Trump Vs Biden On The Economy
Dear Rich Lifer,
Merry Christmas! We wish you and your loved ones a safe, healthy, and happy holiday.
While the results of the presidential election are officially confirmed, there’s still one key issue at the forefront of many of our minds.
In fact, according to a poll from the Kaiser Family Foundation released last fall, registered voters ranked the economy as the most important issue in deciding their pick for president.
The coronavirus has devastated the economy with record unemployment, the closure of businesses, eviction crises, and exorbitant medical bills. Even further, The International Monetary Fund predicts U.S. economic output will drop 8% this year after 2.3% GDP growth last year.
The economy had always been a selling point for Trump’s reelection, but it would seem enough was not done to convince the American people that he was the man to bring the country back to its February highs.
Joe Biden has argued that Trump’s mishandling of the coronavirus intensified its impact on an economy that was inequitable to begin with, and should be reimagined rather than rebuilt.
Whether you are staunchly pro-Trump, team Biden, or somewhere in the middle, today we will break down both sides views on the economy and highlight how the Biden presidency will affect you.
The coronavirus pandemic is escalating, and will likely affect Americans for months, if not years, to come.
During his presidency, Trump had signed off on four coronavirus relief bills totaling almost $3 trillion in relief funding, but negotiations for another bill have now long been at an impasse.
Trump has departed from other Republicans by urging the members of his party to back another stimulus bill with “much higher numbers.”
He had expressed openness for a $1.5 trillion proposal that calls for:
- between $450 and $600 in enhanced federal unemployment benefits
- more support for small businesses as well as state and local governments
- and another round of direct payments.
He claims support for general health precautions, and he himself wears a mask in public, but his administration indicates a looser grip on the mandate’s wheel.
He is vehemently against encroaching on Americans’ freedom, and that enforcing mask mandates and the like has proven unrealistic.
Joe Biden has released a seven-point plan to combat coronavirus which includes:
- a nationwide mask mandate
- more testing
- ramping up PPE production
- establishing a renewable fund for state and local governments
- investing $25 billion in a vaccine manufacturing and distribution plan
- fixing the country’s relationship with the World Health Organization (WHO)
- and a stimulus and relief package of over $2 trillion with increased oversight.
Trump promised to build on what many see as his biggest legislative victory—the 2017 Tax Cuts and Jobs Act (TCJA), which reduced the corporate tax rate from 35% to 21% and lowered most personal income tax brackets.
In regards to capital gains taxes (which is placed on profits from the sale of assets), Trump wanted to lower the top rate of those taxes from 23.8% to somewhere between 15% and 18.8%.
Trump also recently deferred the collection of payroll taxes, which began on September 1 and lasts until the end of the year. That puts a pause on taxes on the employee portion of Social Security, which is 6.2% per paycheck. He had said he wanted to make this cut permanent but would need congressional approval to do so.
Biden’s focus has been on raising taxes for wealthy Americans and big business. He wants to raise the top income tax rate back to 39.6% from 37% and the top corporate income tax rate to 28% from 21%. He plans to apply Social Security taxes to earnings above $400,000. Biden also intends to raise the corporate tax rate to 28%.
Additionally, he plans to increase the long-term capital gains tax rate from 23.8% to 39.6% for people with incomes over $1 million.
An analysis of most of the policies in Biden’s tax plan from the nonpartisan Penn Wharton Budget Model found that between 2021–2030, Biden’s plan would raise $3.375 trillion in additional tax revenue, increase spending by $5.37 trillion and decrease the federal debt by 6.1%.
Important to note, though: his goal is to relieve some of the burden on middle America—if your gross annual income is below $400k, his tax rate increases would appear to have little effect on your salaried bottom line. But, for any corporation owners and high-income salary earners, you will definitely feel Biden’s reforms.
Unemployment is still at a high, and it will likely take years to lower the rate to pre-coronavirus levels.
In his first term, Trump relied on deregulation and lowering corporate taxes to encourage growth.
In fact, since being inaugurated in 2017, Trump’s policies have generated 6 million new jobs. And prior to the coronavirus pandemic, the nation’s unemployment rate fell to its lowest point in 50 years.
Trump has stated he would have created 10 million new jobs in ten months during his second term and 1 million new small businesses. Trump’s idea to spur job creation is through a $2 trillion infrastructure bill.
Biden’s approach to creating jobs revolves around his plan to raise taxes on the wealthy and then use that money to upgrade the country’s infrastructure and shift to a clean-energy production, creating jobs in the process.
To help manufacturing, he plans to quadruple funding for the Manufacturing Extension Partnership and provide tax credits for investing in communities that experienced mass layoffs or the closure of a major government institution.
Biden also supports a $15 minimum wage.
With inauguration day less than a month away, we will likely see many of Biden’s plans come to fruition soon.
To a Richer Life,
The Rich Life Roadmap Team