Goldman Sachs believes that if Vice President Kamala Harris becomes the Democratic presidential nominee, her economic policies will largely align with those of President Biden. Following Biden’s announcement that he would not seek re-election, primarily due to increasing pressure after a challenging debate against Donald Trump, he endorsed Harris, who confirmed her intention to continue her candidacy. She has received backing from notable figures such as California Governor Gavin Newsom, Pennsylvania Governor Josh Shapiro, and New Jersey Governor Phil Murphy.
Analysts at Goldman Sachs emphasized that there would likely be no significant changes in the Democrats’ fiscal and trade policies should Harris take the lead, suggesting that the election outcome would only slightly improve the party’s chances of winning the White House, estimating these odds to be just below 40%.
The firm previously noted that tax policy will be a major focus in the upcoming year, particularly as certain provisions from the Tax Cuts and Jobs Act are set to expire at the end of 2025. The next administration will have crucial decisions to make regarding potential tax extensions and new tax policies.
Goldman’s forecasts included a proposed 39.6% tax rate on individuals earning $400,000 or more, an increase from the current rates of 35%/37%. They also projected a proposed corporate tax rate of 28% under Biden, up from 21%, though they expressed skepticism that Congress would pass this, suggesting a more feasible rate might be 25%. Additionally, a proposed increase in the Social Security and Medicare tax rate on high incomes was set at 5%, raised from 3.8%.
Lastly, if Harris secures the nomination, speculation is rising about potential vice-presidential candidates, including Governors Shapiro of Pennsylvania, Roy Cooper of North Carolina, Andy Beshear of Kentucky, and Senator Mark Kelly from Arizona.