Trump and your finances: taxes, student and payday loans, the councils target in the 1st year

President Trump took office a year ago. And immediately promised to take a meat grinder for the rules, which he said stifled corporate America and the economy.

However, consumer advocates don’t agree with this. They believe that the discrepancies between the Trump administration and the Obama era financial rules, as well as its support for new legislation, will hit U.S. household's pocket. But this is not the worst. In addition, the rules gave Americans the right to join in group lawsuits against banks. Also, these groups can seek forgiveness of student loans and receive financial advice that suits their interests rather than their advisers”.

A radical tax review by the White House¹ and Republicans in Congress was also adopted. This will reduce for some people, but increase for others. In addition, legislation has been introduced to repeal parts of the Dodd-Frank financial reform law.

"The financial markets will be skewed in favor of financial institutions, not consumers. All of this will happen if the proposed changes are completed," says Rachel Weintraub, legislative director for the Consumer Federation of America² .

But not everyone agrees with this statement. In a recent speech, U.S. Chamber of Commerce President³  Tom Donoghue decried “burdensome labor rules. Because these rules impede business operations and harm workers. These rules are burdensome financially. They would suppress pension investments and unfavorable consumers.”

Below are Trump's initiatives that scale back, or aim to reduce:

Taxes. 

Trump has proposed cutting middle-class taxes. An average low-and middle-income household will realize annual savings of about $ 1,000 in the short term. Data provided by the Tax Policy Center⁴ . The standard deduction should be doubled. This will allow many low-income Americans to avoid pay no taxes while others gain from the expansion of the child tax credit.

However, most benefits go to the rich, says TPC. Presumably by 2027 households who earn from 40 000 to 80 000 dollars will pay billions more in taxes. Upper and middle class households can be much more affected. This is because the deduction for state and local taxes will be capped at $10,000. A mortgage interest deduction will be limited to the cost of housing to $750,000, down from $ 1 million.

Protection of borrowers of student loans. 

The Department of Education⁵  is rewriting Obama’s administration rules. These rules were designed to protect students who attended career preparation programs at nonprofit colleges. But these students were failed to earn projected incomes or claimed they were misled by the schools. These rules were supposed to come into force last July. They defrauded consumers could have asked the federal government to forgive their loans. Now partially subject to another regulation. This regulation denies federal funding for college programs if graduates don’t earn enough to support themselves and repay their loans.

The Institute for College Access and Success⁶  says the changes will help expose "to defraud students and evade accountability." However, Education Secretary Betsy DeVos says that these rules have gone too far. They made too easy for students to evade repayment of debt.

Guarantees for investors. 

A Labor Department regulation [https://www.dol.gov/regulations] demanded financial advisers to put their client’s interests above their own. And disclose conflicts when recommending investments for retirement accounts. These standards were to come into force in early 2018, but their application was delayed until July 2019. At this time, Trump's Labor officials are looking for more public input.

Lawsuits by clients of banks and credit cards. 

A rule adopted by the Consumer Financial Protection Bureau (CFPB)⁷ , which came into force next spring would allow customers of banks, credit-card companies and others to join group lawsuits. Currently, many financial firms require consumers to resolve any disputes through arbitration.

Consumer lawyers say clients deserve to have their day in court. They cite cyberspace at credit rating agency Equifax⁸  and the scandal over unauthorized accounts at Wells Fargo⁹  as examples. The data examples justified the problems with group action. However, the financial industry claims that clients usually win bigger payouts through arbitration than through class-actions suits. They argue that class actions are mainly benefit lawyers. The CFPB investigated disputes that were resolved between 2010 and 2012. According to the study, average consumer assistance in arbitration cases amounted to $ 5,489 compared to $32,25 in settlement of class actions. However, about 25% of class-actions were settled, while consumers got relief in only 9% of arbitration cases.

Protecting low-income borrowers. 

The Consumer Financial Protection Bureau said it would review a rule this week that required payday lenders. This rule should determine whether borrowers can afford to repay loans before they are approved. The rule should come into force in August 2019. It will reduce repeated attempts by lenders to debit payments from a borrower's bank account.

CFPB officials say the regulation will fix a system that is rigged against borrowers. Payday loans that carry an annual interest rate of 300% (sometimes up to $500) and are due in full by the borrower's next paycheck. Many borrowers repeatedly roll over or refinance loans, while carrying expensive new fees each time.

However, thousands of payday lenders were expected to close as a result of constraints. The industry says it will cut off a vital credit stream for financially constrained consumers.

Restaurant tips. 

The Trump Labor Department has proposed a rule that would allow restaurants to share waiter’s tips with employees such as cooks and dishwashers. But nothing in the proposed rule will discourage restaurants from accounting for the tips themselves, Shierholz says. The Obama-era rule made it clear that waiters can keep their tips.

”In each of these cases, we are talking about how to snatch the levers of influence from workers and transfer it to employers," says Heidi Shierholz, senior economist at the left-leaning Economic Policy Institute¹⁰ .

Overtime pay. 

The Obama administration adopted a rule that should have made 4.2 million more workers eligible for overtime pay. It raised threshold. But executive, administrative and professional workers are exempt from overtime of $47,566 from $23,560. This ruling was overturned last year by a federal judge. The Trump administration will appeal the decision, but Labor Secretary Alexander Acosta noted that it went too far. He also added that he will seek a more modest increase in the threshold. This will make fewer workers eligible.

The Dodd-Frank financial reform. 

Congress tried to abandon the radical reform law passed after the 2008 financial crisis. This happened after Trump took office. A bill passed by the House would weaken the CFPB. His current funding from the Federal Reserve¹¹  will be replaced by congressional appropriations. Thus, it will leave him vulnerable to political quarrels. CFPB has established new safeguards for mortgage and sued a major provider of student loan. It returned almost $ 12 billion to more than 30 million consumers. These consumers have been deceived by banks or other financial firms.

The Senate proposal will give home buyers greater access to mortgages. However, Weintraub argues it will ease to verify more risky loans. This will increase the chances of default for less creditworthy borrowers. Such defaults contributed to the financial crisis.