Goldman Sachs has indicated that Kamala Harris’ economic policies are unlikely to differ significantly from those of President Biden should she secure the Democratic presidential nomination. This follows Biden’s recent announcement that he will withdraw from the race amid mounting pressure for him to step aside, particularly after a challenging debate against former President Donald Trump.
In a statement released shortly after his decision, Biden endorsed Vice President Harris, who expressed her intention to continue her candidacy. She has garnered support from notable figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, Goldman analysts, led by chief economist Jan Hatzius, stated that they do not anticipate major shifts in the Democrats’ fiscal and trade policy if Harris becomes the nominee.
According to Goldman, the probability of the Democrats winning the White House has increased slightly, now estimated to be just under 40%. In earlier reports, the firm projected that tax policy would become a central focus next year, particularly with the impending expiration of certain personal income tax cuts from the Tax Cuts and Jobs Act at the end of 2025. This creates an important decision for whoever wins the election regarding the extension of tax cuts and the introduction of new taxes.
Goldman provided specific forecasts for fiscal policies under a potential Biden victory:
– A proposed tax rate of 39.6% for individuals earning $400,000 or more, increased from the current rates of 35% and 37%.
– A suggested corporate tax rate of 28%, up from the current 21%, though Goldman expressed doubt that Congress would approve it, predicting a more realistic outcome of 25%. In contrast, Donald Trump, the expected Republican nominee, has promised to reduce the rate to 20%.
– An increase in the tax rate for Social Security and Medicare from 3.8% to 5% for incomes exceeding $400,000.
Should Harris be nominated, speculation surrounds potential vice-presidential candidates, with high odds placed on Governor Shapiro of Pennsylvania, North Carolina’s Roy Cooper, Andy Beshear of Kentucky, and Arizona Senator Mark Kelly.