Goldman Sachs analysts believe that Kamala Harris’ economic policies would not greatly differ from President Biden’s if she becomes the Democratic presidential nominee. Following Biden’s announcement on Sunday that he would not seek re-election, he endorsed Harris, who expressed her intention to continue her candidacy. She has garnered support from several prominent figures, including California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy.
Goldman’s chief economist, Jan Hatzius, noted in a report that there would likely be little change in the Democrats’ fiscal and trade policy agenda in the event of Harris’s nomination. The shift in leadership may have marginally increased the chances of a Democratic victory in the election, which Goldman estimates to be just under 40%.
Analysts at Goldman previously highlighted that tax policy would be a significant focus in the upcoming year, particularly with the expiration of certain provisions from the Tax Cuts and Jobs Act set for the end of 2025. This will place the onus on the next administration to determine the extent of tax cuts and potential new tax measures.
Goldman Sachs also provided specific forecasts regarding potential fiscal policies under a Biden victory:
– A proposed tax rate of 39.6% on individuals earning $400,000 or more, an increase from the current rates of 35% and 37%.
– A corporate tax rate proposal of 28%, up from the current 21%. However, analysts expressed skepticism about Congress agreeing to this and suggested a more likely outcome of a 25% rate. In contrast, Donald Trump, the presumptive Republican nominee, has pledged to reduce the rate to 20%.
– A proposed increase in the Social Security and Medicare tax rate on incomes above $400,000, from 3.8% to 5%.
Should Harris secure the nomination, prediction markets indicate that potential vice presidential candidates could include Governors Shapiro of Pennsylvania, Roy Cooper of North Carolina, Andy Beshear of Kentucky, or Arizona Senator Mark Kelly.