In a previous article, I discussed the two presidential candidates’ major policy positions on taxes, the debt limit, and abortion. Taxes and the debt limit directly impact retirees’ finances and stewardship.
We’re now on the other side of the election, and the Republican Party won a clear victory, a “trifecta,” as they call it, as they have won control of the House and Senate along with the presidency.
That’s significant because it suggests that the president will be better able to enact more legislation consistent with his policies and campaign promises.
In general, the Republican Party supports smaller government, lower taxes, and less regulation. And most of Trump’s policies align with those principles. However, if not implemented carefully, these policies can increase the budget deficit and fuel inflation, which isn’t good for retirees or others.
Trump made many campaign promises while running for president, and if enacted into law, many of them could significantly affect retirees.
In this article and the next, I’ll list some of them and offer my perspective—sometimes, a “quick take” after an individual promise and then a fuller discussion at the end of the category, e.g., “Taxes.”
First things first
Before I get to the list, I think it’s important to remind ourselves of what our government requires (or allows) for a campaign promise to become a reality.
Executive orders can accomplish many things in areas such as tariffs, immigration policy, and business regulations. However, as shown in the chart, they will likely be challenged in the courts and could be negated if they are inconsistent with current statutes or the Constitution.
Others, such as tax law changes, could significantly impact retirees but require congressional approval. The president may secure that approval more easily since his party now controls both houses of Congress.
A plethora of presidential promises
The source of this list of campaign promises is the website PolitiFact, a non-partisan fact-checking and tracking site. They say that,
”Trump has articulated more than 100 policy proposals since announcing his reelection bid in late 2022. To make our list, Trump himself had to make a promise in speeches, interviews, rallies, or on social media; we did not include proposals backed only by outside groups, such as Project 2025.”
PolitiFacts also tracks promises made and kept and the true or false claims made by the presidents.
I think Trump’s policy agenda for a second term isn’t dramatically different from his first. He’s likely to reinitiate failed or stalled initiatives and take others further (such as immigration and tariffs).
For brevity and other reasons, I’ll only discuss those most impactful to retirees financially and steer clear of more culturally sensitive ones. (I don’t want to veer too far out of my ”lane.”)
I have grouped these under common themes, just as PolitiFact did. In this article, we’ll examine tariffs, trade, and taxes. In the next, we’ll cover interest rates, insurance, energy, and human services (including healthcare).
Tariffs
Promises:
- Add a tariff of 10% to 20% to all non-domestic goods sold in America
- Add a 60% tariff on goods from China
- Institute a reciprocal tariff policy
PolitiFact:
”Collectively, these three promises would continue Trump’s efforts, dating to his presidency, to raise tariffs on foreign goods, especially when foreign countries impose tariffs on the U.S. These foreign nation tariffs would be the target of Trump’s reciprocal tariff policy. Independent groups have estimated that Trump’s proposed tariffs would cost a typical family between $2,000 and $4,000 a year and some Senate Republicans have expressed skepticism about the plan.”
My take:
Tariffs, or taxes on imported goods, have been used throughout the Bible and history. Countries impose them to protect local industries from international competition and to raise tax revenue.
Some economists believe Trump’s proposed tariffs will be a net loss for America and a consumer burden. Others contend that tariffs can benefit some sectors of the economy and possibly certain types of investments.
Given my free-market leanings, I am generally suspicious of tariffs. While they’re not explicitly prohibited in Scripture, they should be balanced and proportional if levied.
Equitable trade practices foster mutual economic benefit and peaceful relations between nations. Biblical law promoted fair exchange (Lev. 25:14, Prov. 11:1, Prov. 16:11-13) and would have prohibited modern exploitative trade practices.
Moderate tariffs can protect local economies from unjust and intrusive trade practices. However, I think a more natural protectionism arising from a genuine desire for quality ”homemade” products and services, even if they cost a little more, can be even better.
It’s hard to predict if this will happen as it will be very contentious, even within the Republican Party. Congress has delegated a lot of power to the president on this, so Trump may be able to institute them, even if some in his party in Congress disagree. His opponents will likely file legal challenges depending on how far he goes with them.
If tariffs are enacted, depending on the kinds and amounts, they could result in higher costs and price volatility, which may be especially concerning for retirees trying to control their spending or are on a fixed income.
Trade
Promises:
- Ban U.S. companies from investing in Chinese companies and ban Chinese companies from investing in U.S. companies
- Adopt a four-year plan to phase out Chinese imports
PolitiFact:
”This pair of promises would expand on policies Trump sought to impose on China during his presidency. The aim would be to counter China’s influence in the international economy and erase advantages China has over U.S. companies.”
My take:
On the one hand, I can understand this posture and strategy toward China.
China is an atheistic totalitarian state with mostly nefarious intentions. They would like to dominate world trade and financial markets and influence the politics of many rival nations. They are deceptive in many of their political and economic dealings. They subjugate minority ethnic groups within their society, and they are generally intolerant of organized religion.
On the other hand, some trade with China seems necessary to me, especially if done wisely. The key is not to risk our economy (or national security) by becoming overly dependent on China for essential goods or commodities.
