In a recent analysis, Goldman Sachs indicated that Kamala Harris’ economic plans are unlikely to differ significantly if she becomes the Democratic presidential nominee. This comes in the wake of President Biden’s announcement that he would withdraw from the race for the Democratic nomination, following increased pressure for him to step down after a shaky debate performance against former President Donald Trump.
Following Biden’s statement, he endorsed Vice President Harris, who has expressed her commitment to running for the presidency. She has gained endorsements from notable figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. Despite the leadership change, Goldman Sachs forecasts that there will be no substantial changes to the Democrats’ fiscal and trade policy agenda if Harris takes the lead.
Goldman analysts, including chief economist Jan Hatzius, noted that the likelihood of Democrats winning the White House has increased slightly but remains below 40%. The firm previously reported that tax policy will be a central focus in the coming year, particularly with the expiration of certain tax provisions from the Tax Cut and Jobs Act set for the end of 2025. This means that the incoming administration will determine the future of the tax cuts as well as any potential new tax initiatives.
Goldman Sachs laid out some key fiscal policy predictions should Biden secure a second term. They estimate that Democrats may consider raising the tax rate for individuals earning $400,000 and above to 39.6%, up from current rates of 35% or 37%. Additionally, Biden’s proposed corporate tax rate is projected to rise to 28% from the current 21%, although Goldman expressed skepticism that Congress would approve such an increase, suggesting that a 25% rate might be more feasible. Biden also proposes to raise the Social Security and Medicare tax rate on incomes exceeding $400,000 to 5%, up from the current 3.8%.
If Harris becomes the Democratic nominee, speculation has begun regarding potential vice presidential candidates, with Pennsylvania Governor Josh Shapiro, North Carolina Governor Roy Cooper, Kentucky Governor Andy Beshear, and Arizona Senator Mark Kelly being the most mentioned choices.