The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict , this post may contain references to products from our partners. Here's an explanation for .
From determining how much you’ll pay in taxes to influencing the cost of health care, whoever occupies the White House has a direct impact on your wallet.
Yet, Bankrate’s September 2020 politics survey found that many Americans were still divided over whether the Democratic or Republican ticket — former Vice President Joe Biden and Sen. Kamala Harris or President Donald Trump and Vice President Mike Pence — would be the best fit for their personal finances.
Economic policy is bound to be a top issue for many voters. That was the case even before the coronavirus pandemic caused a catastrophic recession, hurtling millions toward financial distress. A July 2019 Bankrate survey found that the U.S. economy would be the top voting issue for the November 2020 elections, back when unemployment was the lowest since the 1960s.
We analyzed how Trump and Biden measure up. Biden looks to be campaigning on a promise to tax only wealthy earners and corporations to fund massive proposals totaling $3.2 trillion in health care, higher education and infrastructure. Trump is running on a platform that promises to roll back taxes and regulations to spur more economic growth and job creation. Keep in mind that whoever ends up in the Oval Office will have to get most of these proposals passed in Congress.
We reached out to both the Biden and Trump campaign teams for details on their candidates’ positions, but did not receive a response in time for publication. This story will be updated if comments are provided.
Based on the candidates’ speeches, public remarks and websites, here is what we know about where both candidates stand.
Where Trump and Biden stand on major economic policies:
Think about taxes as the starting line for a candidate’s economic policy. Roll them back, and you have to consider how you’re going to finance other projects. Introduce new spending proposals, and you’re going to have to find a way to pay for them.
Trump has pledged to reduce taxes across the board, a follow-up to his sweeping Tax Cuts and Jobs Act of 2017 (TCJA). Biden looks poised to undo parts of the TCJA, though he’s pledged to only increase taxes on individuals making over $400,000, investors and big business.
Trump’s tax policy
The TCJA was the pinnacle of Trump’s tax policy, which reduced rates for individuals at virtually all income levels, even among the country’s highest earners, and brought most filers down a bracket (if not more). That’s likely going to be the message the president sticks with if re-elected.
Taxes for everyday Americans: Trump in August said that he was re-upping plans to explore a cut for the “middle class,” what his administration has dubbed “tax cut 2.0,” though details on that package remain scarce and analysts say that would likely only come to fruition if the president is re-elected. That might look like cutting the 22 percent tax rate bracket to 15 percent, what the president’s advisers were directed to look into back in November 2019. Experts, however, have warned that this would make no difference for most middle-class families while instead benefiting high-income earners.
As of 2020 (taxes due in 2021), single filers earning between $40,126 to $85,525 and married filers earning $80,251 to $171,050 are currently taxed at a rate of 22 percent, meaning they’re the ones likely eligible for the cut. Most households, however, don’t fall within those thresholds, according to a report from the joint Urban Institute-Brookings Institution Tax Policy Center.
Tax cuts for families and individuals written into law through the TCJA are currently set to expire after 2025. The president hasn’t outlined any plans to revisit those, but stay tuned, as they’re bound to be on his agenda.
Capital gains tax: Trump has already been vocal about cutting long-term capital gains taxes in his second term to 15 percent, according to a mid-August appearance on Fox Business. The tax on investors who’ve made a profit by selling assets such as stocks or real estate are currently either 0 percent, 15 percent or 20 percent, depending on income, with the highest earners charged an additional 3.8 percent levy. The highest rate of 20 percent falls on the highest earners (those making over $441,450 for single filers or over $496,600 for married filers). Details are scarce on whether Trump’s proposed capital gains cut would shift rates for earners across the board or just the top-line rate. Also unclear is whether that 3.8 percent tax would be adjusted.
The president has also been reportedly considering indexing the capital gains tax to inflation, according to a news conference from mid-August. Such an approach would mean that the IRS would adjust profits for inflation before determining how much they’re to be taxed.
Tax credits: Most recently, Trump outlined other broad-stroking policy proposals at the Republican National Convention in August, which listed plans to enact tax cuts that would “boost take-home pay.” Trump wants to create a “Made in America” tax credit. Details on both of these proposals are thin and eligibility is unspecified. As part of his coronavirus response, the president explored a tax credit for travel within the U.S.
Bottom line: Trump has argued that reducing taxes will free up more money for Americans to spend, stimulating the economy. He also reckons that corporate tax cuts will wind up increasing workers’ take-home pay. While it did keep the wind in the U.S. economy’s sails throughout 2018 (though it wasn’t a record year), wages failed to pick up substantially, showing that many workers didn’t get to pocket that freed up cash. Experts also criticized the TCJA for disproportionately aiding the wealthy while also contributing to a gaping budget deficit that’s only been exacerbated by spending to blunt the pandemic’s devastation.
