Goldman Sachs suggests that there will not be significant changes to Kamala Harris’ economic plans if she becomes the Democratic presidential nominee. This follows President Biden’s announcement on Sunday that he is withdrawing from the race amid increasing pressure for him to step down after a shaky debate performance against former President Donald Trump.
Biden, shortly after his statement, endorsed Harris, who has expressed her intent to continue her campaign. She has received several notable endorsements from prominent figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, analysts believe there will be continuity in policy regardless of the change in leadership.
Goldman Sachs, in a note led by chief economist Jan Hatzius, indicated that they do not expect significant changes in the Democrats’ fiscal and trade policy agenda if Harris becomes the nominee. The firm mentioned that while replacing Biden with Harris might slightly improve Democrats’ chances of winning the White House, the likelihood remains just below 40%.
The impending expiration of personal income tax provisions under the Tax Cut and Jobs Act at the end of 2025 is expected to shift the focus to taxes in the upcoming year. The next administration will be responsible for determining the future of these tax cuts.
Goldman’s forecasts include the following projections for fiscal policy under a potential Biden victory:
– 39.6%: The tax rate considered for individuals earning $400,000 or more, an increase from the current 35%/37%.
– 28%: The proposed corporate tax rate by Biden, up from the current 21%. Goldman expressed skepticism regarding Congress agreeing to this and suggested that a 25% rate is more likely. In contrast, Trump has promised to reduce it to 20%.
– 5%: The proposed increase in Social Security and Medicare tax for incomes above $400,000, up from the current rate of 3.8%.
If Harris secures the nomination, it is speculated that potential candidates for the vice presidential position could include Pennsylvania’s Governor Shapiro, North Carolina’s Roy Cooper, Kentucky’s Andy Beshear, or Arizona Senator Mark Kelly.