How president Trump will affect your wallet
This article talks about the economic policies of Donald Trump
relating to federal income taxes, corporate taxes, childcare, health insurance
and national debt.
Federal income taxes will decrease substantially, but instead of
taxing 7 different income groups, he will bring it down to 3 income bracket
groups. For people earning below $75,000, the income tax rate is 12%; for
people earning between $75,000 and $225,000, the income tax rate is 25% and for
those earning more than $225,000, the income tax rate is 33%. Initially, those
earning below $75000 had an income tax rate of 10%, but his policy will affect
the lowest income bracket, with a 2% increase from the initial rate. Therefore, an individual who earns $76,000 and an individual who earns $224,000 will be taxed at the same rate. Trump's
economic policy will negatively affect hedge fund managers since carried
interest would be taxed as ordinary income. Itemized deduction that would be limited at $200,000 ($100,000 for single filers) would benefit the working class
population, while increasing taxes of the wealthy (higher income bracket).
Under trump, the corporate tax rate would decrease from 35% to
15%. He would tax repatriated income held overseas at 10%, which would encourage
corporations held overseas to bring finance back into the United States (2.5 billion).
Economists debate over the effectiveness of his policy where the
likely outcome might lead to greater capital investments, increased job hiring,
and more capital returned to investors.
Trump has proposed an above the line deduction of up to $5000
for childcare of children under 13, thereby reducing the cost of childcare for
working class Americans. These deductions reduce adjusted gross income. For
families making $62,400 ($31,200 for single filers), Trump would offer a
childcare rebate through the Earned Income Tax Credit.
Trumps policy on healthcare:
- · Allow health insurance to be sold across state lines;
- · Allow individuals to fully deduct health insurance premiums;
- · Allow individuals to use Health Savings Accounts.
The impact of repealing the affordable care act and these
additional reforms will increase the cost of health insurance for some, and
decrease it for others.
Those that currently receive the affordable care act subsidies
are likely pay more.
For younger, healthy individuals, the cost of insurance will
decrease, and for older individuals who are not yet eligible for Medicare, the
cost of insurance will certainly increase.
Estimates mention that the national debt will rise by $11.5
trillion over next the ten years.
Therefore, it is really interesting to see the impact of trumps
economic policies on the employment rate, the labor force participation rate,
wages, the trade balance, per capita GDP, national saving and interest rates in
the distant future. It is futile to predict the efficiency of his policies in
the short run since most of his policies will positively/negatively impact the
economy in the long run.
With Trump's new tax policy I am curious as to how this will effect the trickle-down economy in the long run in terms of unemployment. His attempts to bring overseas investments back stateside may be the true balancing of his new taxation policies. Regardless it should be interesting to say the least.
ReplyDeleteSuccess or bust. I hope Trump policies work. It'll be interesting to see the results.
ReplyDeleteTrump's already decided to keep some parts of Obamacare. I wouldn't rush on making judgements on what his policis will be because he's shown already that he might be flexible with his ideas. I'm going to hope for the best and wait to see how it all unfolds.
ReplyDeleteTrump's tax policy is something that needs to be more critically examined. I believe Travis makes a good point. Trickle-down economics has never worked before. Different result this time around?
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