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What a Biden win in November could mean for the middle class
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With the election approaching, Americans will have to vote on November 5 to decide whether former President Donald Trump will be elected to a second term or whether President Joe Biden will continue to lead the country.
This is not an easy decision for voters given the current state of the economy. For example, house prices and mortgage rates are higher than ever, making it nearly impossible for buyers to purchase a new home. Additionally, inflation has made rent, gas, and even food prices challenging for the average American. According to a recent study from Ipsos Polling, the majority of Americans say that inflation and the economy are the most important issues determining who they will vote for in the next election.
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GOBankingRates spoke with Anthony DeLuca, CFP professional and expert contributor to Annuidade.orgto know what the middle class we can hope to move forward if Biden is re-elected in November.
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Health care
A major concern for more than 80% of Americans is the cost of health care. Trump has not proposed any alternative health care plan. However, Biden has been actively working to improve the Affordable Care Act, making it even easier for anyone who loses current access to Medicaid to enroll in an affordable health plan. He also expanded the PACT Act, which made it easier for veterans to access health care, and signed the Reducing Inflation Act of 2022, which lowered the price of insulin to $35 per month.
If Biden is elected, voters can likely expect him to continue expanding these health programs, making it easier for middle-class Americans to afford them. He expressed that he wants to continue trying to reduce the costs of most healthcare options for Americans, including prescription drugs.
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Taxes
Taxes are always a hot topic during election season, especially since most Americans still benefit from the lower tax code that Trump implemented in 2017. The Tax Cuts and Jobs Act impacted tax brackets, reducing the amount Americans middle-class people had to pay. This is set to expire in 2025.
Biden has expressed that he wants to increase taxes on corporations and those who earn the most money, but he still wants to reduce the amount of taxes charged to middle-class citizens. This could mean increasing the amount of Child Tax Credit that Americans could claim on their taxes.
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However, since it did not explicitly mention renewing benefits from the expiring lower tax code, middle-class Americans could face a much higher tax rate when they file their taxes for 2025. This could be a challenge for Americans barely making ends meet.
Biden, if reelected, will likely let the TCJA expire,” DeLuca said. “Consequently, he will increase the personal income tax rate to 39.6% for individuals earning over $400,000 and increase the corporate tax rate from 21% to 28%. If we raise taxes on the rich, who often own the companies, then the price increases will fall on the consumer.”
Student loan debt
Biden has proposed a plan to forgive student loan debt. The plan included cutting monthly payments on undergraduate loans in half, completely forgiving up to $20,000 in loans for those who received Pell Grants, and forgiving loan balances after ten years of payments for those with balances of $12,000 or less.
Unfortunately, this plan did not gain full support, and unless there are major changes to the bill, it is unlikely that Americans will see these changes in the coming years.
However, he may be able to execute some of his original plans to make higher education more affordable and lessen the burden of student loans for future students, which would help middle-income families.
Inflation
Inflation it is currently at 3.4%, more in line with the Fed’s target level than the 7% reached in 2021. While this is a hot issue for most Americans, they are unlikely to see a reduction in everyday expenses. Biden has not presented any action plan to reduce the inflation rate.
His focus on reducing taxes and student loan debt while increasing health benefits would increase government spending. This could fuel additional inflation, and middle-class Americans may feel this could impact the prices of essential goods. However, its push to increase employment, increase infrastructure and commit to green energy could help lessen some of the impact.
“Based on what I’ve observed in the economy, I would say that Biden’s policies would actually have little impact because changing who pays the bill inevitably falls on the consumer,” DeLuca said. “What the Fed does regarding the Federal Funds Rate has the same impact on the price of goods and borrowing power.”
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This article originally appeared on GOBankingRates. with: I’m a Financial Consultant: What Biden’s November Victory Could Mean for the Middle Class