John Locher/AP Photo
Republican presidential nominee former President Donald Trump arrives to speak during a campaign event at the World Market Center, September 13, 2024, in Las Vegas.
Donald Trump’s recent bid for votes by giving away a host of tax benefits and exemptions would bring the total cost of his tax plan to between $8.5 trillion and $9.75 trillion over a decade, according to a Prospect review of estimates by tax study organizations.
Over the last few months, Trump has vowed to eliminate taxes on tips, cancel taxes on Social Security benefits, end taxes on overtime pay, reduce the corporate tax rate to 15 percent for domestic manufacturers and 20 percent for other corporations, and repeal the cap on the state and local tax deduction (SALT) that he himself signed into law in the 2017 Trump tax cuts. (He has also called for a deduction of “major newborn expenses” but since he gave no indication of what a major expense is, that is impossible to model.)
Trump would extend all of the other tax cuts in his 2017 law other than that SALT cap. The cost of that extension has already been put at $4.6 trillion over ten years, but if the SALT cap is not retained, that would cost another $1.2 trillion. Total estimates for a 2017 tax cut extension without the SALT cap, as listed by tax analysts, ranges between $5.1 trillion from the Committee for a Responsible Federal Budget, to $5.3 trillion from the Tax Foundation, to $5.8 trillion if you add the Congressional Budget Office estimate to the CRFB estimate of the cost of SALT cap repeal.
Ending taxes on Social Security benefits costs between $1.2 trillion and $1.8 trillion over ten years, depending on what estimate you use. No taxes on tips, which the Kamala Harris campaign has also adopted, adds as little as $100 billion and as much as $250 billion. The overtime exemption could reach $1.1 trillion, and a separate estimate puts it at $1.6 trillion. That number in particular is quite variable because exempting overtime invites abuse; people could list many overtime hours in one week and fewer hours the next. (Similarly, people could reclassify their income as tips as well to take advantage of the tax-free rate.)
Overall, Erica York of the Tax Foundation puts the three exemptions on overtime, Social Security benefits, and tips at $2.9 trillion, while noting that it could reach higher. If we take that figure and add it to the Tax Foundation’s $5.3 trillion estimate on extending the 2017 cuts without the SALT cap, that brings us to $8.2 trillion over a decade. If you use the most expensive estimate on everything, you’d get $3.65 trillion on those three exemptions, and $5.8 trillion on the 2017 tax cut extension without a SALT cap. That comes to $9.45 trillion.
Then there are the corporate tax changes. The tick down for all corporations from a nominal rate of 21 to 20 percent is about $110 billion over that decade, the Tax Foundation estimates. If you produce a tax credit for domestic manufacturing that limits those industries’ corporate tax rate to 15 percent, that’s another $200 billion. Add it all up and it’s between $8.5 trillion and $9.75 trillion over a decade. So the new tax cuts are now more costly than the extension of the 2017 tax cuts.
And I haven’t included the expected increase in the Child Tax Credit (CTC), which Trump has not stated a full position on but which his running mate Sen. J.D. Vance (R-OH) has suggested could be taken up to $5,000 per child, which depending on the policy design would cost between $106 billion and $241 billion just in year one. That could cost as much as $3 trillion over a decade.
The majority of these Trump tax cuts would be regressive and skewed toward the wealthy.
Harris has big plans on CTC as well, and would extend the Trump tax cuts for those making under $400,000, while also eliminating the tax on tips. But Harris has agreed to an array of increases in taxes on the wealthy and corporations that would offset those loses and leave money left over for investment.
In April, using what were then the numbers, I put the difference between Trump and Joe Biden on taxes at $6 trillion. With Trump’s new promises and plans, it’s more like $11 trillion.
The majority of these Trump tax cuts would be regressive and skewed toward the wealthy. The average tax change from extending the 2017 cuts would be about $110 for the poorest 20 percent and $45,790 for the richest 1 percent, according to the Institute on Taxation and Economic Policy. The no-tax-on-tips policy only affects those who have a federal tax burden already, which would be the upper echelon of tipped workers. The same principle applies to Social Security benefits, which only higher-income households pay. SALT cap repeal would be wildly regressive, almost entirely benefiting high-income earners. The overtime exemption in theory would help lower-income hourly workers who qualify, but the gamesmanship could go up the income ladder (and keep in mind that while in office, Trump cut overtime protections for more than eight million workers). And of course, corporate tax cuts benefit large corporations the most.
Trump has boasted that you could not only pay for all tax cuts with the tariffs but still have enough left over to fund investments in things like child care. But the most aggressive tariff he’s ever proposed, with 20 percent across the board on all imports and up to 60 percent tariffs on Chinese goods, wouldn’t even cover the increase in debt from the extension of the 2017 tax cut, let alone all of the new handouts he’s making in a play for votes. And that’s if all the goods that are imported today are still imported with the increased tariffs, which is not how tariffs are supposed to work; the idea is to increase domestic production and reduce the trade deficit. The tariff would need to be close to 60 percent across the board to cover all the tax cuts being promised.
Trump would also repeal the 2022 Inflation Reduction Act, which would reduce the tax credits for clean-energy manufacturing. Since many of those investments have been placed in Republican-led states, Republicans have resisted a full dissolution of those tax benefits for green-energy companies. But even if we’re charitable and assume all the tariffs go through at the maximum level, and the repeal of the IRA also goes through, the maximum estimate would be revenue of around $4.8 trillion, which still leaves Trump short between $3.7 and $4.95 trillion overall.
This is, of course, all funny money. Republicans are trying to sound noncommittal on Trump’s tax plans while being fundamentally opposed to them. Yet the history of the Republican Party over the past decade is one that mildly objects but ultimately capitulates to whatever Trump wants. So we have to keep open the possibility, at least, that such a cave-in will happen again if Republicans have full governing control in Washington.
In fact, Sen. Mike Crapo (R-ID), who would become the lead Republican on the tax-writing Senate Finance Committee if the GOP takes the Senate, has already said that extending the Trump tax cuts doesn’t cost anything, because it’s current policy today. That game-playing with the “current law” and “current policy” baselines can make trillions of dollars in red ink vanish in a flash.
The amusing part of all this is that Republicans never miss a moment to accuse Democrats of trying to buy votes. Yet Trump, sensing his grip on the election slipping away, is doing the equivalent of handing out free coupons at every campaign rally.