So why do we trade with China in the first place? Well, as economist Adam Smith said,
”What is prudence in the conduct of every family can scarce be folly in that of a great kingdom. If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage.”
Most nations are not entirely self-sufficient (nor are individuals). However, no country is obligated to trade with another. Trade exists because raw materials and skills are not uniformly distributed across nations or people groups. God has ordained that humans depend on each other (and Him) as an act of common grace, leading to the mutual blessing of mankind.
For example, if a country trades and gains access to technological innovations elsewhere, these can be applied domestically to produce further benefits and greater efficiency.
However, this is not the same as both parties gaining equally. The degree to which each benefits depends on the relative prices of exports to imports. These can be skewed so that one party gains more from the trade than the other.
The data shows that the U.S. has a significant trade deficit (hundreds of billions of dollars) with China, which decreased slightly in 2023.
Based on the numbers, to say that the trade relationship between the U.S. and China is ”unbalanced” or “inequitable” would be an understatement. The chart shows this large deficit and how it hasn’t changed much over the last ten years: advantage China!
Financially backing away from China could reduce geopolitical risk, which could benefit the financial markets, retirees, and other investors.
Shifting investments to the U.S. or other developed markets may bolster domestic industry and job creation, and a more robust domestic economy could lead to better returns in U.S.-focused retirement investment accounts.
There are risks to this strategy as well. Because China is a large producer and consumer of goods with significant growth in key areas like technology, healthcare, and energy, severing ties could prevent us from benefiting from those things.
Also, reducing low-cost imports from China can lead to higher prices for U.S. goods, which could negatively impact retiree pocketbooks by increasing inflation, which is never good for retirees.
Taxes
Promise:
- Provide a “middle class, upper class, lower class, business class, big tax cut.”
PolitiFact:
“Trump has not detailed how his new tax cut would work. The tax bill Trump signed in 2017 did lower taxes for all income groups, at least initially, but wealthier taxpayers gained disproportionately.”
My quick take:
I’m not sure how this would work, either. It all depends on whether there’s a plan to simultaneously increase federal revenue (or significantly reduce tax-funded expenditures).
Promise:
- End taxation on Social Security
PolitiFact:
“He (Trump) did not provide details, such as offsetting revenues to pay for it. The Committee for a Responsible Federal Budget estimated that doing this would cost $1.6 trillion to $1.8 trillion over a decade.”
My quick take:
As a retiree, I like this one. But it raises the same questions I have about other tax reduction measures.
Promise:
- End taxation on tips
PolitiFact:
“This would end taxation on the tipped portions of workers. Economists have mixed feelings about whether the benefits to workers would outstrip the government’s cost and whether companies would take advantage of the new policy to force more workers into tipped jobs.”
My quick take:
According to the Budget Lab at Yale University, about 2.5% of the entire U.S. workforce works for tips, mainly in the service and hospitality fields.
However, I’m not sure how much taxes those workers pay. Still, because of their sheer number, that could be a sizable amount of income that would be exempt from taxes.
Eliminating tips taxes would primarily help those whose income is mainly comprised of them. But I’m not sure how many of the 2.5% are—a majority, I suspect.
Promise:
- End taxation on overtime
PolitiFact:
“The Tax Foundation, a center-right think tank, estimated that this would cost anywhere from $227 billion to $1.1 trillion over 10 years, depending on how the new policy was structured.”
My quick take:
I don’t think someone working ”overtime” would be considered retired, would they? If they retire but then return to hourly work for some reason, paying no taxes on their overtime earnings would probably be a welcome change.
Promise:
- Reduce taxation for Americans living overseas
PolitiFact:
“Some Americans living abroad pay taxes to both the U.S. and a foreign country, although they can deduct the taxes they paid to the foreign government. Critics suggest this could incentivize higher-income Americans to move overseas to lower-tax countries and escape U.S. tax liability.”
My quick take:
This certainly impacts many retired people living in another country (a.k.a, “expats”).
Many retire to foreign countries for financial reasons, particularly the need to live in a lower-cost-of-living location.
However, I have mixed feelings about this. Expats should still pay some tax if they continue to benefit directly or indirectly from the federal government’s services.
Promise:
- Reduce the corporate tax rate from 21% to 15% “for companies that make their products in America”
PolitiFact:
“Trump’s 2017 tax law previously cut the corporate tax rate from 35% to 21%.”
My quick take:
Trump wants to lower corporate taxes even more. Low corporate tax rates are favorable for companies and the economy as a whole. However, the preference for ”companies that make their products in America” triggers some questions.
What about U.S. companies that produce products in other countries at very low cost? Will they be incentivized enough to incur the considerable expense of moving production to the U.S.?
I looked it up and was surprised to learn that corporate tax revenues are a relatively small percentage of total revenues:
Lowering corporate tax rates may not reduce total tax revenues as much as we thought. However, it seems like a good idea if it significantly stimulates economic growth.
Promise:
- Restore the state and local tax deduction (SALT)
PolitiFact:
“Trump’s 2017 tax law capped the amount taxpayers can deduct from state and local tax payments on their federal tax returns at $10,000. Trump wrote that he would ‘get SALT back.’ The Committee for a Responsible Federal Budget estimated that this could cost the federal government $1.2 trillion over 10 years.”
