Goldman Sachs has indicated that if Kamala Harris becomes the Democratic presidential nominee, her economic policies will likely remain consistent with those of President Biden.
Following intensified calls for President Biden to withdraw from the race due to a poorly received debate performance against former President Donald Trump, Biden announced on Sunday that he would not seek reelection. He subsequently endorsed Harris, who confirmed her intention to run and received endorsements from key figures including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, analysts at Goldman Sachs suggest that the transition in leadership would not lead to significant changes in policy.
In a note released on Sunday, Goldman’s chief economist Jan Hatzius stated that they do not expect any substantial shifts in the Democrats’ fiscal and trade agendas if Harris becomes the nominee. The likelihood of Democrats winning the White House under Harris has improved slightly, with Goldman estimating the chances to be just under 40%.
The firm has previously asserted that tax policy will be a major focus in the upcoming year, particularly with the expiration of certain personal income tax provisions from the Tax Cuts and Jobs Act at the end of 2025. The outcome of the election will determine the future of these tax cuts and any potential new taxes.
Goldman Sachs has provided several forecasts for fiscal policy should Biden win reelection:
– 39.6%: The potential tax rate on individuals earning over $400,000, an increase from the current rates of 35% and 37%.
– 28%: Biden’s proposed corporate tax rate, up from the current 21%. Analysts expressed skepticism about Congress approving this rate, suggesting a more realistic outcome might be closer to 25%. In contrast, Trump has proposed cutting the rate further to 20%.
– 5%: Biden’s proposed increase in the Social Security and Medicare tax rate for incomes above $400,000, up from the current rate of 3.8%.
If Harris secures the nomination, speculation about her vice presidential pick points to several governors, including Shapiro of Pennsylvania, Roy Cooper of North Carolina, Andy Beshear of Kentucky, and Senator Mark Kelly of Arizona.