5 Reasons You Can Be Denied a Loan or Credit Card
With a new year and a new President upon us, the prevailing question on everyone's mind is: what could a new president mean for me financially? As President Biden transitions into the White House and unveils his economic platform, we offer some assessments on how critical components of his platform may influence you financially.
Biden Stimulus Plan
The prevailing issue on everyone's mind relative to the events of 2020 is the extent of the proposed stimulus plan. The American Rescue Plan is a $ 1.9 trillion proposal that includes 1 trillion in direct, $1,400 checks to individual households, $400 billion in public health assistance, such as vaccine distribution, that includes funding to facilitate reopening schools, and $450 billion to assist municipalities retain front-line workers and improve cybersecurity.
Depending on how you were affected during the pandemic, the proposal would bring some additional financial assistance through the stimulus checks and, depending on eligibility, assistance through rent forgiveness or utilities. Likewise, reopening schools and funding to local governments not only helps those who work directly in those sectors directly but also allows local economies to expand given how important these services are to facilitating the overall economy. If this plan is approved, it could have ripple effects throughout the whole economy, as spending would increase as a result.
The issue on everyone's when a new president arrives is how taxes will change. This is a critical issue for the Biden presidency, given his tax proposals. President Biden has proposed raising the tax rate for wage earners over 170K a year to 39.6%, increase capital gains taxes for those earning over 1 million a year and apply a payroll social security tax for those earning over 400k a year. Further, he proposes to raise the corporate income tax to 28% and tax foreign subsidiaries at 21%. Depending on your tax bracket, unless you are in the top tax tier or you own a lucrative company, you will most likely not be affected by any tax increases. If anything, his tax proposals include expanding the Earned Income tax credit as well as the low-income housing tax credit, which relates more to low-income earners. The only concern that increased taxation may yield is that companies may continue to shift work overseas, which may could affect those employed in those sectors.
Increasing minimum wage and eliminating student loan debt
Among the more controversial considerations of the new economic plan are President Biden's proposals to increase the minimum wage and to forgive student loan debt. Student loan debt would be forgiven for all undergraduate, tuition-related, federally issued debt for those who earn less than $125,000 a year. This forgiveness applies to students attending 2 and 4-year colleges, which may limit the application to those who are attending trade schools or other post-secondary institutions. If you have children who are going to college or are paying student loans yourself, the proposal would provide a substantial financial relief relative to the loan-related expenses.
The proposed raise to the minimum wage is slightly more controversial relative to the overall effects it could have for the economy. Biden has proposed raising the minimum wage to 15$ in addition to instituting more collective bargaining power for various employees. While the proposed minimum wage would immediately affect low-income workers, who were restricted to the previous state minimum wages, there is always the concern for small-business owners with how the increase in payroll would affect one's balance. Interestingly, studies have been done that suggest that a higher minimum wage improves worker performance and retention, so if you happen to be in a field such as hospitality, landscaping or even food service where the minimum-wage is the norm, the potential change may improve overall earnings relative to reduced job-searching fees.
Jobs investment and healthcare
President Biden has repeatedly proposed his commitment to boosting the American economy through a commitment to local investment, job creation and improving the healthcare system. The president has proposed a 700$ billion investment in American technology production and research, citing the performance of American goods as necessary to boosting the economy overall. For those in the technology and manufacturing sectors, the investment could have a pronounced impact on earnings as well as share prices for respective companies.
Biden has also proposed a 1.3$ trillion investment in infrastructure improvement. The focus will be on improving roads, bridges, and ports as well as airports and broadband service to facilitate and ensure a logistical network that meets modern demands. Whether you're a commuter, an employer or running an international logistics network, any improvement in infrastructure is welcome and necessary f or improving output.
Healthcare is always a concern, and the Biden presidency seeks to address this issue more thoroughly. Biden wishes to revert to Obamacare and seeks 97% insurance coverage for Americans while also providing a premium-free, public health coverage option for individuals. Biden has also proposed lowering the Medicare start age to 60 and lowering employees health plan contribution to 8.5%, measures that would help to improve coverage and decrease employee costs. Of course, the increase coverage and decreased costs would have ripple effects on employers and taxpayers in order to fund these programs.
Environmental economic investment
Amid the various nuances of Biden's proposal, he has also urged greater investment in sustainable development and clean energy. Biden has urged the rejoining of the Paris climate change agreement as well as a 2$ trillion investment in solar, wind, hydro and nuclear developments as well as increased regulations for greenhouse gas emissions, increased investment in electric cars and greater implementation of sustainable building practices. All of this investment is in hopes of increasing sustainable resource management as well as increasing the jobs related to these industries. For those working in these industries, the investment could be a boon for growth and development; likewise, investing in sustainable energy could potentially earn greater returns.
It's difficult to pinpoint exactly what a new president could mean for me financially. Proposals are merely speculative and require congressional approval, and there is a substantial amount of funding that occurs through the increase of national debt versus relying on increased tax revenue. Debt creates its own considerations, particularly regarding foreign investment and interest rates. Similarly, taxation is always a slippery slope, as higher taxes can often drive out investment rather than accumulate funds. For the working class and middle-class employee or the small business owner, even the day trader or sustainably inclined private investor, Biden's economic proposals could lead to an increase in growth and increased returns. Many are waiting with bated breath to see how these policies will unfold regarding the coronavirus response, stimulus plan and healthcare investment. Of course, every presidency is a test of faith and uncertainty. Now that a new president is in office, we'll all have to wait and see how we'll be affected financially.