Biden’s tax policy
Biden seems to be taking aim at the TCJA for his main tax policy goal, followed by plans to increase capital gains tax rates and eliminate a “step up in basis” workaround. That’s going to be crucial to fund the $3.2 trillion in new policies that he’s proposed so far, $1.7 trillion of it coming for climate and infrastructure plans, while $750 billion would be allocated toward health care and another $750 billion toward higher education.
Taxes for everyday Americans: Most notably, Biden has spoken out against Trump’s TCJA, reportedly telling donors in late June that he planned to repeal “the bulk” of the program, according to CNBC. Part of those plans include restoring the top-line tax rate of 37 percent to 39.6 percent, which would only likely impact those earning more than $400,000 a year, Biden claims. As of 2020 (taxes due in 2021), single filers earning $518,401 or higher and married filers earning more than $622,051 are currently taxed at the top-line rate of 37 percent. Biden, diverging from his predecessors such as Sens. Bernie Sanders and Elizabeth Warren, has rejected calls for instituting a wealth tax.
Capital gains tax: Biden has been vocal about plans to adjust how capital gains taxes work and has plans to increase them — at least for some of the country’s highest earners. Currently, capital gains taxes are broken up into two categories: long-term gains and short-term gains. Short-term capital gains taxes apply to assets bought and sold within a year, and they’re taxed similarly to income using federal tax brackets. Long-term capital gains taxes apply to assets sold after more than a year, and those taxes have the 0 percent floor and 20 percent ceiling that Trump is reportedly planning to adjust.
Under Biden’s proposal, if you make more than $1 million annually, your investment profits would be taxed as normal income, regardless of whether it’s a short- or long-term investment. Such a change would mean that the long-term capital gains tax rate would increase for the wealthiest investors from 23.8 percent to 43.4 percent (adding the additional 3.8 percent levy to the top-line income tax rate of 39.6 percent). Biden also reportedly wants to eliminate what’s called a “step-up in basis” that allows descendants to pass capital gains to heirs without taxing them.
Research from the Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT) suggests that individuals can time when they sell their capital gains to reduce how much they owe in taxes. It means that a move might not generate as much revenue as Biden thinks, with the Tax Foundation estimating those top-line changes could result in a loss of about $2 billion a year.
Tax credits: Of the tax credits most likely to impact your wallet, Biden has been most vocal about one that families with children up to 13 years in age could use to subsidize half of their child care costs, as long as it doesn’t exceed $8,000 (or $16,000 for two or more children). Families making less than $125,000 annually would be eligible for the full 50 percent credit. After that threshold, a partial credit would be available to individuals whose incomes come in under $400,000.
Biden has also proposed providing small businesses with tax credits for establishing a retirement savings plan for their employees, a $5,000 tax credit for informal caregivers and expanding the Earned Income Tax Credit (EITC) to include workers older than age 65, who are currently excluded.
Bottom line: Biden’s tax proposals are necessary to fund his other proposals, and they would bring in about $3.35 trillion to $3.67 trillion, according to the Committee for a Responsible Federal Budget. But they would modestly weigh on growth, with higher taxes preventing some companies from hiring, expanding and investing more. The Tax Foundation’s General Equilibrium Model estimates that Biden’s corporate tax changes, for example, would cause employment to fall by 236,000 jobs, wages to shrink by 1 percent and economic output by 1.3 percent.
Security has been a hot button issue and is bound to be an area of focus for many voters, given just how rapidly the population is aging and how many Americans rely on the entitlement program.
The Congressional Budget Office estimates the number of people who will be age 65 or older is expected increase by 37 percent over the next decade and 76 percent over the next 25 years.
Social Security is facing shortfalls that could leave part of its funding source insolvent by 2035, meaning workers would receive only about 79 percent of their benefits if the issue isn’t addressed, according to a report from the Social Security Administration. The Social Security Trustees project estimates that unfunded obligations over the next 75 years will swell to $16.8 trillion, up from the $13.9 trillion estimate a year ago.
Whichever candidate occupies the Oval Office will be tasked with fixing the system.
Trump’s Social Security policy
A major talking point for Trump in 2016 was a pledge to leave Social Security alone. But with the president’s preference to scale back payroll taxes, Trump could put the entitlement program in an even more precarious position.
