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How election results could impact your finances

WalletHub Senior Analyst Jill Gonzalez joins Yahoo Finance’s Kristin Myers to discuss the differences between what a Trump or a Biden presidency may mean for your wallet.

Video Transcript

KRISTiN MYERS: How will the results of the presidential election impact your wallet? Well, WalletHub has done the analysis for us, so let's go through it now with Jill Gonzalez, WalletHub senior analyst. Jill, thank you so much for joining us today. So let's start on personal taxes, because I'm sure a lot of people out there are particularly worried about how each of the presidential candidates are going to be impacting their wallets based on personal taxes.

I wonder if you can go through that. Essentially right now with Joe Biden, he's been in the press a lot lately because so many people are worried over the Biden tax plan, particularly impacting those that earn more than $400,000. So what's the real deal here on personal taxes under a Biden presidency?

JILL GONZALEZ: Yes, so Biden does plan to increase taxes up to about a 40% taxation rate for those making over $400,000. He plans to decrease tax rates for those making under the $400,000 level. So it's not a blanket kind of tax for everyone. There are changes for those people making less than that as well.

KRISTiN MYERS: So essentially however, I'm looking here, WalletHub has a nice little chart. Wondering, so it's actually staying roughly the same. Actually yes, exactly the same, right? So if you are earning anywhere up to that $400,000 level, it is staying exactly where it is right now. So you really only if you're 1.9% of people, roughly 2% of people earning over $400,000, you're not going to see your tax rate go up. And I'm seeing here, it only jumps by about 2 and 1/2% at the most upper bracket. Is that correct?

JILL GONZALEZ: That's correct. So there's been a huge deal kind of made about this and what seems to be leaps and bounds in this tax bracket specifically for, as you said, about 2% of Americans. But it's actually a very marginal change that will add a lot more tax revenue to kind of the bigger picture here to pay for some of these other changes, for a COVID-19 response. So not seeing a lot on the personal level. But actually adding up to a lot on the national level.

KRISTiN MYERS: And we're seeing almost $200 billion being added in projected impact on the tax revenue for 2021. Jill, I want to switch over to Donald Trump. We're seeing that if he becomes president, or stays president, rather, that the individual provisions of the Tax Cuts and Jobs Act would just remain until 2035. Does that mean folks are going to be receiving another tax cut? Or is it just going to be staying the same?

JILL GONZALEZ: We think it's going to be staying the same. So his exact wording in his plan is extended through 2035. We think that extended just means the same thing until that date, but there's no way to be completely sure of that. I mean, Biden lists out exactly what would change for seniors, for estate taxes, for really a lot of different categories of taxes. Trump's plan, not so much. We essentially see this extension and that's about it.

KRISTiN MYERS: And here on the corporate tax side, again, the same thing would happen under a Trump victory here, so to speak. But with Joe Biden, increasing the top corporate income tax rate to 28%. How much is that a leap right now for some of these corporations? Although I do want to note for everyone at home, that the effective tax rate is usually much, much lower than the actual tax rate that we currently have.

JILL GONZALEZ: Right. So then the actual tax rate, that's going to be about a 7% leap, from 21% to 28%. He also is stipulating a 15% minimum on large corporations, which the effective tax rate now is much smaller than that, sometimes even in the negative from year to year. And he's also being very specific about overseas. He would impose another 10% tax on jobs that, or on companies that ship jobs overseas. He would also give a 10% incentive to companies that are keeping jobs in America. That is his famed Made in America tax.

KRISTiN MYERS: So I do want to quickly ask you, have about 30 seconds with you here, Jill. I just want to ask, if you are an average American, you are not in the top 1% of income earners, whose plan financially is better for you? Is it Joe Biden or is it. Donald Trump?

JILL GONZALEZ: If you are in the category of 98% of Americans, then Joe Biden has a better financial plan for you. Everything from personal taxes to health care to education to how corporate taxes will affect you. If you're making less than $400,000, if you ever plan on being things like Medicare or Medicaid, Joe Biden makes more sense financially.

KRISTiN MYERS: All right, well sadly, we will have to leave that there. I wish we had so much more time to go through some of these plans at full. I know that they are available, however, at wallethub.com if anyone wants to check them out. Jill Gonzalez, WalletHub senior analyst, thanks so much for joining us today.