We’re coming up on the U.S. presidential election, and we’re known for using financial issues to inform our votes. Although each presidential candidate might have an agenda that relates to our finances, it’s worth noting that much of what a candidate proposes while on the campaign trail (and even in office) can’t actually take place without action from Congress. In fact, it’s Congress that makes many of the laws that impact our finances.
Regardless, as we look ahead to November, it’s important to consider the proposals made by presidential candidates in order to get an idea of what money moves we might want to make before and after the election. Let’s take a look at what some of President Donald Trump’s proposals could mean for your finances if he wins a second term.
8 ways a Trump presidential victory could impact your finances
It’s important to note that President Trump and his campaign team haven’t provided many details in terms of plans for various items. In many cases, the President shares something on Twitter or during a press conference, and there isn’t much follow-up on how it will be accomplished. As a result, it’s somewhat difficult to gauge how a Trump second term may impact your finances and how you manage your money.
Health care costs
President Trump has promised decreased health insurance premiums to the American people if he’s elected for a second term, though he hasn’t shared a plan to reduce these costs. In 2018, premiums saw a huge jump, due to various disruptions with the Affordable Care Act put forward by the Trump administration. Even though premiums were much more stable in 2019, continued disruptions in the health care market could make premiums unpredictable and unstable.
Additionally, the Trump administration has promised to protect those with preexisting conditions, but it is in the process of trying to eliminate the ACA. So far, it has not introduced a replacement option to allow people with preexisting conditions to keep their health care coverage.
Prescription drug costs
On his proposed second-term agenda, President Trump also indicates that he will lead the charge to cut prescription drug prices, but he doesn’t offer further details on how his administration will make this happen.
Trump continues to promise tax cuts. However, there aren’t many details on potential cuts. There is a payroll tax deferment in effect right now due to the COVID-19 pandemic. If you’re seeing a bigger paycheck, be aware that this is a deferral, not a cut. After the first of the year, you will likely see an increase in payroll taxes as you repay the amount deferred.
The last tax package that went through Congress provided the biggest benefit to corporations and high-income individuals. Low-income earners benefited the least from the most recent tax package, and middle-class earners saw mixed results.
Proposals for unspecified tax credits are being floated by the Trump administration. However, it’s unclear how these tax credits would be applied, and there have not been clear policy guidelines on what happens when some of the provisions in the 2017 tax package expire. This could make tax planning challenging for some Americans if Trump wins a second term.
Capital gains tax
Although President Trump has suggested cutting the capital gains tax rate from 20% to 15%, his administration has not shared details on how this would be accomplished. For many Americans, though, this wouldn’t have much impact. The Pew Research Center points out that only about 14% of U.S. households have invested in individual stocks. Most Americans investing money in the stock market do so through tax-advantaged retirement plans, so a reduced capital gains tax probably wouldn’t have much of an impact.
President Trump’s agenda calls for protecting social security. However, details on how his administration plans to do that are light. Social security is funded by the payroll taxes that employers currently have the option to defer due to the pandemic. According to some analysts, transforming those payroll tax deferments into permanent cuts could potentially deplete social security within a few years.
Although a Trump win in November may have some impact on certain stock prices in the short-term, the person holding the office of president doesn’t usually have a significant long-term impact on the market. The stock market is likely to continue to experience its ups and downs, but overall, it typically trends higher in the long run, no matter who is in office.
President Trump’s plan to increase employment mainly hinges on providing increased tax benefits for those who participate in Opportunity Zones, a program created under the 2017 Tax Cuts and Jobs Act that was designed to offer support to businesses and individuals in economically distressed areas. His administration also plans to offer tax benefits for companies that relocate jobs from overseas to the U.S. This is part of a push to create 10 million new jobs in 10 months, touted on President Trump’s campaign website.
There are a lot of policy ideas floating around, and promises, from President Trump and his campaign. However, there aren’t a lot of specific plans and policies for accomplishing the stated goals. And, of course, it’s important to keep in mind that any president is limited in what they can do without Congressional action.