Goldman Sachs has indicated that Vice President Kamala Harris’ economic policies are not expected to differ significantly from those of President Biden if she becomes the Democratic presidential nominee.
This analysis comes after President Biden announced on Sunday that he would withdraw from the race for the Democratic nomination. This decision followed increasing pressure for him to step aside, particularly after a faltering debate performance against Republican candidate Donald Trump, the former president.
After Biden’s announcement, he endorsed Harris, who expressed her intention to continue her candidacy. She is now receiving endorsements from several prominent figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, analysts from Goldman Sachs believe that there will not be a substantial shift in policy direction.
Goldman Sachs analysts, led by chief economist Jan Hatzius, stated in a report that they do not anticipate any meaningful changes to the Democratic fiscal and trade policy agenda, should Harris become the nominee. They also noted a slight increase in the odds of Democrats retaining the White House, estimating it now at just under 40%.
In their previous assessments, Goldman researchers highlighted that tax policy would be a major focus in the upcoming year, particularly with the pending expiration of personal income tax provisions from the Tax Cut and Jobs Act at the end of 2025. The winner of the upcoming election will ultimately influence decisions regarding the extension of these tax cuts and the introduction of new taxes or cuts.
The following are some of Goldman’s forecasts for fiscal policy if Biden were to win:
– 39.6%: Proposed tax rate for individuals earning $400,000 or more, an increase from the current rates of 35% and 37%.
– 28%: Proposed corporate tax rate from Biden, up from the current 21%. Goldman expressed skepticism that Congress would approve this, suggesting a more likely outcome would be a 25% rate. In contrast, Trump has promised to lower this rate to 20%.
– 5%: Proposed increase in the Social Security and Medicare tax rate on incomes exceeding $400,000, rising from 3.8%.
If Harris secures the nomination, prediction markets suggest the vice presidential candidates could include Pennsylvania Governor Josh Shapiro, Roy Cooper from North Carolina, Andy Beshear from Kentucky, or Arizona Senator Mark Kelly.