Goldman Sachs has indicated that Kamala Harris’ economic plans are unlikely to differ significantly if she becomes the Democratic presidential nominee. This comes after President Biden announced he is stepping aside from the Democratic nomination race amid increasing pressure due to his recent debate performance against Republican candidate Donald Trump.
Following Biden’s statement, he endorsed Vice President Harris, who has expressed her commitment to continuing her candidacy, gaining support from several prominent figures, including California Governor Gavin Newsom and Pennsylvania Governor Josh Shapiro. However, analysts at Goldman Sachs expect continuity in the Democratic fiscal and trade policy agenda regardless of Harris’ nomination.
The firm’s chief economist, Jan Hatzius, noted that while replacing Biden with Harris might slightly enhance Democrats’ chances of winning the White House—now estimated at just under 40%—the fundamental policies are set to remain unchanged. Goldman Sachs previously forecasted that tax policy will be a major focus in the upcoming election cycle, particularly with the approaching expiration of personal income tax cuts from the Tax Cut and Jobs Act in 2025. This will leave the incoming administration with decisions about extending the cuts and potential new tax measures.
Goldman Sachs provided specific forecasts regarding expected fiscal policies under a Biden presidency, which include:
– A proposed 39.6% tax rate for individuals earning $400,000 or more, increased from the current 35%/37%.
– An increase in the corporate tax rate from 21% to 28%, although analysts express skepticism that Congress would support this increase, predicting a more likely compromise at a 25% rate. Meanwhile, Trump has proposed lowering the corporate tax rate to 20%.
– A proposed increase in the Social Security and Medicare tax rate on incomes exceeding $400,000 from 3.8% to 5%.
In the event of Harris leading the ticket, prediction markets suggest that potential candidates for the vice presidency could include Pennsylvania Governor Shapiro, Roy Cooper of North Carolina, Kentucky Governor Andy Beshear, or Arizona Senator Mark Kelly.