Goldman Sachs has indicated that Kamala Harris’ economic plans are unlikely to differ significantly from those of President Biden if she becomes the Democratic nominee for president. This analysis comes after Biden announced that he would not seek re-election amid growing pressure for him to step aside following a challenging debate performance against former President Donald Trump.
Following his announcement, Biden endorsed Vice President Harris, who has confirmed her intention to run for the presidency. She quickly garnered support from prominent figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, analysts at Goldman, led by chief economist Jan Hatzius, assert that this political transition will not lead to major shifts in policy.
Goldman Sachs anticipates that the odds of Democrats securing the White House have increased slightly but remain just under 40%. The firm also noted that key issues surrounding taxes will come to the forefront next 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 next election will greatly influence decisions on extending tax cuts or implementing new taxes.
Key fiscal policy predictions under a Biden victory include a proposed tax rate of 39.6% on individuals earning $400,000 or more, an increase from the current rates of 35% or 37%. They also project a corporate tax rate increase to 28%, up from 21%, although they express doubt that Congress would agree to this rate, suggesting 25% might be more feasible. Additionally, they note a proposal for a higher Social Security and Medicare tax rate of 5% on incomes exceeding $400,000, an increase from the current 3.8%.
If Harris becomes the nominee, speculation surrounds potential vice presidential candidates, with Shapiro, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, and Arizona Senator Mark Kelly seen as likely contenders.