Goldman Sachs anticipates that Kamala Harris’ economic policies will remain largely unchanged if she secures the Democratic presidential nomination. This assessment comes in the wake of President Biden’s announcement on Sunday that he is withdrawing from the race for the nomination, following an intense wave of pressure for him to step aside after a subpar debate against former President Donald Trump.
In his statement, Biden endorsed Vice President Kamala Harris, who expressed her eagerness to continue her campaign and received endorsements from notable figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. Despite this leadership change, Goldman analysts, led by chief economist Jan Hatzius, predict little shift in policy.
According to their analysis, the likelihood of a Democrat victory in the presidential election has improved slightly but is still below 40%. The firm has previously indicated that tax policy is expected to be a major focus next year, particularly as the provisions from the Tax Cuts and Jobs Act are set to expire at the end of 2025. This will compel the incoming administration to make crucial decisions regarding tax extensions and potential new taxes or cuts.
Goldman Sachs provided several forecasts regarding fiscal policy under a potential Biden administration:
– A proposed tax rate of 39.6% for individuals earning $400,000 or more, an increase from the current 35%/37%.
– A suggested corporate tax rate of 28%, up from the current 21%, though Goldman is skeptical about Congress agreeing to this, predicting a more realistic rate of 25%. Meanwhile, Trump has pledged to lower the rate to 20%.
– A new tax rate of 5% on incomes exceeding $400,000 for Social Security and Medicare, an increase from the existing 3.8%.
If Harris is nominated, prediction markets point to a high likelihood of Pennsylvania Governor Shapiro, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, or Arizona Senator Mark Kelly being considered for the vice presidential slot.