Goldman Sachs predicts that Kamala Harris’ economic policies will not significantly differ from those of President Biden if she becomes the Democratic presidential nominee. Following Biden’s decision to withdraw from the race, which was prompted by mounting pressure for him to step aside after a challenging debate against former President Donald Trump, he endorsed Harris as his successor.
Harris confirmed her intent to run and has garnered several notable endorsements, including from California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. Despite these changes, Goldman’s analysts, led by chief economist Jan Hatzius, believe that the Democratic fiscal and trade policy agenda will remain stable under Harris’s leadership.
The transition from Biden to Harris slightly increases the Democrats’ chances of securing the presidency, but remains under 40%. Goldman previously indicated that tax policy will become a central issue in the coming election cycle due to the impending expiration of the personal income tax provisions from the Tax Cut and Jobs Act at the end of 2025, which will significantly influence future tax discussions.
Key projections for fiscal policy, as outlined by Goldman in relation to a potential Biden victory, include:
– 39.6%: Proposed tax rate on individuals earning $400,000 or more, an increase from the current 35%/37%.
– 28%: Suggested rise of Biden’s corporate tax rate from 21%. Goldman expresses skepticism about Congress approving this, forecasting a more likely outcome of a 25% rate. On the other hand, Donald Trump has pledged to reduce the corporate tax to 20%.
– 5%: Proposed increase in the Social Security and Medicare tax rate on incomes over $400,000, up from 3.8%.
If Harris secures the nomination, speculation suggests that she may choose governors such as Pennsylvania’s Shapiro, North Carolina’s Roy Cooper, Kentucky’s Andy Beshear, or Arizona Senator Mark Kelly as running mates.