Trump Says Our Economy Is ‘Shattered’ — 3 Changes He’s Proposing That Could Impact Your Wallet
Written by
Vance Cariaga
Edited by
Daria Uhlig
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In an X (formerly Twitter) post dated August 12, ex-President Donald Trump wrote: “Are you better off now than you were when I was president? Our economy is shattered. Our border has been erased. We’re a nation in decline. Make the American Dream AFFORDABLE again. Make America SAFE again. Make America GREAT Again!”
There’s nothing surprising about Trump lashing out at the Biden economy — he’s been doing that almost since the day President Joe Biden took office. Even though Biden has stepped aside as the Democratic nominee and Vice President Kamala Harris has taken his place, Trump still blasts the economy in his quest to win a second term. That’s the case even though the Biden economy has outperformed the Trump economy in some areas.
As previously reported by GOBankingRates, a recent analysis from Forbes found that the nation’s real gross domestic product (which accounts for inflation) grew at an annualized rate of 2.7% during Trump’s first three years vs. 3.5% during Biden’s. For Trump’s full term, the annualized growth rate was only 1.4%, weighed down by the COVID impact. Growth under Biden has outpaced that so far.
Stock markets performed better under Trump, and inflation was lower, according to Forbes. But job growth has been better under Biden.
Extension of the TCJA
The biggest piece of tax legislation passed during Trump’s presidency was the 2017 Tax Cuts and Jobs Act (TCJA), which eliminated the personal exemption but increased the standard deduction, lowered corporate and estate tax rates and increased the child tax credit. Those cuts are set to expire at the end of 2025. While Harris has expressed support for the expanded child tax credit, she is unlikely to extend the corporate rates and other aspects of the TCJA if she wins. Trump almost certainly will extend the TCJA if he returns to the White House.
Although some critics say the TCJA mainly benefited the wealthy by permanently reducing the corporate income tax rate from 35% to 21%, the law did have a positive tax impact on middle- and lower-income earners. One of its key features was reducing the marginal tax rates for most tax brackets. Those in the lowest tax bracket still pay 10% under the TCJA, but those in the second pay 12% rather than 15%. Those in the third bracket pay 22% instead of 25%, while those in the fourth bracket pay 24% rather than 28%.
Even More Tax Reductions
If Trump is elected for a second term, it could have an impact on how Americans are taxed beyond just the TCJA. In a recent interview with GOBankingRates, political economist Chuck Warren said Trump has already expressed an interest in cutting taxes even more should he return to the White House.
“These [tax changes] could include modifications of brackets, more deductions, or credits specifically aimed at reducing the tax burden on middle-income earners,” Warren said.
Trump has even floated the idea of eliminating income taxes altogether and replacing them with an “all tariff” policy to fund the government. Getting such a policy approved by Congress is a long shot, however.
Higher Tariffs, Higher Prices?
Speaking of tariffs — one of the cornerstones of Trump’s economic program is to impose strict tariffs on imported goods as a way of protecting U.S. manufacturing. If re-elected, he’s likely to double down on protectionist policies, including 10% on all imports and 60% on Chinese goods.
This could lead to more and better paying U.S. manufacturing jobs, some experts say. But it could also lead to higher prices on consumer goods that are much cheaper to source from overseas. During his term, Trump proposed a 25% tariff on all consumer goods from China that would have raised the prices of these goods by $38.2 billion a year, according to an analysis by the American Action Forum.
Editor’s note on election 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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