Election Watch 2016: Millennial Money Edition
Millennials are positioned to make a big impact in this year’s presidential election—if they turn out to vote.
- Young voters were a key factor in the election of Barack Obama. Obama won 66 percent of the under-30 vote in 2008 and 60 percent in 2012.
- Young voter turnout increased substantially in the last two elections. About half of eligible voters aged 18-29 voted in the 2008 and 2012 presidential elections, compared to less than 40% of voters that age during the 1990s.
- Young voters have the numbers to make a difference. For the first time, the millennial voting population equals that of baby boomers.
Today’s 20- and 30-somethings are facing unprecedented financial challenges, like unemployment, stagnant wages, and student loan debt. This year’s election is a huge opportunity for young voters to make their voices heard. The presidential candidates are talking (a lot) about finances and the economy, and our next president’s actions will likely have a big impact on everyone’s financial future.
Check out our guide below to the 2016 presidential candidates and their stances on the issues that impact young professionals’ financial health.
Student Loans & Education
Millennial Money Breakdown:
The Democratic candidates have been far more vocal on the subject of student loan debt, which impacts 42% of 18-29 year olds. It’s unclear whether the proposed plans would have the backing of Congress or the funding necessary to come to fruition, but it’s clear that student loans and the rising cost of education are top-of-mind for Sanders and Clinton, while Cruz and Trump are less focused on this subject.
Hillary
“Costs won’t be a barrier; debt won’t hold you back.”
Proposed Plan
“The New College Compact”
In school:
- Make in-state, four-year colleges “debt-free” (meaning students only pay what they can afford).
- Make community colleges tuition-free.
- Hold colleges and universities accountable for controlling costs and making tuition affordable.
Paying student loans:
- Enable borrowers to refinance federal student loans with the government at lower interest rates.
- Simplify income-driven repayment options for federal loans.
Who foots the bill?
Pay for these changes by limiting certain tax expenditures for high-income taxpayers. For example, capping the value of all itemized deductions at 28%, which means someone in the 36% bracket who claims a $100 deduction would only reduce his tax bill by $28, instead of $36 under today’s rules.
Bernie
“It’s time to make college tuition-free and debt-free.”
Proposed Plan
“College for All Act”
In school:
- Make public colleges and universities tuition-free.
- Expand need-based financial aid and work study programs to make college debt-free.
- Substantially cut student loan interest rates (interest rates on undergraduate loans would drop from 4.29% to 2.37%)
Paying student loans:
- Enable borrowers to refinance federal student loans with the government at today’s interest rates.
Who foots the bill?
Pay for these changes by imposing a tax on “Wall Street speculation”. Basically, a small tax on every stock (0.5%), bond (0.15%) and derivative (0.005%) trade done in the U.S.
Donald
“I think it’s terrible that one of the only profit centers we [the government] have is student loans.”
No stated plan as of yet.
Ted
“If we want this generation to be able to pay off their loans, we’ve got to return to an environment where small businesses are growing and flourishing, and creating jobs and opportunities.”
No stated plan as of yet.
- Says he wants to dismantle the U.S. Department of Education, which funds grants, subsidized loans and work-study
Taxes
Millennial Money Breakdown:
For anyone who hates doing their taxes, the Republicans’ plans would bring some relief in the form of simpler returns and lower tax bills. But critics worry about the lack of details about where spending cuts would come from. On the flip side, Sanders’ tax plan could mean higher taxes for more than the uber-wealthy—presumably what he’d need to fund some of his ambitious plans like the education initiative above.
Hillary
“The wealthiest pay too little in taxes while the middle class needs more relief. I’m going to fix that.”
Raise or lower taxes?
Keep tax rates the same for most people, but add a 4% surtax on income and capital gains for those who earn over $5 million.
Deductions:
Cap the value of all itemized deductions at 28%.
Investment income:
Raise rates on medium-term capital gains (investments held for less than six years) for top earners to between 24%-39.6%.
Bernie
“It is time to redistribute money back to the working families of this country from the top one-tenth of 1 percent, and tax policy is one of the ways we do that.”
Raise or lower taxes?
Raise the marginal tax rate for those who earn less than $250,000 by 2.2%; raise taxes for those who earn more than $250,000 by establishing four new brackets of 37%, 43%, 48%, and 52%.
Deductions:
Limit tax deductions to 28% for households with incomes over $250,000.
Investment income:
Tax capital gains and dividends at ordinary income rates for households with incomes over $250,000.
Donald
“Simplifying the tax code and cutting every American’s taxes will boost consumer spending, encourage savings and investment, and maximize economic growth.”
Raise or lower taxes?
Cut taxes by establishing four tax brackets with rates of 0%, 10%, 20% and 25%. The top rate applies to to income over $150,000 for single filers and $300,000 for joint filers.
