Goldman Sachs predicts that Kamala Harris’ economic strategies will largely mirror those of President Biden if she becomes the Democratic presidential nominee.
President Biden declared on Sunday that he will not pursue the Democratic nomination amid growing pressure following a lackluster debate performance against Republican candidate Donald Trump. Shortly thereafter, he endorsed Vice President Harris, who affirmed her intention to continue her candidacy and received endorsements from notable figures including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, analysts believe the policy changes will not be significant.
Goldman analysts, led by chief economist Jan Hatzius, noted that they do not anticipate major changes in the Democrats’ fiscal and trade policy agendas if Harris secures the nomination. The probability of the Democrats reclaiming the White House has increased slightly to just under 40%, according to their assessment.
The firm indicated that taxation will be a primary focus in the coming year, especially with the personal income tax provisions from the Tax Cuts and Jobs Act set to expire in late 2025. The outcome of the election will determine whether these tax cuts are extended or if new taxes are introduced.
Goldman’s specific forecasts for fiscal policy in the event of a Biden victory include the following projections:
– 39.6%: The proposed tax rate for individuals earning $400,000 or more, up from the current range of 35%-37%.
– 28%: The suggested corporate tax rate under Biden, an increase from the current 21%, although Goldman expresses doubts that Congress would support this, suggesting a more likely rate of 25%. In contrast, Trump has promised to lower the corporate tax to 20%.
– 5%: The proposed tax rate for Social Security and Medicare on incomes exceeding $400,000, rising from the current 3.8%.
Should Harris become the nominee, betting markets suggest potential candidates for the vice presidential slot include Pennsylvania Governor Shapiro, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, or Arizona Senator Mark Kelly.