor Gavin Newsom and Pennsylvania Governor Josh Shapiro.
Despite the leadership change, Goldman analysts, led by chief economist Jan Hatzius, anticipate that the Democratic fiscal and trade policy agenda would remain largely unchanged with Harris at the helm. They noted that while the odds of a Democratic victory in the White House have improved slightly, they still hover below 40%.
Looking ahead, Goldman researchers had previously indicated that taxes will become a central issue next year, as the personal income tax provisions of the Tax Cuts and Jobs Act are set to expire at the end of 2025. This situation will place significant power in the hands of the election winner regarding potential tax extensions or new cuts.
Several key fiscal policy projections under a potential Biden administration include:
– A proposed tax rate increase to 39.6% for individuals earning $400,000 or more, up from the current 35%/37%.
– A suggested increase in the corporate tax rate to 28%, from the current 21%. However, Goldman expresses doubt that Congress would approve this, indicating a more realistic outcome might be a 25% rate. In contrast, Trump has proposed reducing this rate to 20%.
– A proposed increase in the Social Security and Medicare tax rate for incomes exceeding $400,000 to 5%, up from the current rate of 3.8%.
If Kamala Harris becomes the nominee, speculation about her potential vice presidential pick includes notable figures such as Governors Shapiro, Roy Cooper of North Carolina, Andy Beshear of Kentucky, and Arizona Senator Mark Kelly.