Goldman Sachs has indicated that there will be minimal changes to Vice President Kamala Harris’ economic plans if she becomes the Democratic presidential nominee. Following President Biden’s announcement that he will not seek re-election, he endorsed Harris, who has officially expressed her intention to run. This endorsement has garnered support from prominent figures such as California Governor Gavin Newsom and Pennsylvania Governor Josh Shapiro.
Despite this shift in leadership, analysts at Goldman Sachs, led by chief economist Jan Hatzius, predict that the Democrats’ fiscal and trade policies are unlikely to experience significant changes under Harris. They noted that the probability of a Democratic victory in the upcoming election has increased slightly but remains just under 40%.
The researchers previously projected that taxes will be a central topic in the coming year, particularly with the impending expiration of certain provisions of the Tax Cut and Jobs Act due at the end of 2025. The future administration will then determine whether these cuts will be extended or if new taxes will be imposed.
Goldman Sachs provided specific forecasts for fiscal policy in the event of a Biden victory. They anticipate a proposed tax rate of 39.6% for individuals earning over $400,000, an increase from the current 35%/37%. They also mentioned Biden’s proposed corporate tax rate of 28%, suggesting that a 25% rate might be more feasible due to potential Congressional resistance. Additionally, a new Social Security and Medicare tax rate of 5% on incomes exceeding $400,000 is suggested, up from the current 3.8%.
If Harris secures the nomination, betting markets indicate that the most likely candidates for the vice presidential position could be Governor Shapiro, North Carolina’s Roy Cooper, Kentucky’s Andy Beshear, or Arizona Senator Mark Kelly.