Goldman Sachs has indicated that Kamala Harris’ economic policies are unlikely to differ significantly from those of President Biden if she becomes the Democratic presidential nominee.
On Sunday, President Biden announced he would not pursue the Democratic nomination, following mounting pressure to step aside after a challenging debate performance against former President Donald Trump. Shortly after, he endorsed Vice President Harris, who declared her intention to continue her candidacy. She has since garnered endorsements from notable figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, Goldman Sachs believes the policy shift will be minimal.
Goldman analysts, led by chief economist Jan Hatzius, expressed in a note that they do not expect a substantial change in the Democrats’ fiscal and trade policies if Harris secures the nomination. They estimate that while the probability of Democrats winning the White House may increase slightly with Harris at the helm, it still remains below 40%.
The firm has previously forecasted that tax policy will take center stage next year, particularly with the expiration of individual income tax provisions from the Tax Cuts and Jobs Act set to occur at the end of 2025. This will leave the next administration to determine the future of those tax cuts and whether new taxes will be introduced.
Regarding fiscal policy projections under a Biden administration, Goldman Sachs outlined several key figures. They estimate a potential tax rate of 39.6% on individuals earning $400,000 or more, an increase from the current rates of 35% and 37%. Additionally, they anticipate Biden’s proposed corporate tax rate could rise to 28%, although they are doubtful that Congress would agree to this, suggesting a more likely outcome closer to 25%. In the realm of Social Security and Medicare, Biden’s proposal includes increasing the tax rate on high incomes above $400,000 from 3.8% to 5%.
If Harris is nominated, speculation exists around potential vice presidential candidates, with North Carolina’s Roy Cooper, Kentucky’s Andy Beshear, Pennsylvania’s Josh Shapiro, or Arizona Senator Mark Kelly receiving the most attention.