Goldman Sachs believes that Kamala Harris’ economic policies will closely resemble those of President Biden if she becomes the Democratic presidential nominee.
Following a shaky debate performance against Donald Trump, Biden announced on Sunday that he would not seek reelection, amid increasing calls for him to step down. He subsequently endorsed Harris, who confirmed her intention to run. She has already received endorsements from notable figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy. However, the change in leadership is not expected to result in significant shifts in policy.
Goldman analysts, led by chief economist Jan Hatzius, stated that they do not anticipate a meaningful change in the Democrats’ fiscal and trade agenda should Harris secure the nomination. The odds of Democrats winning the presidency have slightly improved but remain just under 40%, according to Goldman.
In light of the impending expiration of certain provisions of the Tax Cut and Jobs Act at the end of 2025, tax policy is expected to become a major focus in the upcoming election. This means the next president will have to determine the extent to which existing tax cuts will be extended and whether new taxes will be introduced.
Goldman’s projections for fiscal policy in the event of a Biden victory include:
– A proposed tax rate of 39.6% on individuals earning over $400,000, up from the current 35%/37%.
– A proposed corporate tax rate of 28%, an increase from the current 21%. Goldman expresses skepticism that Congress will agree to this level and suggests a rate of 25% is more likely, while Trump aims to lower it to 20%.
– A proposed increase in Social Security and Medicare tax rates on incomes exceeding $400,000 to 5%, up from 3.8%.
If Harris becomes the nominee, predictions indicate she may choose one of several governors or senators for her running mate, with favorites including Shapiro, North Carolina’s Roy Cooper, Andy Beshear from Kentucky, or Arizona Senator Mark Kelly.