Goldman Sachs predicts that Kamala Harris’ economic policies will closely resemble those of President Biden if she becomes the Democratic presidential nominee.
President Biden announced on Sunday that he is withdrawing from the Democratic nomination race, following increasing pressure for him to step down after a lackluster debate performance against former President Donald Trump. Shortly after his announcement, Biden endorsed Vice President Harris, who confirmed her intent to continue her candidacy. She has since gained several notable endorsements, including those from California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, Goldman Sachs asserts that the transition in leadership will not lead to significant changes in policy.
Goldman Sachs’ analysts, led by chief economist Jan Hatzius, stated in a note on Sunday that they do not anticipate a meaningful shift in the Democrats’ fiscal and trade policy agendas if Harris is nominated. According to Goldman, this change in leadership could slightly improve Democrats’ chances of winning the White House, although the probability remains just under 40%.
The firm has noted that taxes are expected to become a primary fiscal focus in the coming year, especially as the personal income tax provisions of the Tax Cut and Jobs Act are set to expire at the end of 2025. The outcome of the election will determine whether any tax cuts are extended and if new taxes are introduced.
Goldman analyzed potential fiscal policies if Biden were to win, revealing key figures such as a proposed tax rate of 39.6% for individuals earning $400,000 or more, up from the current rates of 35% and 37%. They also projected a corporate tax rate of 28%, an increase from the current 21%, though expressed skepticism that Congress would agree to such a hike, suggesting a more realistic outcome might be a rate of 25% instead. In contrast, Trump has promised to reduce the corporate tax rate to 20%. Additionally, Biden has proposed raising the Social Security and Medicare tax rate on incomes over $400,000 from 3.8% to 5%.
If Harris secures the nomination, prediction markets indicate that the vice presidential spot may likely go to one of several governors, including Josh Shapiro of Pennsylvania, Roy Cooper of North Carolina, Andy Beshear of Kentucky, or Mark Kelly, the Senator from Arizona.