Goldman Sachs has indicated that if Vice President Kamala Harris becomes the Democratic presidential nominee, her economic plans are unlikely to differ significantly from those of President Biden. This follows Biden’s announcement that he would withdraw from the race amid increasing pressure for him to step aside following a lackluster debate performance against Donald Trump.
Biden’s endorsement of Harris has been met with support from several prominent figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, Goldman Sachs analysts, led by chief economist Jan Hatzius, noted that they do not expect any substantial shifts in the Democratic fiscal and trade policy agenda should Harris take the lead.
According to Goldman, Harris’s candidacy slightly improves Democrats’ chances of winning the presidency, raising it to just below 40%. Analysts previously reported that taxes are likely to become a critical focus in the coming year due to the impending expiration of the personal income tax provisions under the Tax Cuts and Jobs Act at the end of 2025, making next year’s election crucial in determining the future of these tax cuts.
Goldman Sachs has provided specific projections regarding fiscal policy if Biden were to win. They anticipate a tax rate of 39.6% on individuals earning $400,000 or more, an increase from the current rates of 35% to 37%. Additionally, Biden has proposed raising the corporate tax rate from 21% to 28%, although Goldman remains skeptical about Congress agreeing to such a hike, suggesting that a 25% rate would be more feasible. Lastly, Biden has suggested increasing the Social Security and Medicare tax rate on high earners to 5%, up from the current rate of 3.8%.
In the event that Harris secures the nomination, speculation surrounds potential vice presidential candidates, with governors Shapiro, Roy Cooper from North Carolina, Andy Beshear of Kentucky, and Arizona Senator Mark Kelly being considered strong contenders.