My quick take:
Taxpayers who itemize deductions on their federal income tax returns can deduct state and local taxes—specifically property taxes plus either income taxes or general sales taxes, but they’re limited to $10,000.
This one begs the same question as others: “Where will the revenue (or cost cuts) come from to offset this change”?
I like the idea of full deductibility of state and local taxes. However, how beneficial this is may depend on whether a retiree itemizes them.
As the chart below shows, the number and income distribution of taxpayers itemizing deductions dramatically changed after the original Trump tax bill was enacted in 2017.
It would appear that most retirees don’t itemize, especially those with adjusted gross incomes in the $50K to $100K range. However, if the list of deductible expenses goes back up and the standard deduction remains the same or goes down, itemizing could become more beneficial to some taxpayers.
If this provision goes through, I’d like to see them removed from gross income adjustments, whether someone itemizes or not.
Promise:
- Make it tax deductible to purchase a home generator
PolitiFact:
“Trump made this promise after Hurricane Helene and Hurricane Milton struck. Trump proposed that it was retroactive to Sept. 1, 2024, and valid through Aug. 31, 2025.”
My quick take:
It’s not a bad idea, especially for older Americans who can struggle more without power than others. But again, it may depend on whether they can itemize. A tax credit would be more helpful.
Promise:
- Make interest on car loans tax deductible
PolitiFact:
“Trump revealed this proposal in a speech to the Detroit Economic Club, pitching it as a way to boost the automobile industry.”
My quick take:
If a retiree has a car loan (many don’t), it would benefit them positively, but only if they itemize deductions.
Taxes—my overall take:
Paying taxes is neither one’s “patriotic duty” nor “social obligation.” The state is not the church but God’s servant, whether it knows it or not.
We pay taxes to support the government, which is instituted and sanctioned by God. However, we have no moral obligation to pay more tax than required and can take advantage of any tax reduction strategies that apply to our situation.
Taxes matter to many retirees, some more than others. Tax reductions across the board would be welcomed by most retirees, as they could leave them with more disposable income. The more income-constrained retirees are, the more welcome the tax reductions will be.
Saving on taxes can also enable retirees to pass on more wealth to their heirs if that’s their wish. It may also help better meet long-term care expenses in the future.
Also, if a retiree owns a taxable retirement account such as a Traditional IRA, they will have more money to stay invested, which can help their savings last longer. This would benefit everyone, especially those at greater risk of depleting their savings too soon.
According to the Social Security Administration, up to 40% of retirees currently pay federal income tax (and state tax in some areas) on their benefits. The most interesting proposal is that there should be no tax on Social Security benefits.
If I had to be honest, the tax I least like to pay is on Social Security benefits. I feel like I’m being double-taxed, which isn’t the case.
I’m not alone.
My Social Security benefit dollars are not the same dollar-for-dollar that I paid into the program. The funds I receive today are from the payroll taxes collected from current workers. When they retire, subsequent generations of workers will fund their benefits, and so on.
In that way, it works more like a longevity insurance policy than anything else, which is how it was initially conceived.
There’s no way of tracing the origin of the benefit dollars I am receiving. They can come from payroll taxes, taxes on benefits, or interest income on the trust funds reserves (which is not from taxation).
The original rules were established in 1983 and haven’t changed since, except in 1993, to make up to 85% of higher-income retirees’ Social Security taxable.
Depending on your perspective, the downside of tax reductions is that, unless accompanied by increased tax revenues, it can mean a reduction in government services and benefits, some of which directly benefit retirees.
Federal needs-based programs (such as Medicare, Head Start, public housing and homeless programs, federal aid for public K-12 education, Pell grants for low-income college students, food assistance for Women, Infants, and Children, job training and placement for unemployed people, and other programs), comprise the largest percentage of discretionary budget spending.
Note that I didn’t include Social Security and Medicare because they are funded by payroll tax deductions, not general tax revenues, and as such are partially self-supporting (still, it’s the ”partially” part that is concerning as the trust funds themselves they are in danger of becoming insolvent in the relatively near future if Congress doesn’t take action).
Therefore, some programs may have to be cut or reduced significantly. Trump has indicated a desire to do so mainly through reforms and by pursuing inefficiencies and fraud. Some states may have to levy higher state and local taxes to provide additional services if he succeeds.
I’m not saying I think that’s bad; the state may be able to do many things more effectively and efficiently for its citizens. It could just mean higher state and local taxes.
Furthermore, tax cuts often stimulate significant spending, which could cause inflation to rise, increasing the cost of goods and services. Retirees on fixed (or limited) incomes may find their purchasing power diminished, eroding or even erasing the benefits of lower taxes.
A delicate balancing act
If implemented, the new administration must balance the tax revenue losses of many of these proposals with increased tax revenue from other sources or a significant reduction in federal spending overall.
Keeping other taxes and costs from rising and causing inflation could be very difficult.
These are among the challenges the new administration will face. If enacted, many of Trump’s promises will help seniors and retirees. However, mitigating known consequences and anticipating unknown ones must be a big part of the plan.
