How the Next President’s Policies May Impact Your Personal Finances

With election season approaching fast, we decided to take a look at the platforms of Donald Trump and Hillary Clinton and provide an overview of the aspects of each candidate’s agenda that could impact you financially.  We have taken this information directly from each candidate’s official website and have attempted to present it in a clear and unbiased manner with the aim of simply assisting our clients (and ourselves) in staying informed as voters. 

Taxation.  Trump has called for an overhaul on the tax system, starting with income tax.  He proposes collapsing the current 7 income tax brackets into 3 brackets:  a 12% tax rate for income under $75k, a 25% tax rate for income between $75k and $225k, and a 33% tax rate for income over $225k.  Under the new system, Trump would eliminate the Net Investment Income Tax and the Alternative Minimum Tax, and would increase the standard deduction by more than double while eliminating personal exemptions.  He would also completely eliminate the estate tax.  However, capital gains on investments held until death would be subject to tax (though the first $10 million would be tax-free).

By contrast, Clinton’s tax reform plan targets specific aspects of the existing system rather than proposing a complete overhaul.  She supports a 4% “fair share surcharge” on taxpayers making more than $5 million per year and wants to build on the “Buffett Rule,” which would ensure that those making over $1 million are paying at least a 30% effective tax rate.  She proposes curbing tax evasion and has also proposed changes to IRAs, such as placing a ceiling on the total account balance and limiting investments within an IRA to publicly traded securities. She advocates raising capital gains rates as well and lowering the estate tax limit from $5.45 million to $3.5 million.

Healthcare.  Clinton’s plan for healthcare is to defend and expand the Affordable Care Act as well as expand public healthcare options.  She would seek to allow individuals age 55 and older to buy into Medicare.  She would ensure that the Secretary of Health and Human Services has “the authority to block or modify unreasonable [premium] rate increases.”  She would also work with each state to expand Medicaid as well as access to health care regardless of immigration status. 

Trump’s top priority regarding healthcare would be to repeal the Affordable Care Act.  He would modify the existing law that prevents the sale of health insurance across state lines and would allow any vendor to offer insurance if they comply with state requirements.  Price transparency would be required in order to allow for “shopping” for the best prices of specific procedures or exams.  Similarly, Trump would remove barriers to entry into free markets for drug providers in order to increase competition and lower prices.  He would offer tax incentives such as allowing individuals to fully deduct health insurance premiums as well as increase Health Savings Account flexibility.  Finally, Trump proposes restructuring Medicaid by giving lump sum payments from the federal government to states, allowing individual states to allocate the funds.

Childcare.  Both candidates have proposed mandatory paid maternity leave in some capacity.  Trump has called for 6 weeks of paid leave while Clinton proposes 12 weeks.  Clinton also advocates expanding this paid leave to cover those taking care of an ill family member or recovering from a serious injury or illness.  Trump has proposed tax-free childcare costs by allowing above-the-line deductions for up to 4 children per family.  This deduction would also be available to stay-at-home parents or grandparents, limited to the average cost of childcare in their state of residence.  He also plans to boost the Earned Income Tax Credit to half of the payroll taxes of the lower income parent, with an income limitation of $31,200, in order to lessen the tax burden of a mother returning to the workforce.

College Expenses.  Clinton has proposed a plan that would allow families making under $85k per year to send their children to public 4-year universities tuition-free.  By 2021, the income limit would increase to $125k.  She also advocates making all community colleges tuition-free and proposes a $25 billion fund to provide support to minority-serving institutions and to students who are also parents.  Clinton has also proposed refinancing all student loans to current rates and requiring income-based repayment plans that require no more than 10% of current income for loan payments.  She is also a proponent for debt forgiveness after 20 years and allowing aspiring entrepreneurs to defer their student loan payments for up to 3 years.  Finally, Clinton has proposed payroll deductions for employers who contribute to debt relief for student loans.  Donald Trump has not issued a formal plan on education financing reform.

Of course, all of these policy proposals may change once a candidate is elected–and whether his or her party controls Congress will impact the likelihood of implementation as well–but we hope this overview helps in parsing out the candidates’ stances on issues with which we at PFS are regularly concerned.  And, regardless of the outcome of the election, we are confident that we will be able to help you navigate the changing waters in public policy and reach your financial goals.