Goldman Sachs indicates that Kamala Harris’ economic policies are unlikely to differ significantly from President Biden’s if she becomes the Democratic presidential nominee.
Biden announced on Sunday that he would withdraw from the race for the Democratic nomination, following increasing pressure for him to step down after a shaky debate performance against former President Donald Trump. He subsequently endorsed Vice President Harris, who confirmed her intention to run and received endorsements from notable figures like California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, Goldman Sachs analysts, led by chief economist Jan Hatzius, believe that if Harris becomes the nominee, there will be minimal changes to the Democrats’ fiscal and trade policies.
Goldman’s analysis shows that the chances of a Democratic victory in the upcoming election have slightly increased with Harris as the nominee, but remain under 40%. The firm notes that taxes will be a central focus in the coming year, especially with the expiration of certain tax provisions from the Tax Cuts and Jobs Act at the end of 2025. This will leave the future administration to make decisions regarding tax cuts and potential new taxes.
The firm provided specific forecasts regarding Biden’s proposed fiscal policies, including a potential tax rate of 39.6% for individuals earning $400,000 or more, an increase from the current rates of 35% and 37%. Additionally, Biden’s proposed corporate tax rate could rise to 28% from the current 21%, although Goldman expresses skepticism that Congress would agree to this, suggesting a more realistic outcome might be a 25% rate. Furthermore, Biden proposes a 5% tax rate for Social Security and Medicare on incomes exceeding $400,000, an increase from the current 3.8%.
If Harris secures the presidential nomination, several names are being mentioned as potential vice presidential picks, including governors Shapiro of Pennsylvania, Roy Cooper of North Carolina, Andy Beshear of Kentucky, and Senator Mark Kelly from Arizona.