Vice President Kamala Harris’ economic strategies are expected to remain largely consistent if she secures the Democratic presidential nomination, according to analysts at Goldman Sachs.
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President Biden declared on Sunday that he will withdraw from the race for the Democratic nomination as pressure for him to step down intensified following a less-than-stellar debate against former President Donald Trump. Shortly after his announcement, Biden endorsed Harris, who expressed her intention to continue her campaign. She has already garnered significant endorsements, including from California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. Despite this leadership change, analysts predict minimal changes to the party’s policy agenda.
Goldman Sachs’ chief economist Jan Hatzius noted that they do not anticipate significant alterations in the Democrats’ fiscal and trade policies if Harris becomes the nominee. The analysts suggested that the likelihood of a Democratic victory has improved slightly but remains just under 40%.
Previously, Goldman Sachs indicated that taxes would become a central fiscal issue next year, particularly as the personal income tax provisions set by the Tax Cuts and Jobs Act are slated to expire at the end of 2025. This suggests that the winner of the upcoming election will influence the future of these tax cuts and the introduction of any new taxes.
Among their projections regarding fiscal policy under a Biden administration are:
– A proposed tax rate of 39.6% for individuals earning $400,000 or more, an increase from the current rates of 35% and 37%.
– A recommended corporate tax rate of 28%, up from the present 21%. However, Goldman expressed doubts about Congress approving this and suggested a more realistic rate might be around 25%. In contrast, Trump has pledged to reduce the corporate tax rate to 20%.
– An increase in the Social Security and Medicare tax rate on incomes exceeding $400,000 to 5%, up from the current 3.8%.
If Harris becomes the Democratic nominee, speculation surrounds potential vice presidential candidates, with high odds assigned to governors such as Shapiro of Pennsylvania, Roy Cooper of North Carolina, Andy Beshear of Kentucky, or Senator Mark Kelly of Arizona.