Every four years, our country goes through the phenomenon of electing public officials. And with each election, change occurs. These changes are usually less striking when candidates of the same party are elected. But in recent years, the country has seen some radical changes and we are now about to go through some more changes with the outcome of the 2016 election.
As in every campaign, the candidates make promises that may or may not be kept. But what we have seen in the last eight years is that a party that has full control of the House, Senate, and Oval Office is likely to effect significant change. Trump made quite a few promises that voters will expect him to keep and here are a few that could affect many of our clients.
Health Insurance and the Repeal of the Affordable Care Act
With premiums continuing to rise and some insurers leaving the marketplace, Obamacare has had its share of problems. Like many Republicans, Trump says he believes the program should be dismantled. Republicans could use something called reconciliation to defund the ACA. They have already done that once and President Obama vetoed the measure. President Trump would feel pressure to sign a similar bill but the outcome could result in the loss of coverage for about 20 million people.
As a partial substitute for a defunct Affordable Care Act, health insurance premiums would be a deductible expense from income taxes. And there would be an expansion of insurer choices by allowing carriers to sell policies across state lines. In addition, Trump has argued that doctors and hospitals need to make prices more transparent so patients could shop for the most cost-effective care.
There have been discussions in Washington about a free enterprise approach to health reform which could meet the ACA’s goals without the ACA. More details have yet to emerge from this idea.
Minimum Wage
Based on some of his previous remarks, the federal minimum wage of $7.25 per hour could rise to $10 an hour. The decision could also be left to the states.
Tax Reform and Wages
A big part of Trump’s plan to stimulate the economy has been to lower taxes. He plans to cut them “across the board” and would start by increasing the standard deduction to $30,000 for joint filers ensuring that families earning less than that would owe no income taxes.
To simplify the tax code, he is proposing to reduce the tax brackets from (which range from 10% to 39.6%) to three (12%, 25%, and 33%). He also wants to cut the corporate tax rate from 35% to 15%, and has floated the idea of applying that lower rate not just to large corporations, but also small business owners.
Paid Family and Medical Leave
The President Elect plans on providing six weeks of paid maternity leave which amounts to about $300 per week; however, there doesn’t seem to be any relief for adoption or for caregivers who are taking care of sick family members.
Childcare Expenses
Trump is proposing guaranteed paid leave for new mothers. To ease the burden once moms return to work, Trump has also called for making childcare spending deductible, up to the average cost in each state — even if you don’t itemize your returns. That deduction would be available to singles earning less than $250,000 and couples making less than $500,000.
He also wants to add a new credit of $1,200 to the existing child tax credit.
Trump has also sought a new “dependent care savings account,” in which parents could contribute up to $2,000 a year tax-free, then spend the money on child care, private school, or after-school enrichment programs. Lower-income families would get a $500 match on the first $1,000 they save.
Social Security
Trump has proposed no cuts to benefits in Social Security but he could revisit the issue at a later time. This is a significant issue to consider because Medicare and Social Security are collecting fewer dollars and paying out more. And with tens of millions of baby boomers entering retirement each year, the country’s financial obligations to Social Security and Medicare are set to roughly double in the next eight years.
Employment
Trump has promised to bring jobs back from Mexico and China. He wants to renegotiate trade deals and use tariffs to force companies to make more products in the U.S. Experts are skeptical that he can bring back these manufacturing jobs. Much may depend on Trump’s ability to work with Congress to enact tax cuts and increase spending to repair America’s roads and bridges. Those measures could boost growth and jobs.
More Changes to Come
We recommend that you stay abreast on these issues as they could significantly impact your respective businesses. You can expect to receive regular notices from UBF and should you have any questions on the impact of these changes, please do not hesitate to reach out to a UBF consultant.
Alan Wang is the President of UBF and serves as the lead consultant. He has delivered the UBF solution set throughout the world and is highly regarded for his areas of expertise. You can follow him on Twitter @UBFconsulting.