Goldman Sachs anticipates that Vice President Kamala Harris’ economic plans would not significantly differ from President Biden’s if she secures the Democratic presidential nomination. This assessment comes on the heels of Biden’s announcement that he will withdraw from the race amid increasing pressure following a lackluster debate against former President Donald Trump.
In a statement issued shortly after his announcement, Biden publicly endorsed Harris, who confirmed her intention to continue her candidacy. She quickly garnered support from prominent figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. Despite this shift in leadership, Goldman Sachs does not foresee substantial changes in the Democratic party’s fiscal and trade policy agenda.
Goldman analysts, led by Chief Economist Jan Hatzius, noted that a Harris nomination would slightly increase the Democrats’ odds of winning the presidency but still estimate those odds to be under 40%. The firm previously projected that taxation will become a focal point next year, especially with the impending expiration of personal income tax cuts from the Tax Cut and Jobs Act by the end of 2025, placing future tax policies at the forefront of the upcoming election.
Goldman’s specific forecasts for fiscal policy under a potential Biden victory include the following:
– A proposed tax rate of 39.6% for individuals earning $400,000 or more, up from current rates of 35% and 37%.
– An increase to a corporate tax rate of 28%, up from the existing 21%, though Goldman expressed skepticism that Congress would support this and suggested a 25% rate as more likely. In contrast, Trump has pledged to cut the corporate tax rate to 20%.
– A rise in the Social Security and Medicare tax rate on incomes exceeding $400,000 to 5%, from the current 3.8%.
If Harris is nominated, speculation suggests that candidates for the vice presidential position could include Governors Shapiro of Pennsylvania, Roy Cooper of North Carolina, Andy Beshear of Kentucky, and Senator Mark Kelly of Arizona.