What the economy might look like for people of color under a Trump presidency
As an addition to one of my previous articles, How the economy might look for people of color under a Clinton presidency, I have decided to look at another alternative scenario. In this particular reality, we will be examining and analyzing how the economy might look for people of color under a Trump presidency, given that there is a tangible likelihood that this could materialize. Because the population is comprised of a significant number of people of color, this election is going to be pivotal for the economic situation of many Americans thus illustrating how important it is to be informed about the potential benefits or consequences of a new administration coming to office.
It is also very crucial to understand every perspective that is being offered, not just in the elections, but in real life as well. Too often we find ourselves blinded by our own bias that we refuse to appreciate other viewpoints, no matter how contentious or distasteful they may be. Not only detrimental to our own personal growth, prematurely dismissing other ideologies or perspectives will limit the effectiveness of this democracy that we live in by undermining the concept of discourse. Having established this fact, let’s take a look at what some of the economic policies Trump would implement in the event that he becomes the next President of the United States.
As opposed to Hilary Clinton’s tax proposals, which some could argue isn’t that revolutionary in that it doesn’t alter the tax code too drastically, Donald Trump’s tax policies would have a massive effect on the incomes of middle class and lower class people. Trump has proposed the following changes:
· The reduction of tax brackets from seven to three with the tax rates being reduced to 12%, 25%, and 33%
o Here is a snapshot of what the tax brackets would look like for Married Joint Filers:
§ Less than $75,000: 12%
§ More than $75,000 but less than $225,000: 25%
§ More than $225,000: 33%
· A 35% decrease in the tax bill for a married couple earning $50,000 per year with two children and $8,000 in child care expenses.
· A 30% reduction in the tax bill for a married couple earning $75,000 per year with two children and $10,000 in child care expenses
· The reduction in business tax from the current 35% to 15%, including a 10 percent tax on funds that are being repatriated from overseas accounts
· Additionally, individuals who are “low-income” will have an effective tax rate of 0 percent
As of today, married joint filers who earn around $75,000 pay a rate of 25% meaning that they will receive a 12% reduction in their taxes under Donald Trump’s economic plan. Couples that earn $75,000 to $225,000 under today’s system will receive a 3% decrease in their taxes as well. For upper-class earners, people who earn more than $225,000 or more, they will see a decrease in taxes from 39.6% to around 33%.
Based on the tax proposals that Trump has laid forth, it is unequivocal to state that it will help the financial situation of Americans. The question that we are concerned with, however, is how will this affect people of color? In order to do this, we must look at the population as a whole based on different cross-sections of the population.
Recent data suggests that the average “real median household income” of African Americans and Hispanics in the United States is $33,000 and $51,000, respectfully. Having said that, this would mean that the average minority family would be some of the largest beneficiaries under Trump’s proposed tax plan given that they fall into the lower tax bracket. Based on U.S. Poverty Statistics data from 2016, 24.1% of African Americans, which equates to 10 million people, live in poverty while 21.4% of Hispanics, or 12.1 million people, also live in poverty. People of color disproportionately make up a large segment of individuals who live under the poverty level so they will ultimately be the ones who benefit the most from this seeing as Trump announced that people making a significantly low income will be exempt from paying any form of taxes. People of color would undoubtedly earn a substantial amount of money and would have less of a tax burden on them, which entails a variety of benefits for the national economy as well.
So, for the short-term, ordinary individuals, especially those that fall in the lower income brackets, will see a marketable increase in the amount of disposable income that they will earn every month. However, one of the major stipulations that must not be ignored with Trump’s tax plan is the fact that it is likely to come at a major cost to the overall health of the national economy. According to Forbes, it is estimated that Trump’s tax reductions are going to increase the national deficit by approximately $4.3 trillion over the course of the next 10 years.
Obviously, this spells trouble given that it will weaken financial institutions by placing the burden of debt on them in addition to causing the government to undergo a massive divestment to offset the massive costs incurred. Trump has given no indication that he will enact substantial spending cuts so it is likely that the national debt under his presidency would increase exponentially. Forbes has said that he wants to spend an additional $450 billion dollars for defense spending, implement a $50 billion paid maternity leave and a $550 billion childcare tax deduction plan.
We haven’t even taken into consideration the effect of his immigration plan that would directly impact the lives of 10s of millions of Latinos in America. His deportation plan to expatriate all illegal immigrants would ultimately decrease the workforce by 11 million current employees, which unsurprisingly, would reduce the GDP by $1.6 trillion dollars.
The current projections for Trump’s proposed economic policies, while slightly beneficial in the sense that it would increase the amount of disposable income for many low-income individuals through tax cuts, would indebt the country more than it already is. Many economists denounce Trump’s economic policies as being highly unrealistic and detrimental to the economy in both the short-term and the long-term. While he touts the fact that his policies will substantially lower income taxes for all, he largely brushes over the fact that it will also contribute to one of the largest increases in debt that the United States will ever have occurred.