Goldman Sachs indicates that Vice President Kamala Harris’ economic plans are unlikely to differ significantly from President Biden’s if she becomes the Democratic presidential nominee.
President Biden announced on Sunday that he would not seek re-election, following increased pressure for him to withdraw after a challenging debate against former President Donald Trump. Biden subsequently endorsed Harris, who expressed her commitment to running for president and received several notable endorsements, including those from California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, Goldman Sachs believes this leadership change will not lead to substantial policy shifts.
Goldman analysts, led by chief economist Jan Hatzius, stated in a report that they do not anticipate major changes in the fiscal and trade policy agenda should Harris become the nominee. The analysts also noted that the prospects of Democrats winning the White House have increased slightly but are still under 40%.
Looking ahead, Goldman had previously identified tax policy as a significant focus, particularly with the imminent expiration of personal income tax provisions from the Tax Cut and Jobs Act by the end of 2025. This sets the stage for the next administration to determine the fate of tax cuts and potential new tax initiatives.
The firm’s estimates for fiscal policy under a Biden victory include:
– 39.6% tax rate for individuals earning $400,000 or more, an increase from the current 35%-37%.
– A proposed increase in the corporate tax rate to 28% from the current 21%, although Goldman expressed doubt regarding Congressional approval of this rate, suggesting a more feasible outcome would be around 25%. In contrast, Trump has proposed lowering the rate to 20%.
– An increase in the Social Security and Medicare tax rate on incomes above $400,000 to 5%, up from the current 3.8%.
If Harris secures the nomination, speculation mounts regarding potential vice presidential candidates, with names such as Pennsylvania’s Shapiro, North Carolina’s Roy Cooper, Kentucky’s Andy Beshear, and Arizona Senator Mark Kelly emerging as likely contenders.