Goldman Sachs has indicated that Kamala Harris’ economic policies are unlikely to significantly change if she becomes the Democratic presidential nominee. This assessment follows President Biden’s announcement on Sunday that he will not seek the Democratic nomination, amid increasing pressure for him to step aside after a challenging debate against former President Donald Trump.
Immediately following his statement, Biden endorsed Harris, who expressed her intent to continue her campaign and received notable endorsements from California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, the transition from Biden to Harris is not expected to lead to substantial changes in policy.
Goldman analysts, led by chief economist Jan Hatzius, noted that they do not anticipate a meaningful shift in the Democrats’ fiscal and trade policy agenda if Harris becomes the nominee. They estimate that this change would marginally increase the Democrats’ chances of winning the White House to just under 40%.
The firm highlighted that taxes will be a key focus in the upcoming year due to the impending expiration of personal income tax provisions from the Tax Cut and Jobs Act at the end of 2025. The winner of the election will have to make decisions regarding the extension of tax cuts and the introduction of new taxes or deductions.
Goldman projected specific figures regarding fiscal policy under a potential Biden victory:
– 39.6%: The tax rate that Democrats are considering for individuals earning $400,000 or more, an increase from the current rates of 35% and 37%.
– 28%: The proposed corporate tax rate by Biden, up from the current 21%. Goldman expressed doubt that Congress would agree to this rate, suggesting that a 25% rate is more likely. In contrast, Donald Trump, the presumptive Republican nominee, has promised to reduce the rate to 20%.
– 5%: The proposed tax rate for Social Security and Medicare on incomes over $400,000, an increase from the existing 3.8%.
Should Harris secure the nomination, prediction markets indicate strong potential candidates for the vice presidential role, including Governors Shapiro of Pennsylvania, Roy Cooper of North Carolina, Andy Beshear of Kentucky, and Senator Mark Kelly of Arizona.