Financial Focus: Trump vs Clinton: Their tax plan and our Economy: Who wins, who loses!

Anthony RivieccioTrump vs Clinton: Their Tax Plans and our Economy — Who wins, who loses! 

(Part 2 of 3)

Anthony Rivieccio, MBA

For this discussion it will be helpful to think of our economy as working on four buckets of ” spending”: Consumer Spending (60%); Investment Spending (10%); Government Spending (20%); and International Trade (10%).

As you can tell by the percentage allocations for each bucket that both consumer and business spending represent 70 percent of our economy.

As you see, consumer spending is leading the way. The American economy while not booming isn’t stalling. And that’s good news.

Do we need more money in our economy to have people spend more money? In some ways, we do. Consumer (and government) spending creates jobs. Builds wealth. And creates a stronger economy.

The Trump and Clinton tax plans are meant to affect spending. One candidate wants to inject more money into our economy. The other candidate wants to inject less. Both plans would affect a significant part of consumer income and spending. So, let’s look at how their tax plans would impact personal taxes and business taxes.

1040 Taxes -logoPersonal Taxes

“And Wall Street corporations, and the super-rich should finally pay their fair share of taxes. That’s why I support the so-called Buffett Rule, because multi-millionaires should not be able to pay a lower tax rate than their secretaries. We should also add a new tax on multi-millionaires, crack down on tax gaming by corporations, and close the carried interest loophole.” — Hillary Clinton

As Hillary stated in a recent speech, she relies heavily upon taxing the rich. Lower and middle-income people, meanwhile, would see their incomes change little — some with a slight decline — while the richest one percent would see their incomes fall by 5 percent or more, according to an analysis from the Tax Policy Center.

“Imagine your paycheck was 40 percent higher than it currently is. What could you do with 40 percent more wealth? How many jobs and opportunities for others could you create?” — Donald Trump

Trump says his tax plan would lower the top rate from 39.6 percent to 33 percent, and with that zero bracket would have only four brackets, down from the current seven.

The top 1 percent would see their after-tax incomes grow by 5.3 percent, while people below the 80th percentile would see little change, with their incomes growing by less than 1 percent

Analysis: Clinton wants to tax incomes of $1 million or year and increase revenues to the governmental service fund. Trump want to decrease taxes on high income earners. Now, will wealthy Americans have more money? Yes! Will they spend it? That’s another story.

Business Taxes

“When a corporation outsources jobs and production, it can write off the costs. We must stop that, and we must make them pay back tax breaks they ever received from any level of government in our country. And for those that move their headquarters overseas to avoid paying their fair share, we should reverse that.” — Hillary Clinton

Clinton’s framed her business taxes , as a way to stop companies from leaving the U.S. She would imposes an “exit tax.”

“Under my plan, no American company will pay more than 15 percent of their business income in taxes. In other words, we’re reducing your taxes from 35 percent to 15 percent.” — Donald Trump

Analysis: Hillary wants to create many small business ” reg taxes” that will decrease spending and increase revenues to the Government. Trump, is definitely giving small business a huge 60% Tax cut, hoping that Investment spending will help to bring more money into the economy, while taking away money from the government.

So, let’s go over our economy one more time. Our economy is only creating growth at 3% a year,  with incomes at 2% a year, but we’re spending 5% . As we can see, something is wrong. I believe some would call it consumer debt and savings. We are using it to make the difference currently. Do we need more money injected into our economic system?

Next week: Part 3 —

Anthony Rivieccio is the founder & the CEO of The Financial Advisors Group, celebrating its 20th year asafee-only financial planning firm specializing in solving financial problems. Anthony, a recognized financial expert since 1986, has been featured by many national and local media including: Klipingers Personal Finance, The New York Post, News12 The Bronx, Bloomberg News Radio, Bronxnet, The Norwood News, The West Side Manhattan Gazette, Labor Press Magazine, Financial Planning Magazine, WINS 1010 Radio, The Bronx News and The Bronx Chronicle.

For financial assistance or a FREE 2016 InvestmentAnalysis. Anthony can be reached at (347) 575 5045.

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