Goldman Sachs suggests that if Kamala Harris becomes the Democratic presidential nominee, her economic plans will closely resemble those of President Biden.
On Sunday, President Biden announced he would not pursue re-election amid growing calls for him to step aside following a difficult debate against former President Donald Trump. Shortly after, he endorsed Vice President Harris, who expressed her intention to run and garnered support from prominent figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, the policy shift is expected to be minimal.
In a note released Sunday, Goldman analysts, led by chief economist Jan Hatzius, indicated that they do not foresee significant changes in the fiscal and trade policy agenda if Harris becomes the nominee. The probability of the Democrats winning the White House increased slightly but remains below 40%, according to Goldman.
The firm has previously noted that tax policy will be a major focus next year, particularly as the personal income tax provisions of the Tax Cuts and Jobs Act are set to expire at the end of 2025. The outcome of the election will determine whether parts of the tax cut are extended or if new taxes or cuts are introduced.
Goldman’s forecasts for fiscal policy under a potential Biden victory are as follows:
– 39.6%: The proposed tax rate for individuals earning $400,000 or more, up from the current 35%/37%.
– 28%: Biden’s suggested corporate tax rate, an increase from the current 21%. Goldman expressed skepticism that Congress would agree to this rate, suggesting a more likely outcome of 25%. In contrast, Trump has pledged to reduce the corporate tax rate to 20%.
– 5%: The proposed increase in Social Security and Medicare tax on incomes over $400,000, up from 3.8%.
If Harris secures the nomination, some political analysts believe the vice presidential spot may go to governors Shapiro, Roy Cooper of North Carolina, Andy Beshear of Kentucky, or Arizona Senator Mark Kelly.