Goldman Sachs predicts that Kamala Harris’ economic policies will remain largely consistent if she becomes the Democratic presidential nominee. This assessment comes on the heels of President Biden announcing that he will withdraw from the race, following increasing pressure to step aside after a challenging debate against former President Donald Trump.
In a statement released shortly after his announcement, Biden endorsed Vice President Harris, who affirmed her intention to run for the presidency. She has received endorsements from prominent figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, Goldman analysts indicate that the transition from Biden to Harris is unlikely to result in significant changes to the Democratic Party’s fiscal and trade policy agenda.
Goldman’s chief economist Jan Hatzius noted that the chance of Democrats winning the White House has improved slightly but remains just under 40%. The firm has previously highlighted that the expiration of certain personal income tax provisions from the Tax Cut and Jobs Act at the end of 2025 will put taxes at the forefront of fiscal discussions in the coming year. The outcomes of the election will determine the future of these tax cuts along with any potential new taxes or cuts.
Goldman provided several fiscal policy forecasts based on a potential Biden victory:
– A proposed increase of the tax rate to 39.6% for individuals earning $400,000 or more, rising from the current rates of 35% and 37%.
– A proposed increase in the corporate tax rate to 28% from the existing 21%, although Goldman expressed skepticism that Congress would agree to this, suggesting a 25% rate is more likely. Conversely, Donald Trump has pledged to reduce it to 20%.
– An increase in the tax rate for Social Security and Medicare on incomes over $400,000 to 5%, up from the current 3.8%.
If Harris secures the nomination, speculation suggests that potential candidates for the vice presidential slot could include Governor Shapiro of Pennsylvania, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, or Arizona Senator Mark Kelly.