Goldman Sachs has indicated that Kamala Harris’ economic policies are unlikely to differ significantly if she becomes the Democratic presidential nominee. This observation comes following President Biden’s announcement on Sunday that he would withdraw from the race, amid intensified calls for him to step aside after a difficult debate performance against former President Donald Trump.
Biden quickly endorsed Vice President Harris, who expressed her commitment to pursue the nomination and has received endorsements from notable figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, Goldman Sachs suggests that there will be minimal changes in policy direction.
In a note released on Sunday, Goldman analysts, led by chief economist Jan Hatzius, stated, “We would not expect the Democrats’ fiscal and trade policy agenda to shift meaningfully in the event that Harris is the nominee.” The likelihood of Democrats securing the White House has increased slightly, now estimated at just under 40%.
The firm had previously noted that taxes would be a central focus in the upcoming year, especially with the impending expiration of personal income tax provisions from the Tax Cuts and Jobs Act at the end of 2025. The incoming administration will have the responsibility to decide which, if any, tax cuts to extend, as well as any potential new taxes or tax reductions.
Goldman’s forecasts for fiscal policy under a potential Biden victory include:
– A proposed tax rate of 39.6% on individuals earning $400,000 or more, an increase from the current 35%/37%.
– A corporate tax rate increase to 28%, up from 21%. Goldman analysts expressed skepticism about Congress agreeing to this rate, suggesting that a 25% rate is more realistic. In contrast, Trump has pledged to reduce it to 20%.
– A proposed rate of 5% for Social Security and Medicare taxes on incomes exceeding $400,000, up from the current rate of 3.8%.
If Harris secures the nomination, speculation regarding the vice presidential pick includes governors such as Shapiro of Pennsylvania, Roy Cooper of North Carolina, Andy Beshear of Kentucky, and Arizona Senator Mark Kelly.