How Biden’s Presidency Will Affect You Financially
Joe Biden is now officially President of the United States of America. His plans for the country differ dramatically from our last Commander-in-Chief, Donald Trump.
So, what will a Biden presidency look like for the average American financially?
First, let’s take a bird’s eye view on his tax plan. Here’s a summary:
- People who are making over $400,000 a year will see their taxes increase
- Corporations will see corporate income taxes raised
- Taxes for first-time homebuyers, parents, and renters will be expanded
- If all of Biden’s proposals become active this year, the lowest-income earners would see an 11% income increase immediately, versus an 11% income decrease for the highest-income earners.
- The GOP would decrease by 1.6% in the long run if all of Biden’s proposals are enacted.
- Tax revenue will increase by $3.3 trillion over the next 10 years
President Biden is expected to begin work immediately on changing much of the 2017 tax policy enacted under the Trump Administration that benefits the wealthy and corporations at the expense of others.
Now, let’s get into specifics.
Increasing taxes on the wealthy
Biden has proposed raising the income tax rate for Americans making more than $400,000 from 37% to 39.6%.Those who make more than $1 million a year will also pay 39.6% on long-term capital gains and investment incomes under his plan.
Biden has spoken about his desire to encourage middle-class and lower-earning Americans to save for retirement (either a 401(k) or a traditional IRA) by changing the way taxpayer contributions are incentivized. Right now, contributions are considered deductions from overall earnings at tax time rather than credits. Biden, however, wants lower earners to get bigger tax breaks in advance while shrinking tax breaks for the wealthy.
First-time homebuyers are in luck. President Biden has proposed giving a $15,000 tax credit to all American citizens who buy their first house. It could essentially be used for a down payment because you’d get it right away, rather than having to wait until you file your tax returns the following year. Everyone who bought their homes within the last three years would be eligible. There is a downside here, though, and that is the current pandemic. The availability of homes for sale has shrunk due to COVID, with many people choosing not to move right now. But other buyers are active, looking for homes that better accommodate the work-from-home lifestyle, which has increased competition and prices. This means Biden’s new tax incentive could make home prices even higher, keeping potential buyers from entering the market.
Helping seniors and the disabled
Biden’s tax plan proposes increased tax credits for employers that hire people with disabilities and to family caregivers. If enacted, it will also expand access to Achieving a Better Life Experience (ABLE) accounts, which provide tax-friendly saving accounts for people with disabilities to pay for certain experiences.
Regarding seniors, Biden wants to increase tax benefits for elderly Americans who pay for long-term care insurance with their retirement savings. He also wants to allow low-wage workers over the age of 65 to claim the earned income tax credit, which is something they can’t do currently.
Other ways Biden’s presidency could help you financially
Besides his proposed tax plan, President Biden has other ideas he wants to implement that could help more Americans financially.
America’s response to the COVID pandemic has been troublesome for sure. And the threat of the new COVID strains, such as B.1.1.7 is only making matters worse. As Biden transitions into power, he has an increasingly uphill battle to face. But, his plans to help America grapple with and end the pandemic are hopeful. He plans to administer 100 million doses of the vaccine in his first 100 days of his presidency and to challenge all Americans to wear masks, for starters. He also plans to greatly increase testing, and safely reopen schools and businesses again. Biden also plans on offering financial support to states so unemployment benefits can be extended, and wants to spend trillions of dollars to help create jobs and give Americans a third stimulus check.
Reopening the country
Though Biden understands the need to reopen the country so businesses can thrive again and Americans can begin to get back to their normal lives, he knows that can’t be done until COVID testing is vastly increased. He’s intent on listening to scientific and health experts about how to reopen our schools and businesses in a safe way, and supports more federal spending on equipment and training in order to do that.
The Affordable Care Act
Biden wants to increase spending for the Affordable Care Act by $750 billion over the next 10 years to improve the law, and plans to finance this through raising taxes on the wealthy. This means more health coverage for more Americans, reducing potential out-of-pocket spending.
Negotiating lower drug prices
The House of Representatives passed a bill last year that would allow Medicare to negotiate drug prices the same way private insurers do, and Biden supports this. This could help reduce prices for much-needed prescriptions.
Lowering Medicare/Medicaid eligibility
Biden proposes the eligibility age for Medicare be lowered to 60, which will give access to an additional 20 million Americans.
Supporting American manufacturing
In an effort to create 5 million jobs, Biden supports domestic manufacturing with plans to invest $700 million in industrial research and American-made products.
Investing in nuclear energy
During his first term, Biden has proposed investing $2 trillion for research into advanced models for nuclear energy to reach a goal of 100% clean energy generation by 2035.
Increasing emissions standards
Biden wants to increase emissions standards for automobiles that were created during the Obama administration, and wants to incentivize manufacturers to produce zero-emission cars. He also wants to implement a new federal procurement program to put clean vehicles in federal fleets and to mandate that all new buses be zero emissions by 2030.
Expand broadband access
Paid for by tax increases on businesses and wealthy Americans, Biden wants to invest $20 billion in a rural broadband project. It’s designed to expand access to high-speed internet in remote areas, which could potentially save Americans a lot of money by allowing them to work from home rather than drive. It also will help them increase their income by selling goods and services online.
Addressing the student loan crisis
By expanding existing programs designed to help alleviate the current U.S. student debt problem, which has 44 million Americans owing more than $1.6 trillion, Biden hopes to alleviate some of this burden. He wants to build on previous initiatives that forgive student loan debt and allows more grace to low-income people who are struggling to repay.
Biden wants to increase resources for educators and parents to reduce the disparities between districts.
While he’s in office, Biden has expressed the desire to establish minimum bargaining rights for public employees and create a cabinet-level group to support labor organizing. He also wants to raise the national minimum wage from $7.25 to $15 an hour.
While it’s yet to be seen how much of these plans Biden will be able to enact during his four years as president, there is great hope that some of these initiatives, especially when it comes to the pandemic, will be successful so Americans and the economy can begin to heal.