Goldman Sachs indicates that if Kamala Harris becomes the Democratic presidential nominee, her economic policies may not differ significantly from those of President Biden. This comes after President Biden announced on Sunday his decision to withdraw from the race following intense pressure to step down due to a weak debate performance against former President Donald Trump.
Biden subsequently endorsed Vice President Harris, who expressed her intent to continue her candidacy and gained prominent endorsements from leaders like California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. Goldman analysts, led by chief economist Jan Hatzius, stated that they do not anticipate any substantial changes to the Democrats’ fiscal and trade policy agenda should Harris take the lead.
Following the endorsement, Goldman noted that the odds of Democrats winning the presidency increased slightly but still remained below 40%. Their research highlights that taxation will be a significant focus in the upcoming election, particularly with the impending expiration of personal income tax cuts from the Tax Cut and Jobs Act at the end of 2025. The election outcome will determine which aspects of the tax cuts are extended or if new tax measures are implemented.
Goldman Sachs also provided specific predictions regarding Biden’s fiscal policy, which include:
– A proposed tax rate of 39.6% for individuals earning $400,000 or more, an increase from the current rates of 35% and 37%.
– An increase in the corporate tax rate from 21% to a proposed 28%, although Goldman expresses doubt that Congress would support this and suggests a more likely outcome of a 25% rate. In contrast, Donald Trump has promised to reduce the rate to 20%.
– A proposed increase in the tax rate for Social Security and Medicare on incomes above $400,000 from 3.8% to 5%.
Should Harris secure the nomination, prediction markets are pointing towards governors like Shapiro of Pennsylvania, Roy Cooper of North Carolina, Andy Beshear of Kentucky, or Arizona Senator Mark Kelly as potential candidates for the vice presidency.