Goldman Sachs suggests that if Kamala Harris becomes the Democratic presidential nominee, her economic policies will closely resemble those of President Biden. Following intense pressure for Biden to step aside after a challenging debate with Republican Donald Trump, he announced he would no longer pursue the nomination and endorsed Harris. She has confirmed her intention to run and received endorsements from several prominent figures, including Governors Gavin Newsom, Josh Shapiro, and Phil Murphy.
Despite the transition in leadership, analysts from Goldman Sachs, led by chief economist Jan Hatzius, predict minimal changes to the Democrats’ fiscal and trade policy agenda. They estimate that Harris’s nomination would only slightly increase the Democrats’ chances of winning the presidency, currently assessed at just under 40%.
The focus for the upcoming year will primarily be on taxes, especially as the personal income tax provisions from the Tax Cuts and Jobs Act are set to expire at the end of 2025. The election winner will determine the extent of tax cuts and potential new tax policies.
Goldman has forecasted specific tax proposals that could emerge under a Biden or Harris presidency:
– 39.6%: Proposed tax rate for individuals earning $400,000 or more, an increase from the current 35%/37%.
– 28%: Suggested corporate tax rate, increased from the current 21%, though Goldman believes a 25% rate is more realistic due to potential Congressional pushback. In contrast, Trump has pledged to lower this rate to 20%.
– 5%: Proposed increase in the tax rate for Social Security and Medicare on incomes over $400,000, up from the existing 3.8%.
Should Harris secure the nomination, speculation surrounds potential vice presidential candidates, with governors like Josh Shapiro of Pennsylvania, Roy Cooper of North Carolina, Andy Beshear of Kentucky, and Senator Mark Kelly of Arizona being considered strong contenders.