Goldman Sachs believes that Kamala Harris’ economic plans will not significantly differ if she becomes the Democratic presidential nominee. This comes in the wake of President Biden’s announcement on Sunday that he would withdraw from the Democratic nomination race, following criticism regarding his debate performance against former President Donald Trump.
Following his statement, Biden endorsed Vice President Harris, who affirmed her intent to run for the presidency and received endorsements from notable figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. Despite the changes in leadership, Goldman analysts, led by chief economist Jan Hatzius, have indicated that the Democrats’ fiscal and trade policies are expected to remain consistent under Harris’ potential candidacy.
According to Goldman, the likelihood of a Democratic victory in the presidential election has slightly increased, but still rests below 40%. They also noted that the upcoming year will shift the focus of税 policy toward taxes due to the impending expiration of personal income tax provisions from the Tax Cut and Jobs Act at the end of 2025. The victor of the next election will determine the future of these tax cuts and any potential new taxes.
Goldman provided some predictions regarding fiscal policy if Biden were to win again:
– 39.6%: Possible tax rate for individuals earning $400,000 or more, up from the current range of 35% to 37%.
– 28%: The proposed corporate tax rate under Biden, an increase from the current 21%, although Goldman expressed skepticism regarding Congress’s agreement, suggesting a more likely outcome would be a 25% rate. In contrast, Donald Trump has promised to lower it to 20%.
– 5%: Biden’s proposed tax rate for Social Security and Medicare on incomes exceeding $400,000, an increase from the existing 3.8%.
If Harris secures the nomination, prediction markets suggest that the vice presidential candidacy may go to either Pennsylvania’s Governor Shapiro, North Carolina’s Governor Roy Cooper, Kentucky’s Governor Andy Beshear, or Arizona Senator Mark Kelly.