How a Clinton or Trump Presidency Will Impact Your Finances
This might bore you, but the following story on the presidential election does not address beauty queens, philandering husbands or locker room talk.
It does, however, address how a President Clinton or a President Trump would impact your finances. You know, kitchen-table issues like jobs, wages, Social Security, taxes, and child care.
They’ve mostly been lost in the mudslinging of Election 2016. But once you get past the fact that both candidates are slimeballs (according to the other one), their economic plans will have far more impact on your day-to-day existence than whether Donald Trump is an octopus around women or Hillary Clinton subleased her email server to the Russians.
We take no position on those issues. As far as economic plans go, we can say you should definitely vote for…
Fill in the blank.
Not to cop out, but the economic plans the candidates have laid out would benefit certain groups more than others. So the best presidential choice depends on which group you’re in and your economic philosophy.
Each side, of course, has plenty of “experts” who’ll tell you the other side’s plan should only be used as Kleenex. We’ll just present the basic facts on key issues and leave it up to you to decide.
Trump would cut income brackets from seven to three. Individuals earning less than $75,000 would pay 12% to Uncle Sam, those making $75,000 to $225,000 would pay 25%, and people making more than $225,000 would pay 33%. The current top federal rate is 39.6%, and Trump’s plan would mean a tax cut for most in every bracket. It would eliminate the inheritance tax, which currently peaks at 45%, but would impose a capital-gains tax of nearly 20% on any gains a person made through inheritance.
Clinton would raise taxes on high earners, including a minimum of 30% on individuals making more than $1 million. Estates valued at $500 million or more would be taxed 65%, though both candidates make exceptions for small businesses and farms. The Tax Policy Institute estimates that under Trump’s plan, middle-income earners would get an average tax cut of $1,010. Clinton’s plan would not affect most in the lower 80% of earners.
Jobs and Wages
The tax plans have a direct impact here, as does your philosophy on tax cuts vs. government spending. The Tax Foundation said Clinton’s plan would reduce the size of the economy by 2.6% over the next decade. It said 700,000 fewer Americans would be working full-time relative to current projections. That’s because tax increases typically discourage investments. That holds back the entire economy, so employers are less likely to hire.
The analysis does not factor in the money raised by new taxes, however. If the government spends it wisely (try not to laugh), it could stimulate the economy and make up for the projected wage and job losses.
The Tax Foundation analysis projected that Trump’s plan would increase the GDP by 6.9 to 8.2% and add about 2 million jobs in the next decade. Tax revenues, however, would be slashed between $4.4 and $5.9 trillion. That would add $2.4 trillion to $7 trillion to the federal deficit, which already sits at $19 trillion. Just as Clinton says government spending will make up for projected shortfalls, Trump says his trickle-down tax economic cuts will stimulate the consumer and business spending and not add substantially to the deficit.
That’s a theoretical debate. As for the real-world impact in the plans, Clinton would increase the minimum wage from $7.25 to $12 an hour, with an eye toward further increases. Trump wants to leave the minimum wage up to the states. Again, your view on that will depend on your philosophy and whether you believe minimum wage increases harms job-seekers because they squeeze employers’ ability to hire.
Clinton proposes a modest increase in benefits for widows and workers who take leave to care for family members. The individual Social Security tax of 6.2% currently applies to the first $118,500 of income. Clinton’s plan would expand that to at least the first $250,000. Trump has vowed not to touch Social Security payments or taxes.
The problem is, barring Social Security reform, finances will run short in 2034 and claimants will start receiving only 73% of scheduled benefits. Neither candidate’s plan addresses that looming crisis. Now that’s bad debt management.
Clinton’s plan would double the child tax credit to $2,000 for families with kids four or younger. Trump’s plan would let parents deduct the average cost of child care in their state, based on their child’s age. It also would create a dependent care savings account that would give a tax break to anyone who sets aside $2,000 a year to cover child-care or elder-care costs.
Paid Maternity Leave and College Tuition
Trump has promised six-week paid maternity leave to new mothers. Clinton would allow parents to receive two-thirds of their wages for 12 weeks, and provide equal coverage for men and women regardless of whether they became parents through pregnancy, surrogacy or adoption.
Clinton has also promised free college tuition for any student whose family earns less than $85,000. That would increase $10,000 a year until 2021 when anyone whose family makes $125,000 a year or less would go tuition-free. Trump says there is no such thing as a free education since somebody has to pay for it.
He also calls Clinton a shyster who should be in jail. Clinton calls Trump an egomaniacal sexual deviant who would nuke the world. It’s no wonder that 52% of Americans say this election is a significant cause of stress, according to a survey by the American Psychological Association.
What’s Next for Your Finances
At least the election will be over soon, and whoever wins can start bringing their expertise, honesty, and wisdom to solving the economic issues facing everyday America.
If that makes you want to hide under the kitchen table, you’ll probably have plenty of company.
Joey Johnston has more than 30 years of experience as a journalist with the Tampa Tribune and St. Petersburg Times. He has won a dozen national writing awards and his work has appeared in the New York Times, Washington Post, Sports Illustrated and People Magazine. He started writing for InCharge Debt Solutions in 2016.
5 MINUTE READ
- NA, ND. Comparing the 2016 Presidential Tax Reform Proposals. Retrieved from http://taxfoundation.org/comparing-2016-presidential-tax-reform-proposals
- Bischoff, B. (2016, Aug. 9). These Are the Differences Between Clinton and Trump’s Tax Plans. Retrieved from http://www.marketwatch.com/story/these-are-the-differences-between-clinton-and-trumps-tax-plans-2016-08-08
- Arends, B. (2016, Sept. 16). Opinion: Donald Trump flip-flops on the “death tax”. Retrieved from http://www.marketwatch.com/story/donald-trump-flip-flops-on-plan-to-scrap-the-death-tax-2016-09-16
- Tankersley, J. (2016, Oct. 14). Who would win and lose under Donald Trump and Hillary Clinton’s tax plans. Retrieved from https://www.washingtonpost.com/news/wonk/wp/2016/10/14/who-would-win-and-lose-under-donald-trump-and-hillary-clintons-tax-plans/