Goldman Sachs suggests that Kamala Harris’ economic policies would not significantly differ if she becomes the Democratic presidential nominee. This comes after President Biden announced his withdrawal from the Democratic nomination race, following intense pressure to step down following a lackluster debate performance against Donald Trump.
Biden subsequently endorsed Harris, who has expressed her intent to continue her candidacy, garnering support from prominent figures such as California Governor Gavin Newsom and Pennsylvania Governor Josh Shapiro. However, Goldman analysts, including chief economist Jan Hatzius, believe that the overall fiscal and trade policy agenda for the Democrats will remain largely unchanged should Harris become the nominee.
While the transition from Biden to Harris marginally increases the likelihood of a Democratic victory in the upcoming presidential election to just below 40%, Goldman forecasts significant tax policy adjustments next year due to the impending expiration of key provisions of the Tax Cut and Jobs Act by the end of 2025. The outcome of the election will determine the fate of these tax cuts and potential new taxes.
In terms of fiscal policy predictions, Goldman estimates that Democrats are considering a tax rate of 39.6% for individuals earning $400,000 or more, an increase from the current rates of 35% or 37%. They also predict a proposed corporate tax rate of 28%, though Goldman expresses doubt that Congress would agree to this and suggests a more likely outcome of 25%. Additionally, Biden has proposed raising the Social Security and Medicare tax rate on incomes exceeding $400,000 from 3.8% to 5%.
If Harris secures the nomination, speculation regarding the vice presidential candidate includes names like Pennsylvania Governor Josh Shapiro, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, and Arizona Senator Mark Kelly.