In a recent analysis, Goldman Sachs indicated that Vice President Kamala Harris’ economic policies would largely mirror those of President Joe Biden if she secures the Democratic presidential nomination. This assessment comes on the heels of Biden’s announcement that he would withdraw from the race, following significant pressure and a challenging debate with former President Donald Trump.
Biden subsequently endorsed Harris, who has expressed her intention to pursue the nomination and has garnered support from several prominent figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. Despite these endorsements, Goldman analysts believe that there will be little change in the Democrats’ fiscal and trade policies with Harris at the helm.
The investment bank noted that the chances of a Democratic victory in the upcoming presidential election have increased slightly but remain just below 40%. They also predicted that the expiration of personal income tax cuts from the Tax Cuts and Jobs Act at the end of 2025 would turn taxes into a major fiscal focus for the next administration, highlighting the significance of decisions regarding tax cuts or new taxes.
Goldman’s forecasts for fiscal policy under a potential Biden victory are as follows:
– A proposed tax rate of 39.6% on individuals earning $400,000 or more, up from the current rates of 35%/37%.
– A suggested increase in the corporate tax rate to 28%, although Goldman expressed doubts about Congress agreeing to this and posited that a rate of 25% might be more realistic. In contrast, Trump’s campaign promises include lowering the corporate tax rate to 20%.
– An increase in the Social Security and Medicare tax rate to 5% on incomes exceeding $400,000, up from the current rate of 3.8%.
If Harris becomes the nominee, analysts believe the frontrunners for the vice presidential nomination could include Governors Shapiro, Roy Cooper of North Carolina, Andy Beshear of Kentucky, or Senator Mark Kelly from Arizona.