STYLECASTER
While chatting about the election frontrunners’ economic policies might not sound quite as pressing as, say, debating immigration or abortion access, it’s still the top priority for the overwhelming majority Americans this election, with 44 percent listing it as their number one concern. With that in mind, and because this topic can get convoluted real fast, we’re breaking down the important things you absolutely need to know about how each candidate is planning on improving the economy—and your paycheck—if they’re elected president.
Donald Trump
“I will be the greatest jobs president that God ever created.”
What you need to know:
- His plan would eliminate income tax for people earning less than $25,000 and married couples jointly earning less than $50,000.
- Trump promises to simplify the tax code to four brackets instead of seven and provide the lowest tax rate in decades.
- Reduce taxes for businesses of all sizes.
- Eliminate tax loop holes for the “very rich.”
- Bring overseas jobs back to America.
What it means:
Aside from sounding scarily like Kanye West when he announced his candidacy by proclaiming, “I will be the greatest jobs president that God ever created,” Trump’s policies do focus largely on job creation. He intends on bringing back American jobs “from China, from Mexico, from Japan, from so many places,” by imposing tariffs on foreign goods and changing our current trade deals. And, while the concept of job creation locally is a great one, Trump’s protectionist rhetoric is something you should be worried about.
Economic experts question whether shielding America’s domestic industries from foreign competition through tariffs and taxes is a smart move for a mature economy, and could specifically work against you and other millennials still at the early stages of their careers. Richard Barrington, senior financial analyst at Moneyrates told us that this type of policy can even stunt economic growth. “It tends to protect ‘old economy’ jobs, which means helping people with more dated skill-sets at the expense of people starting their careers with more cutting-edge skills,” he said. It’s important to note that, like Trump, Clinton’s policies also focus on bringing overseas jobs back to America.
The good news is that (like Clinton) Trump plans on simplifying the tax code, which could mean you would only need to fill out one form at tax time. “This should be good for millennials, because people just starting their careers typically have fewer complex deductions than older, wealthier people or corporations,” Barrington said.
Hillary Clinton
“Creating good paying jobs and raising incomes is the defining economic challenge of our time.”
What you need to know:
- Clinton wants to rescind tax breaks and other benefits for American companies that move jobs overseas.
- Will provide tax incentives for companies that share profits with employees.
- Clinton will close “loopholes and expenditures for the most fortunate” to finance her scheme to make college more affordable.
- Place restrictions on the richest investors accessing the lower, long-term capital gains rate.
- Hedge fund managers’ compensation (referred to as ordinary income) will be taxed as ordinary income and not capital gain.
- Plans to raise federal minimum wage to $12.
- Would require employers to provide 12 weeks of paid family and medical leave.
What it means:
Right now her plan to increase the minimum rage and keep jobs in America has been fairly well received by economists. Alan Krueger, professor of economics and public affairs at Princeton told us that Clinton’s scheme is a “coherent” one to “expand the economy and raise wages for middle-income workers.”
If you’re currently working at minimum wage, Clinton’s plan to raise the figure to $12 means an extra $4.75 in your pocket every hour. Of course, most states have their own minimum wage that is higher than the federally imposed $7.25/hour wage, but none as high as Clinton’s proposed $12. Meanwhile, her plan to rescind tax benefits given to companies using cost-cutting overseas headquarters could also help keep jobs at home in the United States, and mean more employment opportunities for Americans. However, like with Trump’s policy, there’s an argument that supporting these dated skill-sets could stunt the economy.
Clinton’s profit-sharing initiative encourages companies to share profit with their employees. But before you think, “ka-ching!” you should know it’s been met by a bit of a mixed response, with some analysts questioning whether the scheme will really have much of an impact. If effected, your employer would get tax credits for making contributions on your behalf, based on both your salary and the company’s performance. The money grows tax-deferred, just like with your 401(k). However there are some restrictions, particularly around how much a company can claim for profit-sharing with high-income workers, and the value of the credit is capped at 10 percent of the employee’s wage. So, if you earn $50,000, the company could give you a profit share of up to $5,000. The company you work for would get a tax credit worth up to $750 (15% of $5,000).
Bernie Sanders
“Let us wage a moral and political war against the gross wealth and income inequality.”
What you need to know:
- Sanders plans to enforce an estate tax on the top 0.3 percent of Americans who inherit more than $3.5 million.
- Wants to increase federal minimum wage to $15 per hour by 2020.
- Would invest $1 trillion over five years to rebuild infrastructure in cities and create an estimated 13 million jobs.
- Plans to reverse trading policies to make it harder for Amercian companies to manufacture products in China.
- Sanders plans to invest $5.5 billion in youth jobs programs with the aim of creating one million jobs.
- Would require employers to provide 12 weeks of paid family and medical leave, two weeks vacation, and seven days of sick leave.
What it means:
Most of Sanders’ proposed policies aim directly at reducing the income inequality gap and increasing the minimum wage, which at the current $7.25 rate he calls “starvation pay.” His proposed $15 wage is $3 higher than Clinton’s plan.
While Clinton and Sanders disagree about how they would pay for the initiative, both candidates would require employers provide 12 weeks of paid family and medical leave, which is a huge contrast to current policy—right now the United States is the only developed nation with no guaranteed paid leave of any kind.
Economists are split on Sanders’ plan, which is more radical than the other candidates’: One analysis found that median household income would be up to $82,200 by 2026 with Sanders’ as President, far above the $59,300 projected by the Congressional Budget Office. However the Committee for a Responsible Federal Budget also found that aspects of Sanders’ plan to fund his schemes would fall short of at least $3 trillion.