Though the president hasn’t said much specifically about his plans for Social Security in a second term, he’s mentioned in remarks that he might have to look at cuts to entitlement programs. The Trump administration’s fiscal year 2021 budget also proposed trimming the Social Security Disability Insurance (SSDI) program, as well as cuts to Medicare and Medicaid.
Trump’s views about Social Security have also diverged drastically over the years, at one point calling to privatize the program and tax the wealthy in his 2000 book “The America We Deserve.”
Payroll taxes: Details haven’t been released about how much Trump prefers to cut payroll taxes, but the president’s August 8 executive order might be an indication of how much they’d be reduced. About 89 percent of Social Security funds in 2019 came from payroll taxes, meaning any cuts would be detrimental to the entitlement program if the president doesn’t propose beefing up another revenue stream. The Committee for a Responsible Federal Budget estimates that could interrupt about $100 billion in revenue, if the cut indeed takes place.
Trust fund solvency plans: Trump hasn’t specifically addressed the solvency issue or made known any plans to address revenue shortfalls, nor has his administration identified any immediate fixes to the problem while in the White House. He has, however, argued that the TCJA would indirectly help Social Security by boosting the economy, thereby creating jobs and lifting wages, which theoretically could lead to more payroll tax (and therefore, higher revenues). Payroll taxes did increase by 6 percent between 2018 and 2019, according to CBO, but over time that isn’t likely to be enough to offset the depleting trust fund.
Bottom line: While not making outright cuts to Social Security, Trump’s stance on payroll taxes would put the Social Security system in a tough spot, jeopardizing his pledge to leave the system alone.
Biden’s Social Security policy
Biden also has a tricky record when it comes to Social Security, and in the early 1980s advocated for a plan to fix a gaping budget deficit that included freezing Social Security spending, among other programs.
Payroll taxes: Biden’s main approach to payroll taxes seems to be implementing the 12.4 percent Old-Age, Survivors and Disability Insurance (Social Security) payroll tax on wages that make above $400,000, which would be evenly split by the employee and the employer. That still, however, leaves a significant chunk of lost revenue, given that the tax is currently capped at $137,700 and appears to leave “a donut hole,” with other earners untouched until their salary reaches $400,000.
Trust fund solvency plans: That approach also appears to Biden’s main plan at fixing the solvency issues. Biden has also been explicit about rejecting privatizing Social Security as another way of fixing the program and is pledging not to pursue “means-testing”.
New programs: Biden’s plans for Social Security also include providing the country’s oldest Americans with a higher benefit if they’ve been making payments for at least 20 years, though how much that would be isn’t specified. That could help address the pervasive issue that poverty levels rise with age.
Drawing off a similar plan floated by Sen. Warren, Biden is also proposing offering Americans who’ve worked for at least 30 years a benefit that’s 125 percent of the federal poverty level. That would be a monthly benefit of $1,329.17 in 2020, about $456 more than where lifetime low earners’ minimum benefit currently stands. That increase could potentially pull about half a million seniors out of poverty by 2030, according to a MarketWatch analysis. Social Security is currently set up to reward the highest earners with the highest payouts.
For teachers or other public-sector workers who’ve switched jobs, Biden would reportedly eliminate penalties that ensure teachers ineligible for Social Security receive their benefits sooner, rather than having to wait 10 years. It would also get rid of benefit cuts for workers and their surviving beneficiaries who would be covered by both Social Security and another pension.
Cost-of-living adjustment: Biden reportedly wants to use the consumer price index for the elderly (CPI-E) when determining the annual cost-of-living adjustment, which tracks inflation on a typical basket of goods important to the senior population. This index grows faster than most other inflation measures.
Bottom line: Biden’s payroll tax increases would supposedly only affect your wallet if you make more than $400,000, but it would be necessary to help fund his other progressive retirement proposals, though some analysts say it might not be enough. A University of Pennsylvania analysis estimates those hikes would reduce the imbalance by 1.5 percent but still leave a shortfall.
Health care took the spotlight in the Democratic debates in late 2019. Meanwhile, the Republican party isn’t traditionally focused on health care, but Trump reportedly wants to take it in that direction.
A 2019 Bankrate survey found that health care was the third most important issue for voters, behind immigration, while an August Pew Research poll found that more than two-thirds of voters say it’s “very important” to their vote, the second biggest issue behind the U.S. economy.
Trump’s health care policy
Trump is largely aligned with the Republican Party when it comes to repealing President Barack Obama’s Affordable Care Act (ACA), mainly on the party’s broad belief that the government should stay out of health care and give consumers more autonomy in choosing their coverage options.
Trump has broadly listed his health care goals during a second term as cutting prescription drug prices, putting patients and doctors in charge of health care, lowering insurance premiums and ending surprise billing.
