2024 Election, Taxes, and more

Every four years, we observe the same spectacle unfold in Washington D.C., as the nation anticipates who will become our next president. Without fail, pundits across various talk shows make predictions, setting odds on the favorite candidate for presidency.

While I completely enjoy discussing politics and the odds of determining our next president, in all honesty, I have no special insights or hidden knowledge. Thus, my predictions carry no more weight than anyone else’s. Instead of adding to the sea of predictions, I thought it would be helpful to outline the four most probable scenarios (in no specific order) for the 2024 election and the potential impacts they may have on our economic and tax policies.

Taking a closer look at the different election outcomes can help us understand how the economy might shift under various administrations. Here are four possible scenarios:

1. Scenario A: Republican Victory

If Republicans win the presidency and maintain control of both the House and Senate, there could be an extension of the 2017 tax cuts, which lowered the corporate tax rate and made several changes to individual income tax rates. We might also see an increase in tariffs, a tactic often used by Republicans to support domestic industries. Additionally, there could be reforms to Medicaid and cuts to green energy subsidies, both typical of conservative policy.

2. Scenario B: Republican President & Senate, Democratic House

In this scenario, there could be a bipartisan agreement to extend some of the 2017 tax cuts. However, with a Democratic House, higher-income households could see an increase in their tax rates. Tariffs might still be increased as a means of deficit reduction.

3. Scenario C: Democratic President, GOP Senate

If a Democrat wins the presidency but Republicans control the Senate, we might see a partial extension of the 2017 tax cuts. However, with a divided government, it’s likely there would be little major legislative action, meaning the deficit could continue to grow.

4. Scenario D: Democratic Victory

If Democrats win across the board, there could potentially be tax hikes for higher income brackets and corporations. A Democratic government might also introduce a carbon or gas tax as part of a larger commitment to addressing climate change and the deficit. New tariffs are unlikely in this scenario, but we could see continued funding towards Ukraine.

While it’s helpful to consider these scenarios as we look ahead, it’s important to remember that the political landscape can be highly volatile and unpredictable. The individuals elected to office, their specific policy goals, and the broader global economic context will all play significant roles in shaping what ultimately happens.

Changes in tax laws, government spending, and regulatory policies can all have a substantial impact on the financial planning landscape. As financial planners, we need to be prepared to adjust our strategies in response to these changes. This might involve reevaluating investment portfolios, revising retirement plans, or reconsidering estate planning strategies. But while it’s crucial to be ready to adapt, it’s equally important not to overreact. Making drastic changes in response to short-term political shifts can often do more harm than good. In short, regardless of who wins in 2024 and what policies they enact, staying informed and responding thoughtfully and strategically will be essential for successful financial planning.

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