If Kamala Harris becomes the Democratic presidential nominee, her economic plans are expected to be largely similar to current ones, according to Goldman Sachs.
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In a significant political development, President Biden announced on Sunday that he is withdrawing from the Democratic nomination race amidst increasing calls for his exit following a debated performance against Republican candidate and former President Donald Trump.
Shortly after his announcement, Biden endorsed Vice President Kamala Harris, who confirmed her intention to pursue the candidacy and gained endorsements from several notable figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, policy changes are not expected to be drastic.
“We would not expect the Democrats’ fiscal and trade policy agenda to shift meaningfully in the event that Harris is the nominee,” wrote Goldman Sachs analysts, led by chief economist Jan Hatzius, in a note on Sunday.
The decision to replace Biden with Harris has slightly increased the Democrats’ chances of winning the White House, raising the odds by a few points to just under 40%, according to Goldman.
Goldman researchers had earlier stated that taxes would become the primary fiscal focus next year due to the expiration of the personal income tax provisions of the Tax Cut and Jobs Act at the end of 2025. Whoever wins the election will influence the extent to which these cuts are extended and whether new taxes or cuts are implemented.
Here are some of the firm’s fiscal policy forecasts under a potential Biden victory:
– 39.6%: The tax rate Democrats are considering for individuals earning $400,000 or more, an increase from the current 35%/37%.
– 28%: President Biden’s proposed corporate tax rate, up from the current 21%. Goldman Sachs noted skepticism that Congress would agree, suggesting a 25% rate as a more plausible outcome. In contrast, presumptive Republican nominee Donald Trump has pledged to lower the rate to 20%.
– 5%: Biden’s proposed Social Security and Medicare tax rate on incomes exceeding $400,000, up from 3.8%.
If Harris secures the nomination, prediction markets give the highest odds for her vice-presidential spot to governors like Pennsylvania’s Josh Shapiro, North Carolina’s Roy Cooper, Kentucky’s Andy Beshear, or Arizona Senator Mark Kelly.