Goldman Sachs believes that Kamala Harris’ economic policies would not significantly differ from President Biden’s plans if she becomes the Democratic presidential nominee.
Following mounting pressure for him to step back, President Biden announced on Sunday that he would not seek the Democratic nomination and subsequently endorsed Vice President Harris. She has expressed her intent to continue her candidacy and has gained support from notable figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, analysts expect no substantial shifts in policy moving from Biden to Harris.
Goldman Sachs’ chief economist Jan Hatzius noted that the Democrats’ fiscal and trade policy agenda is likely to remain consistent regardless of whether Biden or Harris leads the ticket. They estimate that the chances of the Democrats securing the presidency have increased slightly but remain below 40%.
The firm highlighted that taxes will be a significant focus in the upcoming year, particularly as the personal income tax provisions of the Tax Cut and Jobs Act are set to expire at the end of 2025. The outcome of the election will determine the future of these tax cuts and any potential new taxes.
Key financial forecasts under a possible Biden victory include a proposed tax rate of 39.6% on individuals earning $400,000 or more, an increase from the current 35%/37%, and a proposed corporate tax rate of 28%, up from 21%. However, Goldman analysts express skepticism that Congress would agree to this increase, suggesting a more feasible rate may be around 25%. Additionally, Biden’s proposal aims to raise the Social Security and Medicare tax rate on incomes above $400,000 from 3.8% to 5%.
If Harris becomes the nominee, there is speculation about potential vice presidential candidates, including Governors Shapiro of Pennsylvania, Roy Cooper of North Carolina, Andy Beshear of Kentucky, and Senator Mark Kelly of Arizona.