November 7/14, 2016: Volume 31, Number 11
By Steven Feldman
So how’s your November going? Pretty mundane, I know. Yeah, the Chicago Cubs won the World Series for the first time in 108 years, setting off what was arguably the biggest sports celebration in our lifetime. And yeah, we had that little thing called the Presidential election, where a man for the first time was voted to lead this country without any government or military experience, all the while trailing in just about every poll leading up to the election.
So the voters have spoken. What were they trying to say? My gut tells me the election results were a vote against something, not a vote for something. A rejection of Secretary Clinton, certainly. A rejection of the traditional political party machines. A rejection of the status quo.
Republican voters already rejected their own party when they nominated President-elect Trump last summer. The party has since splintered and spluttered and struggled to find its center.
But this election turned on states where the new economy has not arrived, where the manufacturing economy collapsed over the past three decades: Ohio, Michigan, Pennsylvania. Trump proved to be stronger in those states than any pollster predicted. And what does this say about the countless polls that simply got it all wrong?
Maybe this was a referendum on the state of the union. People seemed to say, “We are tired of Washington, D.C., we are tired of broken promises. We want wholesale change.”
What does this all mean for us? For business? I don’t know if anyone can say for sure, but here are some guesses broken down to its simplest form based on what I’ve read.
First, we know President-elect Trump wants to slash business taxes, eliminate Obamacare and curb illegal immigration. But he’s also called for increasing the standard deduction for middle-class earners. And he’s called for guaranteed paid leave for new mothers.
Taxes: A big part of Trump’s plan for boosting the economy has been to lower taxes. He would start by increasing the standard deduction (what you use when you don’t itemize) to $30,000 for joint filers, from $12,600 now—ensuring that families earning less than that would owe no income taxes.
To simplify the tax code, he wants to pare the current seven brackets, which range from 10% to 39.6%, to three. He also wants to cut the corporate tax rate from 35% to 15% and has floated the idea of applying that lower rate not just to large corporations but small business owners—including doctors, lawyers and even freelancers.
Under this scenario, middle-class earners—those making roughly $50,000 a year—would keep, on average, an extra $1,000 a year. By contrast, those who make $450,000 and up would get more than $100,000 on average.
Trade: A big part of Trump’s appeal was his promise to bring back middle-class manufacturing jobs that have been lost over the past generation. To do that, he aims to renegotiate trade deals like the Trans-Pacific Partnership (TPP) and impose a 45% tariff on Chinese imports and 35% on Mexican goods. That could have a huge impact on our industry and boost domestic manufacturing.
Healthcare: With premiums set to rise and some insurers leaving the market, Obamacare has had its share of problems. Trump believes the program should be dismantled.
As a partial substitute for a defunct Affordable Care Act, he would let you deduct health insurance premiums from your income taxes. In addition, Trump has argued that doctors and hospitals need to make prices more transparent so patients can more easily shop for the most cost-effective care.
Childcare and family benefits: To ease the burden once new moms return to work, Trump has also called for making childcare spending deductible, up to the average cost in each state. That deduction would be available to singles earning less than $250,000 and couples making less than $500,000. He also wants to add a new credit of $1,200 to the existing child tax credit. On the flip side, his maternity leave plan, paid through unemployment insurance, would offer relatively modest benefits of $300 a week on average—about one-third of U.S. median weekly earnings of $824.
As with most Presidential elections, about half the country wakes up unhappy the morning after. Only time will tell whether America got it right.