Goldman Sachs analysts believe that Kamala Harris’ economic policies will not significantly differ if she becomes the Democratic presidential nominee. This perspective follows President Biden’s recent announcement that he is stepping aside for the Democratic nomination, a move influenced by mounting pressure due to his performance in debates against former President Donald Trump.
Upon Biden’s announcement, he endorsed Vice President Harris, who confirmed her intention to run and garnered support from notable figures including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, Goldman Sachs anticipates that there will be continuity in policy, stating in a recent report that they do not expect substantial changes in the Democrats’ fiscal and trade agendas with Harris at the helm.
Goldman’s analysis suggests that the likelihood of Democrats retaining the White House has slightly increased, approaching 40%. Analysts have highlighted that taxes will become a primary focus in the coming year, especially with the impending expiration of key provisions from the Tax Cut and Jobs Act by the end of 2025. The outcome of the election will be pivotal in determining whether these tax cuts are extended or replaced with new tax measures.
In their forecasts, Goldman outlined several critical fiscal policy estimates under a potential Biden victory. They note a proposed tax rate of 39.6% on individuals earning $400,000 or more, an increase from the current rates of 35% and 37%. They also mentioned a proposed corporate tax rate rise to 28%, up from 21%, although they expressed skepticism about Congress agreeing to this, suggesting a more realistic outcome could be a rate of 25%. Additionally, Biden has proposed increasing the Social Security and Medicare tax rate on high earners to 5%, up from 3.8%.
If Harris becomes the nominee, speculation suggests that potential candidates for the vice presidential slot include governors Shapiro, Roy Cooper of North Carolina, Andy Beshear of Kentucky, and Senator Mark Kelly of Arizona.