Goldman Sachs has indicated that Vice President Kamala Harris’ economic policies are unlikely to differ significantly from those of President Biden if she becomes the Democratic presidential nominee. This assessment follows Biden’s announcement that he will withdraw from the race, amidst increasing pressure for him to do so after a less-than-stellar debate against former President Donald Trump.
Upon confirming her candidacy, Harris received notable endorsements from prominent figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, analysts at Goldman, led by chief economist Jan Hatzius, suggest that there would be minimal shifts in the Democrats’ fiscal and trade policy agenda with Harris at the helm.
Goldman Sachs estimates that the chances of Democrats securing the presidency have improved slightly but remain just under 40%. They have previously noted that tax policy will be a major focus in the coming year, especially with the impending expiration of personal income tax provisions from the Tax Cuts and Jobs Act by the end of 2025. The next election will determine if these tax cuts are extended or if new taxes are implemented.
Their projections include a potential tax rate of 39.6% for individuals earning $400,000 or more, an increase from the current rates of 35% and 37%. They also predict a possible corporate tax rate increase to 28%, up from 21%, though a more realistic outcome might be a rate of 25%. Additionally, there is a proposal for a 5% tax on Social Security and Medicare for incomes exceeding $400,000, up from the existing 3.8%.
If Harris is nominated, speculation is high regarding potential vice presidential picks, with Shapiro, North Carolina’s Roy Cooper, Kentucky’s Andy Beshear, and Arizona Senator Mark Kelly being mentioned as strong possibilities.