As Vice President Kamala Harris moves toward a potential run for the Democratic presidential nomination, Goldman Sachs anticipates that her economic plans will likely remain similar to those of President Biden.
This follows President Biden’s announcement that he will not seek re-election, amidst growing pressure following a challenging debate performance against former President Donald Trump. Shortly after his statement, Biden endorsed Harris, who has expressed her intent to continue her campaign. She has garnered support from prominent figures, including California Governor Gavin Newsom and Pennsylvania Governor Josh Shapiro.
Goldman Sachs analysts, led by chief economist Jan Hatzius, pointed out that if Harris becomes the nominee, it is unlikely that there will be significant changes to the Democrats’ fiscal and trade policy agenda. They noted that the likelihood of Democrats winning the presidency has slightly increased, yet remains below 40%.
Researchers from Goldman previously indicated that tax policy will be a key focus in the coming year, especially with the expiration of personal income tax provisions from the Tax Cut and Jobs Act looming at the end of 2025. The outcome of the election will be crucial in determining whether these tax cuts will be extended or if new taxes or cuts will be implemented.
Goldman’s projections for fiscal policy under a Biden administration include a proposed tax rate of 39.6% for individuals earning over $400,000, an increase from the current rates of 35% and 37%. They also predict a corporate tax rate of 28%, up from 21%, though they express skepticism about Congress agreeing to this, suggesting a more feasible rate of 25%. Additionally, Biden has proposed raising the Social Security and Medicare tax rate on incomes above $400,000 from 3.8% to 5%.
Should Harris secure the nomination, speculation suggests that the Democratic vice presidential spot might go to figures such as Governor Shapiro of Pennsylvania, North Carolina’s Roy Cooper, Kentucky’s Andy Beshear, or Arizona Senator Mark Kelly.