Trump is now promising several surprising tax breaks for millions of Americans, a way for the average person to keep more money.
An increasing number of Americans may benefit from tax cuts if former President Donald Trump returns to the White House.
Recently, Trump has proposed various tax breaks for different groups, including senior citizens, tipped workers, overtime earners, and homeowners in high-tax states.
His latest proposal, announced during a campaign stop in New York, aims to eliminate the $10,000 cap on state and local tax (SALT) deductions that he implemented in the 2017 Tax Cuts and Jobs Act (TCJA).
The financial implications of Trump’s tax proposals are significant, especially since they would be in addition to his plans to extend the TCJA tax cuts set to expire in 2025 and to reduce the corporate tax rate from 21% to 15%.
To offset these costs, Trump has suggested introducing new tariffs on all U.S. imports.
In a recent interview, Trump referred to tariffs as “the most beautiful word there is,” expressing confidence that they could reduce the national deficit to a manageable level and foster economic growth.
However, experts believe that the proposed tariffs are unlikely to sufficiently cover the costs of Trump’s extensive tax cuts.
According to a September 20 analysis by TD Cowen analyst Jaret Seiberg, Trump’s tax proposals could cost up to $9 trillion over the next decade, while forecasts from the Tax Policy Center estimate that the proposed tariffs would generate around $2.8 trillion in revenue during that same period.
Marc Goldwein, senior policy director for the Committee for a Responsible Federal Budget, commented on Trump’s approach, noting that it seems he promises tax cuts tailored to the interests of specific locations.
He cautioned that the accumulating costs could be substantial, stating, “Tariffs can’t cover this whole agenda.”
Meanwhile, Vice President Kamala Harris is also proposing various tax benefits aimed at groups such as new parents and first-time homebuyers.
Her campaign plans to raise revenue by increasing the corporate tax rate to 28% and reversing TCJA tax cuts for high earners.
Estimates from the Penn Wharton Budget Model suggest that Harris’s plans could lead to a $1.2 trillion increase in the deficit over the next decade, compared to $5.8 trillion for Trump’s proposals.
If Trump eliminates the SALT deduction cap, the deficit could rise by an additional $6.9 trillion, according to Kent Smetters, the faculty director of the Penn Wharton Budget Model.
Despite the efforts, both presidential candidates are facing criticism from tax experts and fiscal conservatives for their plans, which are expected to contribute to a projected $1.9 trillion deficit in fiscal year 2024, marking a 27% increase from earlier forecasts.
Goldwein remarked, “It seems both candidates are likely to be in the red.”
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