Goldman Sachs has indicated that Kamala Harris’ economic policies are unlikely to differ significantly from those of President Biden, should she become the Democratic presidential nominee.
Recently, President Biden announced that he would not seek reelection, a decision spurred by mounting pressure following a lackluster debate performance against Donald Trump. Following his announcement, Biden endorsed Vice President Harris, who expressed her intention to continue her candidacy and garnered support from notable figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, analysts at Goldman Sachs predict that this leadership change will not drastically alter the Democratic Party’s policy agenda.
In a note released on Sunday, Goldman analysts, led by chief economist Jan Hatzius, stated that they do not anticipate significant changes to the Democratic fiscal and trade policy if Harris becomes the nominee. Their analysis suggests that the odds of Democrats winning the presidency have increased slightly but remain just below 40%.
Looking ahead, Goldman researchers expect that taxes will be a central concern next year, especially as the personal income tax provisions from the Tax Cuts and Jobs Act are set to expire at the end of 2025. The victor of the upcoming election will have a critical role in determining the future of these tax cuts.
Goldman Sachs presented several key predictions regarding fiscal policy implications of a Biden win:
– 39.6%: The proposed tax rate that Democrats are considering for individuals earning $400,000 or more, an increase from the current rates of 35%/37%.
– 28%: President Biden’s suggested corporate tax rate, up from the current 21%. Goldman expressed skepticism regarding Congress’ approval, suggesting that a 25% rate may be more realistic. In contrast, Donald Trump has pledged to reduce the corporate tax rate to 20%.
– 5%: Biden’s proposed increase to the Social Security and Medicare tax rate on incomes exceeding $400,000, up from the current 3.8%.
If Harris secures the nomination, betting markets currently favor several candidates for the vice presidential role, including Governors Shapiro, Roy Cooper of North Carolina, Andy Beshear of Kentucky, and Senator Mark Kelly of Arizona.