How the election outcome could affect your wallet

Where Trump and Biden stand on key money issues that matter to you

Oct 26, 2020 | Editorial | Government | Current Events
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The debates are over, 50 million Americans have cast their votes, and the election is just a week away. And no matter who you’re voting for, you probably want to know how the election outcome will affect your bottom line. From jobs to taxes, here’s what you can expect from a Biden victory or Trump win next week.

Stimulus and Covid relief

Since March, every Democrat-backed stimulus plan has been met by the same refrain from Republicans: too expensive. But recent signals from the President indicate a compromise might be within reach. Trump took to Twitter to instruct Republicans to “go for the much higher numbers” in stimulus talks and signaled support for the $1.5 trillion plan proposed in September by the Problem Solvers Caucus. The plan’s highlights include a $450-$600 boost for weekly unemployment benefits, more support for small businesses, and another round of no-strings-attached $1,200 checks. If Biden wins, expect a $2 trillion economic injection in January, with a $3 trillion comprehensive policy plan to follow. The former VP’s plans largely mirror the House’s Heroes Act; think more unemployment benefits, support for local and state governments, plus:

  • An emergency sick leave plan that will pay 100% of workers’ salaries up to $1,400/week
  • Readily available and free nationwide Covid-19 testing
  • Interest-free loans for small businesses affected by the pandemic
  • Fully staffing all federal agencies that will help prevent future pandemics

Jobs

We don’t need to remind you that 2020 hasn’t been great for jobs. And while job creation is always a hot election topic, it’s no mystery why the talking point is earning even more emphasis in 2020. The President has promised “10 million jobs in 10 months” — but few plan details have been laid out. Also on Trump’s agenda: creating 1 million new small businesses, cutting taxes to boost take-home pay, and expanding tax incentives to bring jobs back to the US. Biden’s “Build Back Better” plan will pour $700 billion into procurement and R&D in hopes of creating 5 million jobs, with a focus on green energy, manufacturing, AI, and biotech. Biden’s to-do list also includes: increasing the minimum wage to $15/hour, making paid sick leave available to all, and offering 12 weeks of paid medical leave. Both candidates’ plans toe the party line, with Trump focused on bringing back outsourced manufacturing jobs and Biden banking on emerging technologies to create new ones.

Taxes

The former VP hasn’t been shy about his plans to raise taxes on the ultra-rich and corporations. But unless you make more than $400,000 a year, he’s pledged your paycheck won’t look any different. Under Biden’s plan, taxes for those earning $518,401/year or more would increase from 37% to 39.6%, corporate tax rates would rise from 21% to 28%, and capital gains — aka profits earned from investments — would be taxed at the ordinary income rate of 39.6% on earnings over $1 million. Biden would also expand the child care tax credit and introduce a credit for first-time homebuyers. Trump’s tax plans are less clear, but that could be because the President passed some of the biggest tax cuts our country’s seen in decades in 2017. Business owners now get to deduct up to 20% of qualified business income from their individual taxes and C corporations saw their tax rate drop to 21%. Trump’s first objective will likely be to make the 2017 cuts permanent, as some key provisions are set to expire in 2025. He’s also touted plans to lower the top capital gains tax to 15%, eliminate payroll taxes, and offer even more tax incentives to companies that create US jobs.

Investments

If you own stocks, you’ve probably seen your investments through some high highs and low lows this year. Because if there’s anything that creates market volatility, it’s uncertainty (otherwise known as 2020 in a nutshell). And if the year 2000 is any indicator, the biggest threat to your stocks in the short term could be a contested election. After all the votes are counted, and if Biden clinches the election, green energy stocks could see a lift. If Trump wins, tech giants could be the clear (continued) winners. But experts advise that with so many contributing factors at play, it’s impossible to accurately predict how stocks will swing in the short term. For long-term investors, this Presidential election is just a minor event that shouldn’t drastically affect earnings over time. If checking your investing account nowadays makes your palms sweat, just keep in mind that the S&P 500 and its predecessor indexes have generated annualized returns of 10.3% since 1929, hitting plenty of gut-wrenching lows along the way.