In a recent development, Goldman Sachs has indicated that if Vice President Kamala Harris becomes the Democratic presidential nominee, her economic plans are unlikely to differ significantly from those of President Biden. This follows President Biden’s announcement on Sunday that he would withdraw from the race for the Democratic nomination amid mounting pressure after a challenging debate against former President Donald Trump.
Shortly after Biden’s statement, he endorsed Harris, who affirmed her intention to continue her candidacy. She has since garnered support from prominent figures including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, Goldman Sachs analysts, led by chief economist Jan Hatzius, predict that policy changes would be minimal.
Goldman Sachs reported that the potential transition to Harris as the nominee has slightly increased the likelihood of Democrats winning the White House to just under 40%. The firm noted that they anticipate taxation will become a key fiscal issue in the upcoming year, especially with the expiration of certain provisions from the Tax Cuts and Jobs Act set for the end of 2025. Consequently, the outcome of the election will determine whether existing tax cuts are renewed or new tax measures are implemented.
The firm outlined potential fiscal policies under a Biden victory, forecasting a tax rate of 39.6% on individuals earning $400,000 or more—up from the current rates of 35% to 37%. Additionally, they predict a proposed corporate tax rate of 28%, higher than the current 21%, but express skepticism that Congress would agree to this, suggesting a more feasible rate may be around 25%. Furthermore, they anticipate an increased Social Security and Medicare tax rate on incomes over $400,000, rising to 5% from the current 3.8%.
Should Harris secure the nomination, analysts predict that the frontrunners for the vice presidential spot could include Pennsylvania Governor Josh Shapiro, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, or Arizona Senator Mark Kelly.