Goldman Sachs has observed that Kamala Harris’ economic policies are unlikely to differ significantly if she becomes the Democratic presidential nominee.
President Biden announced on Sunday that he would withdraw from the Democratic nomination race following mounting pressure for him to step aside after a challenging debate against former President Donald Trump. Shortly after, Biden endorsed Vice President Kamala Harris, who expressed her intention to continue her campaign. She quickly gained several prominent endorsements, including those from California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, analysts at Goldman Sachs believe this transition will not lead to substantial changes in policy.
Goldman analysts, led by chief economist Jan Hatzius, stated that they do not expect any significant alterations to the Democrats’ fiscal and trade policy agenda if Harris becomes the nominee. The likelihood of the Democrats winning the White House has increased slightly but remains just below 40%, according to Goldman.
In earlier reports, Goldman indicated that taxes will become a primary focus in the coming year due to the expiration of personal income tax provisions from the Tax Cut and Jobs Act at the end of 2025. Whoever wins the election will influence decisions regarding the extension of these tax cuts and the introduction of any new taxes or cuts.
The firm’s projections for fiscal policy under a potential Biden victory include:
– 39.6%: Possible tax rate on individuals earning $400,000 or more, up from the current 35%/37%.
– 28%: Proposed increase in the corporate tax rate by Biden, up from the current 21%. Goldman expressed skepticism about Congress agreeing to this and suggested that a 25% rate might be more realistic. In contrast, Donald Trump, the likely Republican nominee, has promised to lower the rate to 20%.
– 5%: Proposed increase in the Social Security and Medicare tax rate on incomes over $400,000, raised from the current 3.8%.
Should Harris secure the nomination, prediction markets show that the most likely candidates for the vice presidential position would include Pennsylvania’s Governor Shapiro, North Carolina’s Roy Cooper, Kentucky’s Andy Beshear, or Arizona Senator Mark Kelly.