What to Expect Financially from the Trump Administration
While you may or may not be happy with the presidential election outcome, one thing is certain: Donald Trump is going to serve as the 45th President of the United States. While it would be nice to have a crystal ball so that we could tell you exactly what this means for your wallet, unfortunately, we don’t. We do, however, have the ability to give you a general idea of what could happen in 2017 based on President-Elect Trump’s tax plan and his talking points during the campaign.
You will see that uncertainty is the common theme that runs throughout our list. That is due, in part, thanks to the fact that our President-Elect is a somewhat unknown entity. It is also due to the fact that economists seem to disagree on virtually everything – and we mean everything.
Keeping all this in mind, here is our list of 10 ways the Trump Presidency might impact your finances:
If Trump’s tax plan get approved, the current seven tax brackets might be replaced by just three – with rates of 12%, 25%, and 33%. Note that the marginal rate for the wealthy could be going to 33% from the current 39.6%. The standard deduction for married couples and single filers might increase to $30,000 and $15,000, respectively, and the child-care deduction could also be increased, helping those who juggle jobs and little ones. Lastly, and perhaps most importantly, the corporate tax rate might be decreased from 35% to 15%. While we have no way of knowing for sure, these tax cuts should create jobs in the private sector and give you a little more wiggle room in your bank account. As always, we recommend that you discuss any potential tax changes with your CPA.
If decreasing the corporate tax rate isn’t enough, Trump made it a point during his acceptance speech to talk about how he plans to rebuild America’s infrastructure. By renewing and reinvigorating schools, roads, tunnels, and bridges, “we will put millions of our people to work,” he said. We believe it’s possible that we could see an uptick in jobs in the telecom, energy, transportation, and utilities industries.
3. Interest Rates
It’s hard to say what interest rates will do. The Federal Reserve meets again in December to discuss rates, but most experts believe that they will do nothing based on the economic uncertainty surrounding Trump’s election. When Trump gets into office, he will appoint his own Fed Chair, but that doesn’t mean that he’ll have control over rates. We think rates are likely to go up, we just aren’t sure when. They have been stagnant for so long that any liveliness in the economy is possible to bring about an increase. That isn’t necessarily bad news, though, even if you see mortgage rates and credit card interest rates rise; you might see better returns on your checking, savings, money market account, and/or CDs.
4. Access to Credit
We added credit to the list even though this one is purely speculative. Many economists believe that as Trump deregulates different industries, lending standards might finally loosen. This would be good news for anyone looking for capital to start a new business.
5. The Affordable Care Act
The President-Elect has promised voters that he will “repeal and replace” Obamacare. Even though we don’t know all the details surrounding this, we do know that he plans to allow competition between insurers across state lines. Trump also wants to make health insurance premiums deductible and incentivize Americans to use tax-friendly Health Savings Accounts (HSAs). There could be ramifications of a total repeal of the ACA – especially when it comes to pre-existing conditions. Our only guidance here is that you should continue to save for health care expenses; new deductions and a push to HSAs might save you money, but there are still a lot of unknowns.
6. The Stock Market
We’ve seen the market go a little crazy over the past couple of weeks. Historically, though, when the Republicans run the White House, the House, and the Senate, the stock market gains 16.36% on average, annually according to The Motley Fool. There are some good investment opportunities out there that you may want to finally take advantage of – assuming this trend holds true.
7. College Savings
On the campaign trail, Trump said that he plans to pump $20 billion into education and will encourage the states to also increase their educational support. He also said that he plans to work with colleges to address mounting costs and student debt, offering tax incentives to schools that cooperate with him. Although it’s nice to think that college might become more affordable one day, we think that you should continue to plan for education well in advance.
8. Real Estate
If interest rates increase, home ownership may become harder for many individuals. On the other hand, if the President-Elect can reduce regulations, the real estate industry could benefit . Builders claim that the cost to construct new homes has been significantly higher in recent years thanks to regulations, not increasing material or labor costs. If regulations decrease, house prices could as well.
9. The Regulatory Environment
Getting rid of some regulations might stimulate the private sector, but there are also fears that Trump’s planned tariffs could start some sort of trade war. It’s hard to say what would happen if this took place; historically, trade wars resulted in job losses for low-skilled, low-wage workers. On the flip side, it could also benefit local economies by making local goods the more frugal option.
10. The National Debt
If Trump’s proposed spending goes on as planned, experts say we could accrue another $11.5 trillion in debt within the next decade. If he can stimulate the economy, though, this could be entirely offset. Once again, it’s hard to say what is going to happen – even a year from now.
With a President-Elect like Trump, there’s no way of knowing what the next four years will bring. Your safest bet is to plan ahead, think long-term, and take advantage of any tax deductions that you can. And of course, we’ll be right here for you in 2017 if you need any help.
The opinions voiced in this material are for informational purposes only and are not intended to provide specific advice to any individual. Consult your legal, tax, and/or financial advisor to determine what is appropriate for your situation.
Partnership Wealth Management is comprehensive financial services company. We are committed to providing our clients with financial planning and wealth management services to help them make the most of their investments. At Partnership Wealth Management we have a long history of working with the LGBT community. Among our many services we offer financial planning for gay couples and lesbian couples as well as estate planning for gay couples and lesbian couples. Financial planning is an important part of preparing for the future. Contact us today to get started: www.partnershipwm.com.