Now the ballots have been cast and we know that Donald Trump will be occupying the Oval Office come January, it's time to take a closer look on what exactly he plans to do -- especially when it comes to your money.
Of course, you've probably got some idea already. You may have heard, of instance, he wants to slash business taxes, eliminate Obamacare and curb illegal immigration. But now that he is set to become our next president, it's worth giving his plans more attention. You might be surprised: For instance, did you know he's called for increasing the standard deduction for middle-class earners? Or guarantee paid leave for new mothers?
Of course, the new president's proposals won't necessarily sail though Congress -- although the Republican victories in both the House and Senate give them a better chance. But President-elect Trump is also likely to single a few out as priorities to pursue during his first 100 days in office, meaning you'll soon hear more about them. Here is what you need to know.
A big part of Trump's plan for boosting the economy has been to lower taxes, and he wants to cut them "across the board." He would start by increasing the standard deduction (what you use when you don’t itemize) to $30,000 for joint filers, from $12,600 now -- ensuring that families earning less than that would owe no income taxes.
To simplify the tax code, he has said he would pare the current seven brackets, which range from 10% to 39.6%, to three. He also wants to cut the corporate tax rate from 35% to 15%, and has floated the idea of applying that lower rate not just to large corporations, but small business owners -- including doctors, lawyers, and even freelancers.
One criticism of Trump's plan is that the benefits skew to the wealthy. An analysis by the Tax Foundation, a right leaning think-tank, found middle-class earners -- those making roughly $50,000 a year -- would keep, on average, an extra $1,000 a year. By contrast, the top 1% of earners -- those who make $450,000 and up -- would get more than $100,000 on average.
Another potential problem is how he would pay for the plan. The Trump campaign argues that the cuts will spur economic growth and eventually pay for themselves, but budget scorers have been far more skeptical. The Committee for a Responsible Federal Budget put the Trump plan's price tag as high as $6 trillion over 10 years.
Trade and Immigration
It's no secret that a big part of Trump's appeal was his promise to bring back middle-class manufacturing jobs that have been lost over the past generation. To do that, he aims to renegotiate trade deals like the Trans-Pacific Partnership (TPP) and impose a 45% tariff on Chinese imports and 35% on Mexican goods. By curtailing immigration and deporting undocumented workers, he has argued, he'll be able to protect unskilled Americans from low-wage competition.
It's one of his most controversial stances, and not just because it's a flashpoint in the culture wars. Mainstream economists believe the economy needs both trade and immigration to grow in the future. In fact, one well-known economist -- Mark Zandi, of Moody's Analytics -- went so far as to predict that Trump's stances could send the U.S. into a recession by 2018.
All the same, it's not unprecedented for voters to reject the advice of Ph.Ds when it comes to the global economy: U.K. voters did the same thing when they chose to leave the European Union earlier this year.
With premiums set to rise and some insurers leaving the market, Obamacare has had its share of problems. Like many Republicans, Trump says he believes the program should be dismantled.
As a partial substitute for a defunct Affordable Care Act, he would let you deduct health insurance premiums from your income taxes. And he wants to expand your choices of insurers by allowing carriers to sell policies across state lines. In addition, Trump has argued that doctors and hospitals need to make prices more transparent -- so patients could more easily shop for the most cost-effective care.
If you buy your own insurance, Trump’s plan could spell trouble. Should you lose your job and find yourself unable to afford coverage, you would have no Obamacare subsidies to help you get a policy.
Despite rising premiums, insurance plans sold on the Obamacare exchanges are often still cheaper than private alternatives. A recent study by the Commonwealth Fund and Rand Corp. finds that without repeal, an individual ACA policy would cost you $3,200 a year on average in 2018, but that an Obamacare repeal would pump up the cost of a replacement policy to $4,700.
Even if Trump pushed through his tax deduction on premiums, the cost would still be higher than under the ACA: $3,500.
Childcare and Family Benefits
Trump made headlines during the campaign by proposing something Republicans had long resisted -- guaranteed paid leave for new mothers. To ease the burden once moms return to work, Trump has also called for making childcare spending deductible, up to the average cost in each state -- even if you don’t itemize your returns. That deduction would be available to singles earning less than $250,000 and couples making less than $500,000.
He also wants to add a new credit of $1,200 to the existing child tax credit.
Plus, Trump has sought a new “dependent care savings account,” in which parents could contribute up to $2,000 a year tax-free, then spend the money on child care, private school, or after-school enrichment. Lower-income families would get a $500 match on the first $1,000 they sock away.
Trump's childcare plans aren't without criticism, however. His maternity leave plan, paid through unemployment insurance, would offer relatively modest benefits of $300 a week on average -- about one-third of U.S. median weekly earnings of $824. And while his childcare deductions would benefit many parents, another aspect of his plan, eliminating so-called personal exemptions, could raise taxes for many families, particularly those headed by single parents.
Every year millions of retirees rely on Social Security and Medicare to make ends meet. It's no surprise that during the campaign both Hillary Clinton and President-elect Trump vowed to protect benefits for seniors.
The incoming president’s task may not be that simple, however. With tens of millions of baby boomers entering retirement each year, America’s financial obligations to Social Security and Medicare are set to roughly double in the next eight years. Meanwhile, a solid but hardly exhilarating economy -- GDP is projected to expand at 2% annually over the next decade -- would suggest that tax receipts couldn’t grow fast enough to pay our new bills.
While Trump has suggested that his economic plans -- including his big tax cuts and plans to renegotiate trade deals -- could solve that problem by reigniting America's economic energy and pushing GDP growth to 3.5% or more, many budget watchers remain skeptical of the claim.
In other words, Washington's existing promises to seniors give Trump one big, extra hurdle to face as he seeks to enact the tax cuts and other changes on his economic wish list.