Goldman Sachs predicts that Kamala Harris’ economic policies will not see significant changes if she becomes the Democratic presidential nominee. This comes in light of President Biden’s recent announcement that he is stepping aside from the race, following mounting pressure after his performance in a debate against former President Donald Trump.
Biden has formally endorsed Harris, who has expressed her intent to continue her campaign. She has garnered support from several prominent figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. Despite this shift in candidacy, analysts at Goldman Sachs, led by chief economist Jan Hatzius, believe there will be little change in the Democrats’ fiscal and trade policy agenda if Harris takes the lead.
Goldman Sachs noted that this change could slightly increase the Democrats’ chances of winning the presidency, though they still estimate these odds to be just below 40%. The firm had previously indicated that tax policy is likely to be a major focus in the coming year, with the expiration of certain provisions from the Tax Cuts and Jobs Act looming at the end of 2025. The next administration will have to make critical decisions on extending these cuts and implementing new taxes or reductions.
Their specific forecasts for potential tax changes under a Biden presidency include a proposed 39.6% tax rate on individuals earning $400,000 or more (up from the current 35%/37%), a suggested corporate tax rate increase to 28% (currently 21%), and a rise in the Social Security and Medicare tax from 3.8% to 5% for those earning over $400,000. However, Goldman expressed skepticism about Congress agreeing to these tax hikes, suggesting that a corporate rate closer to 25% seems more feasible, especially with Trump indicating plans to lower it to 20%.
If Harris secures the nomination, predictions for her vice presidential pick include potential candidates such as Governor Shapiro from Pennsylvania, Governor Roy Cooper from North Carolina, Governor Andy Beshear from Kentucky, or Senator Mark Kelly from Arizona.