Obamacare: Repealing and replacing the ACA has always been Trump’s mantra. The Trump administration through the TCJA most notably eliminated the individual mandate — a fee that’s charged to those who go without insurance — and halted billions of dollars in payments to insurance providers that are used to help compensate them for covering more expensive, sicker patients. The American Health Care Act of 2017 also repealed many of Obamacare’s tax increases, subsidies, penalties and mandates. Meanwhile, Trump has promised his own version of the health care program, but so far, that hasn’t come to fruition.
Prescription drug prices: So far, most of Trump’s health care policies have been aimed at curbing rising drug prices. The president in July signed four executive orders aimed at reducing prescription drug prices, though the full text of those orders hasn’t been released, leading some experts to wonder whether it was only meant to get drug companies to concede. The Trump administration also took a unique step for its party by recommending increased federal scrutiny of hospital mergers that in some cases has been known to drive up drug prices, though some Democrats want to see more. The president has also tried to address prescription drug prices by encouraging Americans to shop around.
Health savings accounts: Trump has been in favor of expanding health savings accounts (HSAs) that could help address high deductibles. A 120-page joint Labor Department, Treasury and Health and Human Services document recommends boosting contribution limits and opening them up to individuals who aren’t enrolled in a High Deductible Health Plan (HDHP).
Bottom line: Trump’s health care plans are scarce, though his views don’t seem to diverge too much from the GOP. Though his plans are designed to pull government regulation out of health care and increase individual choice and autonomy, experts say his plans might make it harder for low- and middle-income Americans to get affordable coverage.
Biden’s health care policy
Biden’s health care plans vows to bring back a public health insurance option similar to Obamacare, though he’s crafting his own version.
Affordable Care Act: Biden wants to reportedly use an executive order to bring back the individual mandate that Trump repealed and then build on the Affordable Care Act by creating a public health insurance option similar to Medicare. Americans would still be able to choose their health care provider or another insurance program that’s available to them, whether it’s from their employer or one that they purchased. On the plan, Americans wouldn’t have to pay a copay on primary care and Americans wouldn’t spend more than 8.5 percent of their income on coverage. Similar to Medicare, this insurance option reportedly plans to negotiate with hospitals and providers directly for lower prices.
Prescription drug prices: Biden also listed plans to help lower prescription drug prices, which include allowing American consumers to buy prescription drugs from other countries. Biden is also pledging to limit price increases that exceed overall inflation rate on all “brand, biotech and abusively priced generic drugs,” and will appoint the Secretary of Health and Human Services to launch a review board that would assess the value of a drug coming onto market that doesn’t have much competition, terminate pharmaceutical companies’ advertising tax breaks, among other steps.
Bottom line: While Biden’s health care plan would help tackle affordability issues, it will come with a heavy price tag. The Committee for a Responsible Federal Budget estimates that his plan would cost $2.25 trillion, considerably higher than Biden’s provided $750 billion price tag, and could add $800 billion to the budget deficit, with other forecasts ranging higher and lower.
Younger voters are probably more inclined to look at a candidate’s student loan policy, given that outstanding education debt has surpassed $1.6 trillion.
Trump’s student loan debt policy
Trump’s most notable student loan policy is likely two coronavirus-driven executive orders that delayed federal student loan payments and interest starting in mid-March through the rest of 2020. But the Trump-era Department of Education, led by Secretary Betsy DeVos, has come under fire throughout the past three and a half years for not doing enough to provide students with needed support.
While Trump’s comments regarding student loan policy priorities in his second term have been minimal, we can use his past three and a half years as a guide for where he may stand, most of which comes from his fiscal year 2021 budget proposal, which cut the Department of Education funding by $5.6 billion.
Student loan payments: Trump proposed consolidating five income-driven repayment plan programs into one system that would base each payment on 12.5 percent of an individual’s discretionary income. His administration also proposed offering one loan option to each type of borrower. The proposal eliminates the subsidized Federal Stafford loan program to undergraduates, where the government pays interest during in-school and deferment periods, as well as in grace periods. Instead, undergraduates would see their loans consolidated into the Unsubsidized Stafford program, graduate students into Graduate PLUS loans and parents into the Parent PLUS loan program. Of course, these policies wouldn’t apply to existing loans. Trump also reportedly discussed capping the amount that students can take out in loans based on the expected future income for their field.