Deductions:
- Increase the standard deduction to $25,000 for single filers and $50,000 for married couples (about four times higher than the current one).
- Reduce or eliminate most itemized deductions except charitable contributions and mortgage interest.
- Allow individuals to fully deduct health insurance premium payments from their tax returns.
Investment income:
Continue to offer today’s income-based tax rates rates of 0, 15%, and 20% on long-term capital gains and qualified dividends, plus eliminate the 3.8% net investment income surtax.
Ted
“We need to pass fundamental tax reform making our tax code simpler, flatter, fairer.”
Raise or lower taxes?
Cut taxes by establishing a flat rate of 10% on all ordinary income.
Deductions:
- Increase the standard deduction to $10,000 per filer.
- Eliminate all itemized deductions except charitable contributions and mortgage interest.
Investment income:
Lower the rate on capital gains and dividend income to 10%.
Estimated tax impact on a single, childless individual making $75,000/year:
Jobs & Wages
Millennial Money Breakdown:
On the subject of jobs, all parties agree that something’s gotta change. As for how to increase jobs and raise wages, the Pubs and Dems have fallen into pretty typical party lines with Clinton/Sanders advocating social programs and a higher minimum wage, and Trump/Cruz proposing lower taxes, U.S. trade protections, and incentives for businesses.
Hillary
“The defining economic challenge of our time is raising incomes for hardworking Americans.” (hillaryclinton.com)
Job creation:
Create jobs by boosting public investment in infrastructure, clean energy and scientific/medical research.
Job training:
Provide a tax credit for businesses that create high-quality apprenticeships that lead to jobs.
Small business/entrepreneurship:
- Expand access to capital by easing regulatory burdens on community banks.
- Simplify tax filing to reduce burden of hiring tax/accounting help.
- Improve infrastructure to make it easier to bring goods to new markets.
- Provide incubators, mentoring, and training to 50,000 entrepreneurs and small-business owners in underserved communities.
Minimum wage:
Raise the federal minimum wage to $12/hour and expand overtime rules.
Gender pay gap:
Sign the Paycheck Fairness Act into law to drive gender pay equity.
Bernie
“The issue of wealth and income inequality is the great economic issue of our time.” (berniesanders.com)
Job creation:
Create jobs through the “Rebuild America Act”, which would invest $1 trillion over five years to modernize US infrastructure. Also, increase US manufacturing jobs by reversing trade policies like the North American Free Trade Agreement (NAFTA).
Job training:
Introduced the Employ Young Americans Now Act last year, which would spend $4 billion to provide one million jobs for Americans ages 16-24.
Small business/entrepreneurship:
- Support low interest SMB loans
- Reform the current patent system
- Advocate for net neutrality
- Reform the visa program
Minimum wage:
Raise the federal minimum wage to $15/hour by 2020.
Gender pay gap:
Sign the Paycheck Fairness Act into law to drive gender pay equity.
Donald
“I will be the greatest job-producing president in American history.”
Job creation:
Create jobs by reforming the US-China trade relationship, for example by challenging China to adhere to the same labor and environmental standards that the US follows.
Small business/entrepreneurship:
- Cap business tax at 15%
- Repeal Obamacare
- Eliminate the estate tax so SMBs can be passed to heirs.
Ted
“The best way to jumpstart (jobs) growth is through fundamental tax reform.”
Job creation:
Create jobs by approving the Keystone Pipeline and similar infrastructures.
Small business/entrepreneurship:
- Lower business tax to 16%.
- Eliminate the payroll tax.
- Simplify tax code to reduce burden of hiring tax/accounting help.
- Eliminate the estate tax so SMBs can be passed to heirs.
- Repeal Obamacare
- End Environmental Protection Agency (EPA) regulations.
Money & Marriage Equality
Millennial Money Breakdown:
While marriage equality is a social issue, it also has a financial impact. When the Supreme Court struck down state bans on same-sex marriage last year, it opened the door for same-sex couples to experience the financial ramifications of being legally married, including collecting spousal social security benefits, contributing to spousal IRAs, filing joint taxes, and administering a spouse’s estate upon death. Both Trump and Cruz have stated they would appoint Supreme Court judges to overturn the current ruling, which would end these considerations for same-sex couples.
Hillary
“LGBT Americans are our colleagues, our teachers, our soldiers, our friends, our loved ones – and they are full and equal citizens, and deserve the rights of citizenship. That includes marriage.”
Bernie
“I have supported same-sex marriage and voted against Clinton’s Defense of Marriage Act. You can’t claim to support equality and not support equal rights.”
Donald
“I am a traditionalist. I have so many fabulous friends who happen to be gay, but I am a traditionalist.”
Ted
“Five unelected judges ignored the Constitution and purported to tear down the marriage laws of all 50 states. That decision was fundamentally illegitimate, it was lawless, and it will not stand.”
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