Vice President Kamala Harris’ economic policies are likely to remain largely unchanged if she becomes the Democratic presidential nominee, according to analysis from Goldman Sachs.
President Biden announced on Sunday that he would withdraw from the race for the Democratic nomination, following intensified calls for him to step aside after a challenging debate against former President Donald Trump. In his statement, Biden endorsed Harris, who subsequently confirmed her intent to run and received backing from notable figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. Nevertheless, the anticipated shift in leadership is not expected to significantly alter policy direction.
Goldman analysts, led by chief economist Jan Hatzius, stated that they do not foresee a substantial change in the Democratic agenda regarding fiscal and trade policies if Harris becomes the nominee. They noted that the replacement of Biden by Harris could marginally increase the Democrats’ chances of winning the White House, but estimates place those odds at just below 40%.
The firm previously indicated that taxation will be a significant focus in the coming year, especially considering the expiration of personal income tax provisions from the Tax Cut and Jobs Act at the end of 2025. As a result, the next president will determine whether to extend these tax cuts and the potential for new taxes.
Goldman’s fiscal policy projections under a potential Biden victory include:
– A proposed tax rate of 39.6% for individuals earning $400,000 or more, an increase from current rates of 35% and 37%.
– A proposed corporate tax rate of 28%, up from the current 21%, although Goldman expressed skepticism that Congress would agree on this figure, suggesting a 25% rate as more likely. In contrast, Trump has promised to reduce the corporate tax rate to 20%.
– A proposed increase in the Social Security and Medicare tax rate for incomes over $400,000, from 3.8% to 5%.
If Harris secures the nomination, prediction markets speculate that the vice presidential spot could go to candidates such as Pennsylvania Governor Shapiro, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, or Arizona Senator Mark Kelly.