Goldman Sachs suggests that Kamala Harris’ economic policies would not significantly differ from those of President Biden if she secures the Democratic presidential nomination.
On Sunday, President Biden announced he would withdraw from the race following intense pressure to step aside, particularly after a lackluster debate performance against Donald Trump. In his statement, Biden endorsed Harris, who promptly confirmed her intent to run and garnered endorsements from prominent figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, analysts believe there will be minimal policy shifts.
Goldman Sachs analysts, led by chief economist Jan Hatzius, indicated that they do not expect substantial changes to the Democratic fiscal and trade policy agenda if Harris becomes the nominee. The likelihood of a Democratic win in the upcoming election has slightly increased but remains under 40%, according to Goldman.
The research firm previously noted that taxation will become a central focus in 2024 due to the impending expiration of the personal income tax provisions from the Tax Cuts and Jobs Act in 2025. The outcome of the election will influence decisions on extending tax cuts or introducing new taxes.
Goldman provided some insights into potential fiscal policy under a potential Biden victory, including the following projections:
– A proposed tax rate of 39.6% on individuals earning $400,000 or more, an increase from the current 35%/37%.
– A suggested corporate tax rate of 28%, up from the present 21%, though Goldman expressed skepticism that Congress would agree to such a rate, suggesting that 25% is a more likely outcome. In contrast, Trump has promised to reduce the corporate tax rate to 20%.
– An increase in the Social Security and Medicare tax rate to 5% on incomes exceeding $400,000, up from 3.8%.
If Harris secures the nomination, speculation suggests that the vice presidential slot could likely go to governors such as Josh Shapiro of Pennsylvania, Roy Cooper of North Carolina, Andy Beshear of Kentucky, or Arizona Senator Mark Kelly.