Trump’s Presidency: 4 Potential Economic Laws the Middle Class Should Be Wary of This Year
Written by
Kerra Bolton
Edited by
Zuri Anderson
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A president’s economic policies could make or break middle-class families’ wallets. Changes in tax laws, trade policies and social programs can either ease financial burdens or make it harder for families to save, invest and afford everyday items.
6 Bills That Could Skyrocket With Trump as President
With Donald Trump as president again, here are four potential economic laws the middle class should be wary of this year.
Increased Tariffs
As we reported, Trump’s planned tariffs on Canada, Mexico and China are now in effect.
“Tariffs are a powerful, proven source of leverage for protecting the national interest. President Trump is using the tools at hand and taking decisive action that puts Americans’ safety and our national security first,” administration officials explained.
However, Wayne Winegarden, an economist at the Pacific Research Institute, said the tariffs also come with trade-offs that affect the middle class, especially in the steel industry.
“In this case, the tariffs created some jobs in the steel-making industries, but cost far more jobs in the manufacture of products that use steel, such as cars,” Winegarden said. “Also, middle class families are harmed because tariffs increase the costs of goods and services and further increase the cost of living.”
Tax Policies Favoring Wealthy Households
One of Trump’s signature proposals is to extend and expand the Tax Cuts and Jobs Act that was enacted during his first term.
For middle-class families, the changes lowered tax rates, doubled the standard deduction and reduced their tax bill. However, these tax cuts were also smaller than those that higher-income households and businesses received. For example, business owners, including sole proprietors, LLCs and partnerships, also get a 20% deduction on qualified income.
The middle-class tax cuts were also temporary compared to corporate tax reductions. Many of the tax cuts that middle-class families received are scheduled to expire after this year unless Congress decides to continue them, while the corporate tax rate was permanently dropped from 35% to 21%.
Lowering the State and Local Tax (SALT) deduction disproportionately affects middle-class taxpayers because it limits how much they can deduct from their tax bill.
“Trump’s tax reforms, such as reducing the state and local tax (SALT) deductions, could primarily hurt middle-income households by increasing their tax burden,” said Christopher Stroup, CEO and founder of Silicon Beach Financial.
“This is especially true for those in high-tax states like New York or California. These changes will diminish the deductions available to homeowners and families.”
Business Deregulation
Financial experts are split on the impact of Trump’s vow to deregulate businesses, particularly in the financial sector.
Winegarden said the current business regulatory environment hurts middle-class families by making it harder to get credit and contributing to the affordable housing shortage.
However, both Winegarden and Stroup agreed that Trump’s business deregulation stance has significant downsides for middle-class families.
“Deregulations in housing and banking, such as loosening lending standards or weakening consumer protections, could increase risky mortgages, higher-interest loans or result in predatory lending,” Stroup said. “Together, these changes will make it harder for the middle class to secure affordable credit.”
Hands-Off Policy on Social Security
During his successful second presidential bid, Trump said in an AARP interview that the future of Social Security would be protected through strengthening the country’s economic growth.
“I’m going to do nothing to Social Security,” the president said.
However, the federal entitlement program faces a shortfall in less than a decade unless the White House and president take action to shore up Social Security reserves.
“Without any changes, middle-class families will face large benefit cuts,” Winegarden said. “Therefore, doing nothing is actually allowing future benefit cuts to happen. Doing nothing is, consequently, harming middle-class families.”
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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