Goldman Sachs has indicated that Vice President Kamala Harris’ economic policies are unlikely to differ significantly if she becomes the Democratic presidential nominee. This announcement comes as President Biden steps back from the race, following mounting pressure after a difficult debate performance against former President Donald Trump.
In a recent statement, Biden endorsed Harris, who confirmed her intention to pursue the nomination. She has gained support from prominent figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, experts predict that there will be minimal changes to policy direction.
Goldman analysts, led by chief economist Jan Hatzius, noted that they do not anticipate a substantial shift in the Democrats’ fiscal and trade policies under Harris compared to Biden. They currently estimate that the probability of a Democratic victory in the presidential race has only slightly increased, remaining below 40%.
The firm previously stated that tax policy will become a central focus next year, especially with the upcoming expiration of certain personal income tax provisions from the Tax Cuts and Jobs Act at the end of 2025. The next administration will influence decisions regarding the extension of these cuts and potential new tax initiatives.
Goldman’s fiscal policy forecasts under a potential Biden administration include a proposed tax rate of 39.6% for individuals earning $400,000 or more, up from the current rates of 35% and 37%. They also anticipate a proposed increase of the corporate tax rate to 28%, though they express skepticism that Congress would agree, suggesting a more likely rate of 25%. Additionally, they cited a proposed increase in the tax rate for Social Security and Medicare on higher incomes.
If Harris secures the nomination, prediction markets suggest that potential candidates for the vice presidential pick may include Governors Shapiro, Roy Cooper of North Carolina, Andy Beshear of Kentucky, or Senator Mark Kelly from Arizona.