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At first glance, Trump policies to put more cash in wallets


Bill Van Sant, a managing director for Girard Partners, a Univest Wealth Management Firm, was featured in the Lehigh Valley Business Journal

January 2, 2017
By Bill Van Sant, Girard Partners, a Univest Wealth Management Firm

With Donald Trump’s inauguration speech just weeks away, the American public is scrambling to discern how his presidency will affect their investments, annual income and daily finances.

Since Election Day in November, Trump has continued to dominate headlines with his Cabinet nominees and ever-present tweeting. Judging by his rhetoric so far, it appears he plans to shake things up while in the Oval Office.

However, his tone has somewhat softened when it comes to his prior comments about repealing the Affordable Care Act, terminating the North American Free Trade Agreement and deporting all illegal immigrants. Trump also has said he will alter policies around tax plans, free trade and more, but important specifics are still missing from these plans.

Trying to figure out every impact of a Trump presidency has left pundits and the general public in a tizzy, but there appear to be a few key areas where his presidency could affect your wallet.

Trump has spoken at length about simplifying the tax code by reducing the number of tax brackets from seven to three. While the Trump administration is still ironing out the details, the final product likely will put more cash in consumers’ pockets.

For example, under the existing tax code, married couples filing a joint return reporting less than $75,000 in annual income pay roughly 15 percent in taxes. If all else held equal, this same household would pay only 12 percent under Trump’s proposal.

The plan also would reduce the tax rate to zero for joint filers making less than $30,000.

Trump’s proposal also could help those with student loan debt. While the details are still taking shape, the new policy would forgive student loans after 15 years of payment, as opposed to today’s 20-year threshold.

In Trump’s outline of his first 100 days in office, he proposes an American Energy & Infrastructure Act that promises to spur $1 trillion in infrastructure investments by leveraging “public-private partnerships and private investments through tax incentives.”

Should this policy reach just a fraction of this goal, it could put thousands of Americans to work. Obviously, this would vastly increase the disposable income of folks around the country who otherwise would be out of work.

Since Election Day, the stock market has largely benefited from Trump’s pro-growth economic rhetoric. His plan to lower corporate taxes also boosted the market’s expectations for future earnings. Heightened investment in infrastructure could also benefit stock market performance.

Keep in mind, these developments must be analyzed in proper context. The U.S. is entering its eighth consecutive year of economic expansion, the stock market has reached all-time highs and the unemployment rate continues to drop.

In the past, this combination of conditions has led to a slight regression when it comes to economic growth. While Trump’s policies theoretically promote further expansion, the existing economic backdrop could potentially prevent the positive effects from shining through as brightly as expected.

The incoming president also spoke at length about trade deals with foreign nations and imposing higher taxes on imported goods.

Merchants paying higher amounts to buy goods overseas likely will transfer these costs onto customers in the form of higher retail prices – which ultimately will result in less money in consumers’ wallets.

When it comes to your wallet, there are several expected pros and cons associated with a Trump presidency, but the net impact of his policies is yet to be determined.

It is still too early to know exactly what a Trump presidency will look like and how employers, the economy and financial markets will respond.

Until then, it’s just speculation based on rhetoric from Trump and his Cabinet nominees.

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Investments offered by Girard Partners, a Univest Wealth Management Firm, are not FDIC insured, are not a deposit of or bank guaranteed, and are subject to risks, including loss of principal amount invested.

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