Public Service Loan Forgiveness program: The Trump administration’s 2021 budget proposed getting rid of the Public Service Loan Forgiveness program that cancels student loan debt for those who work for nonprofits, in public service or for government organizations, after they’ve made 120 qualifying monthly payments. Trump and DeVos have long been critics of the program, citing priorities of balancing students’ needs with taxpayers’ priorities and not favoring one type of work over another. Trump did, however, want to retain the option for teachers.
Debt cancellation: Trump also wanted to revamp a debt cancellation program for low-income individuals. In Trump’s 2021 budget, he proposed creating one income-based payment plan where borrowers would see their outstanding loan balance forgiven after a certain amount of time (15 years for undergraduates and 30 years for graduates). Right now, it takes undergraduates and graduates 20 and 25 years, respectively, to pay off those loans, on five different income-driven repayment plans. It isn’t specified if individuals would still have to pay income taxes on the amount that was forgiven.
Pell Grants: Trump’s 2021 budget proposal sought to expand Pell Grant eligibility to students enrolled in short-term programs that lead to a credential, certification or license in a “high-demand field.” The Trump administration also proposed eliminating the Federal Supplemental Educational Opportunity Grant program.
Rolling back Obama-era regulations: Trump and DeVos most notably challenged an Obama-era Borrower Defense regulation that canceled loans for students defrauded by colleges, most notably by for-profit institutions. Under the new rules, students have to abide by stricter standards that would involve proving a college had made a false statement with knowledge that it was deceptive and that the student had relied on that false claim when making their borrowing decisions.
Lending standards: The Trump administration in 2019 also considered limiting the amount of student loans borrowers can take out, what Vox has called a big priority for the Trump administration. The administration’s 2021 fiscal year budget also proposed capping Federal Parent PLUS and Federal Grad PLUS loan limits.
Bottom line: While the system has been criticized for being overly complicated, some experts worry that consolidating loan options and limiting borrowing amounts may hinder low-income individuals’ chance at securing a loan.
Biden’s student loan debt policy
According to Biden’s plans for higher education, the candidate would enact legislation that makes community college or another high quality career training program tuition free through a jointly funded federal-state partnership. When it comes to four-year degrees, Biden wants to make public colleges and universities tuition free exclusively for families whose incomes fall below $125,000.
Similar to Biden’s college affordability stance, the Democratic nominee has shifted his student loan policies to a much more progressive stance, mirroring Warren and Sanders, though don’t expect college debt to be canceled across the board.
Student loan payments: Biden is making a campaign promise that would entail exempting individuals who earn $25,000 or less a year from having to owe payments on their undergraduate federal student loans. Under this plan, interest would also not continue to accrue. Everyone else would pay 5 percent of their discretionary income toward their student loans, and after 20 years, the remainder of the loan would be forgiven. Individuals with new and existing loans would be automatically enrolled in this income-based repayment plan. Biden says he would also change the tax code so that the forgiven debt wouldn’t be taxed. Another joint Biden-Sanders plan is pushing for up to $10,000 in student loan debt relief to help families weather the financial hardship from the coronavirus crisis.
Public Service Loan Forgiveness program: Biden wants to create a program that would provide $10,000 in student loan debt relief for every year a borrower works in national or community service, up to five years. Individuals who work in schools, governments or non-profits would be automatically enrolled in that forgiveness program, including adjunct professors, and up to five years of national or community service would qualify.
Debt cancellation: Biden’s plans include a push for passage of the What You Can Do For Your Country Act of 2019, which would allow for direct loan borrowers to have their balances forgiven after working for a federal, state, local or tribal government or another nonprofit organization for 10 years.
Pell Grants: Biden wants to enact legislation that would allow recipients to use their Pell Grants, state aid and other types of aid to cover education costs beyond tuition and fees, such as rent, housing, food and textbooks. Biden also wants to double the maximum value of the Pell Grant, which he argues would expand eligibility to more middle-class students and increase the grant value for individuals.
Forgive loans in bankruptcy: Biden proposes allowing private loan borrowers to discharge their debt in bankruptcy. In mid-March, Biden also endorsed Warren’s bankruptcy reform legislation that would grant the same option to federal borrowers.
Lending standards: Biden so far hasn’t proposed anything that would crack down on the federal lending standards that include a minimal credit check and no consideration of a borrower’s ability to repay. Some studies argue that it’s contributed to the rapid rise in tuition costs.
Bottom line: Biden’s plan to make college free for some university attendees, as well as community college-goers, would only apply to students going forward after the date it is passed. Meanwhile, making college free and canceling student loan debt does come with a price tag, and experts have long pointed to extreme hurdles for getting this legislation passed.
Thumbnails by Tasos Katopodis via Getty Images & Kelsey J via Shutterstock