Goldman Sachs has indicated that Kamala Harris’ economic policies are unlikely to diverge significantly from those of President Biden if she secures the Democratic presidential nomination. This assessment follows Biden’s announcement on Sunday that he would withdraw from the nomination race, amid increasing pressure for him to step aside after a faltering debate performance against former President Donald Trump.
Biden has endorsed Harris, who has expressed her intention to continue her candidacy and has garnered significant endorsements from prominent figures including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, Goldman Sachs believes that this transition will not lead to substantial changes in policy direction.
In a note authored by chief economist Jan Hatzius, the investment firm stated, “We would not expect the Democrats’ fiscal and trade policy agenda to shift meaningfully in the event that Harris is the nominee.” They noted that with Harris stepping in, the chances of a Democratic victory in the upcoming election have increased slightly, although they still assess the probability at under 40%.
Goldman also highlighted the critical focus on tax policies in the coming year due to the impending expiration of the personal income tax provisions from the Tax Cuts and Jobs Act at the end of 2025. This situation presents an opportunity for the next elected leader to make significant decisions regarding tax extensions or new tax implementations.
Here are some specific fiscal policy predictions Goldman has offered under a potential Biden victory:
– A proposed tax rate of 39.6% for individuals earning $400,000 or more, an increase from the current rates of 35% and 37%.
– A corporate tax rate proposal of 28%, up from the current 21%. However, Goldman expressed skepticism that Congress would approve this, suggesting a more likely rate of around 25%. In contrast, Trump has announced intentions to lower the corporate rate to 20%.
– A proposed increase in the Social Security and Medicare tax rate for incomes exceeding $400,000 from 3.8% to 5%.
If Harris becomes the nominee, analysts predict that the most likely candidates for the vice presidential slot would include Pennsylvania Governor Josh Shapiro, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, or Arizona Senator Mark Kelly.