5 ways Donald Trump’s victory could affect your wallet

Donald Trump has reclaimed the White House. After the highly anticipated general election, which was expected to be one of the closest in the country’s history, the GOP nominee sailed past the magic number of 270 electoral college votes, earning his ticket back to the White House.

While earlier polls indicated that a narrow margin would decide the election, Trump made history by becoming the first Republican to win the popular vote since George W. Bush in 2004. The main driving force behind Trump’s campaign was the economy, with his crucial promise being to “fix the nightmare of inflation,” which reached its highest level in the last 40 years. But how feasible are his proposals? We explain the Republican’s plans.

Tax cuts

Former President Donald Trump has outlined a series of bold tax policy proposals designed to reshape the country’s tax system.

A central aspect of his plan involves a significant reduction in the corporate tax rate, currently set at 21%. He has proposed lowering this rate to 15%. Critics contend that this rate is too low and could increase the country’s deficit if government spending is not reduced. Social programs may be at risk regarding spending cuts, especially considering decades of Republican policymaking have already weakened the country’s social safety net.

Eliminating taxes on Social Security

In addition to changes for corporations, Trump has proposed a controversial measure to alleviate the financial burden on senior citizens by eliminating Social Security taxes for this demographic altogether. Social Security, a critical program for millions of Americans, is primarily funded through payroll taxes from workers and employers. Removing Social Security taxes for seniors could lead to substantial underfunding of the program, jeopardizing its ability to provide benefits to current and future beneficiaries if the funding gap is not filled.

Eliminating taxes on tips

Moreover, Trump, alongside Vice President Kamala Harris, pledged to introduce legislation that would safeguard tipped workers from having their gratuities taxed. This proposal aims to ensure that those working in industries reliant on tips—such as restaurant staff, bartenders, and valets—can retain the total amount of their hard-earned income.

The possible impacts of these cuts

Although Trump’s ambitious proposals could significantly impact the tax system, he must provide a comprehensive plan outlining how these changes would be implemented. The absence of clarity regarding the mechanisms for enacting these tax reductions and the potential effects on programs like Social Security raises many unanswered questions about whether these tax cuts will increase the deficit. As a result, these proposals are likely to spark a vigorous debate among policymakers, economists, and citizens about balancing promoting economic growth through tax cuts and ensuring the sustainability of essential social safety nets.

Increase in tariffs

The President-Elect suggested that some of these cuts could be financed by increasing tariffs by up to 60% on products from China and 20% on those from other countries. In other words, consumers would pay higher prices for goods, which could fill some of the gaps created by some of the cuts outlined above. Although this increase would be applied to the company in charge of importing the products in question consumers would end up assuming the companies chose to pass that additional tax down to consumers. However, if consumers see higher prices, inflationary pressure could grow in the economy as price tags rise on essential goods.

Increased petroleum production

Under President Biden, petroleum production exploded and hit record levels. Donald Trump has said that he will further increase production in an effort to bring down energy costs, including prices at the pump. However, such efforts could lead to rapid increases in greenhouse gas emissions when huge areas of the country are still reeling from the impacts of natural disasters made worse by climate change and government inaction to prepare the country’s infrastructure for this new reality.