Goldman Sachs has assessed that if Kamala Harris becomes the Democratic presidential nominee, her economic policies will largely mirror those of President Biden. This comes after Biden announced he would not seek re-election amidst increasing pressure following a lackluster debate performance against former President Donald Trump.
In his statement, Biden endorsed Harris, who has confirmed her candidacy. She has also gained key endorsements from several governors, including Gavin Newsom of California, Josh Shapiro of Pennsylvania, and Phil Murphy of New Jersey. Despite the change in candidates, Goldman Sachs analysts led by chief economist Jan Hatzius believe that there will be little shift in the Democrats’ fiscal and trade agendas if Harris ascends to the nominee position.
Goldman Sachs indicated that while this transition to Harris slightly improves Democrats’ chances of winning the White House — now estimated to be just under 40% — the fundamental policy proposals are unlikely to vary significantly. Analysts noted that the taxation landscape will be a primary focus in the coming year, particularly with the impending expiration of certain provisions of the Tax Cut and Jobs Act at the end of 2025, which will influence decisions on tax extensions and adjustments.
Regarding fiscal policy, Goldman has provided some key projections under a potential Biden victory:
– A proposed tax rate of 39.6% for individuals earning $400,000 or more, up from the current rate of 35%/37%.
– A suggested increase in the corporate tax rate to 28% from the current 21%, though Goldman is doubtful Congress would approve this, forecasting a more realistic outcome of 25%. In contrast, Trump has promised to reduce the corporate tax to 20%.
– An increase in the Social Security and Medicare tax rate on incomes above $400,000, proposed to rise to 5% from 3.8%.
If Harris is the nominee, speculation surrounds potential vice presidential candidates, with names like Pennsylvania’s Josh Shapiro, North Carolina’s Roy Cooper, Kentucky’s Andy Beshear, and Arizona’s Mark Kelly gaining traction.