Goldman Sachs believes that Kamala Harris’ economic policies would not significantly differ from those of President Biden if she becomes the Democratic presidential nominee. This comes in the wake of President Biden’s announcement that he is stepping down from the race amidst increasing pressure following a lackluster debate against Republican opponent Donald Trump.
After Biden’s statement, he endorsed Vice President Harris, who expressed her commitment to continuing her campaign. She has since garnered support from notable figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, Goldman Sachs analysts, led by chief economist Jan Hatzius, indicate that there would be minimal changes to the Democrats’ fiscal and trade policy agenda regardless of Harris’ nomination.
Goldman Sachs has reported a slight increase in the likelihood of a Democratic win in the upcoming presidential election, estimating it to be just under 40%. Analysts have previously highlighted that the issue of taxes is expected to dominate fiscal discussions, particularly with the expiration of the personal income tax provisions from the Tax Cuts and Jobs Act at the end of 2025. The outcome of the election will play a crucial role in determining the future of these tax cuts and any potential new taxes.
In terms of potential tax policy under a Biden victory, Goldman Sachs projected the following numbers:
– 39.6%: The proposed tax rate for individuals earning $400,000 or more, an increase from the current rates of 35% or 37%.
– 28%: Biden’s suggested corporate tax rate, higher than the current 21%, though Goldman expressed skepticism about Congress approving such a rate, suggesting that a 25% rate might be more feasible. In contrast, Trump aims to reduce it to 20%.
– 5%: The proposed increase in the Social Security and Medicare tax rate on incomes exceeding $400,000, up from the current rate of 3.8%.
As for potential vice presidential candidates if Harris secures the nomination, speculation points towards governors such as Shapiro from Pennsylvania, Roy Cooper from North Carolina, Andy Beshear from Kentucky, or Senator Mark Kelly from Arizona.