93 million Americans could be exempt from income taxes under Trump’s tax plans

According to CNBC’s analysis of multiple estimates, approximately 93.2 million Americans, a significant portion of the U.S. electorate, could potentially benefit from former President Donald Trump’s tax reform proposals. These ideas include the possibility of providing total or partial income tax exemptions to eligible individuals.

Trump has proposed a comprehensive tax reform as part of his economic agenda, which includes a range of income tax benefits for voters.

The Republican presidential nominee has already put forth several proposals. One of these is the elimination of income tax on tips and Social Security benefits. Additionally, he has also suggested doing away with overtime pay. In a recent interview on the sports media site OutKick, Trump expressed his openness to the idea of tax exemptions for firefighters, police officers, military personnel, and veterans.

As part of his broader vision to move away from the current income tax system, President Trump has implemented certain exemptions. These exemptions aim to replace the revenue generated by his tough tariff proposals.

“In the 1890s, during a time when our country was at its peak prosperity, we had a smart approach. We were a smart nation, implementing tariffs and without the burden of income taxes,” Trump stated during a recent gathering with New York voters. He expressed his belief that the current system, with income taxes in place, is causing unnecessary harm, leading to loss of life.

In his promise, Trump has committed to implementing a 20% universal tariff on imports from all countries, while targeting Chinese imports with a higher rate of 60%.

Tax experts dismiss the idea that getting revenue from tariffs could completely compensate for the financial losses caused by eliminating income taxes.

According to Garrett Watson, a senior policy analyst at the nonpartisan Tax Foundation, the math doesn’t add up.

According to his statement, Trump’s tariffs are projected to generate around $3.8 trillion in revenue over the next ten years. This amount, however, falls significantly short of the estimated $33 trillion that income taxes are expected to generate during the same time frame.

The strategy employed by Trump seems to revolve around the idea of replacing income tax revenue with a hidden sales tax. This is because, historically, tariffs have been paid by U.S. importers and those costs have typically been transferred to consumers.

Tariffs can have a significant impact on low-income consumers, similar to sales taxes and other costs incurred at the point of sale. For individuals with lower incomes, these amounts tend to represent a larger portion of their monthly budgets.

According to the Social Security Administration, approximately 68 million Americans receive Social Security benefits every month. Additionally, Yale University’s Budget Lab estimates that in 2023, around 4 million workers were employed in tipped jobs.

According to the U.S. Department of Veterans Affairs, as of March 2023, there are an estimated 18.6 million living veterans. The Department of Defense reports that there are approximately 1.3 million active-duty military personnel. Additionally, there are around 800,000 sworn law enforcement officers and roughly 500,000 paid firefighters.

These reforms, when combined, have the potential to relieve approximately 93.2 million individuals from the burden of paying at least a portion, if not the entirety, of their income taxes.

Approximately 38% of the 244 million eligible American voters in 2024 fall into this category.

The number of people who would benefit from Trump’s proposed tax cuts is significant. However, it’s important to note that this total does not include those who would also be exempt from paying taxes on overtime pay if Trump’s plan to eliminate taxes on overtime pay is implemented. Additionally, the actual number of individuals who would benefit from these tax breaks may vary depending on the extent of overlap between the different taxpayer groups identified by Trump.

According to the Tax Foundation, federal tax revenue would be reduced by $2 trillion over the next 10 years due to tax exemptions on tips, overtime pay, and Social Security benefits.

According to the Tax Foundation’s Watson, Trump’s proposal to provide tax exemptions for tips, Social Security benefits, overtime work, and workers in specific occupations is in line with his tendency to promise tax benefits that are narrowly targeted. However, these proposals lack a strong underlying policy rationale and fail to consider the potential impact on revenue collections or the complexity of the tax system.

According to the Tax Foundation, if we take into account Trump’s tariff plans and other tax cuts, his overall plan is projected to reduce federal tax revenue by approximately $3 trillion from 2025 to 2034.

Analysts view Trump’s plan to shift away from income taxes as somewhat unrealistic.

According to a report by Evercore analysts in June, they stated, “Spoiler alert: We don’t think tariffs will replace income taxes.”

Vice President Kamala Harris’ campaign did not immediately provide a response when CNBC reached out for comment regarding Trump’s tax plans.

In addition to pledging to make his 2017 tax cuts permanent, Trump has also proposed significant changes to the income tax system. These changes are aimed at further reducing tax burdens for individuals and businesses.

Source

Leave a Reply

Your email address will not be published. Required fields are marked *