With the election nearing, the presidential candidates are making their final appeals to voters. We’ve heard candidates’ stances on several pocketbook issues—the minimum wage, child care costs, taxes—but neither Clinton nor Trump have spoken much about wealth.
Different from income, wealth—what a family owns minus what it owes—is a key means for families to weather emergencies, afford a down payment or college tuition, and secure a comfortable retirement. Yet for many decades now, some Americans have been falling behind. Twenty percent of families hold only about $4,000 or less in wealth. The median family has about $80,000—no more than what the median family in the 1980s possessed (adjusted for prices), despite an economy in which average income and average wealth has about doubled since then.
Young families and families of color have fallen especially behind. People in their 20s and 30s today appear to be on a slower wealth-building trajectory than their parents’ generations. African American and Hispanic households on average have not gained at all in recent decades relative to white families on key wealth accumulation measures such as homeownership and retirement savings.
Right now, federal wealth building incentives happen mainly in the tax code through subsidies that give little support to low- and middle-income families: Less than 10 percent of two major housing tax subsidies goes to the bottom 60 percent of earners, and less than 15 percent of three major retirement savings tax subsidies do so.
Both candidates’ tax plans would, as a side effect, reduce these largely inefficient tax subsidies—Clinton’s by limiting the value of itemized deductions and Trump’s through moving more taxpayers to take the standard deduction, capping itemized deductions, and lowering rates. Since many of these deductions likely subsidize savings that would have occurred anyway, limiting them would likely have little effect on saving. But would the candidates replace them with policies that help families save more and borrow smarter?
There are many avenues beyond tax policy to encourage wealth-building: lifting asset limits in safety net programs, incubating innovative consumer financial products while curbing harmful or unproductive ones, and supporting state initiatives to expand automatic enrollment in retirement accounts, to name a few. Unfortunately, they haven't gotten much attention in debates or stump speeches in this election cycle. Before Election Day, it would be informative—and refreshing—for these issues to be put more in the limelight.