If elected for a second term in the White House, Donald Trump’s proposed policies could result in tax cuts for over 90 million Americans, according to a recent economic estimate from CNBC. However, financial experts are expressing concern about the implications of these plans.
The report indicates that approximately 93.2 million people could benefit from significant income tax breaks if Trump defeats Vice President Kamala Harris next month.
As the Republican nominee, Trump has proposed eliminating income taxes on tips and Social Security benefits, as well as ensuring that overtime pay remains untaxed at the federal level.
Additionally, he has suggested offering tax exemptions for public service workers, including police officers, firefighters, and military personnel.
Trump has argued that tariffs would compensate for the revenue lost due to tax cuts. While he claims these tariffs could generate $3.8 trillion over ten years, CNBC suggests that income taxes are projected to generate $33 trillion during the same period.
Notably, around 68 million Americans receive Social Security, and about 30 million are veterans or public service employees. Trump has highlighted the historical success of tariffs, referencing the late 19th century when tariffs were prevalent and income taxes were nonexistent.
He remarked, “In the old days when we were smart… this is when the country was relatively the richest it ever was. It had all tariffs. It didn’t have an income tax.”
The proposed tariffs include a 20 percent levy on all imports and a 60 percent tariff specifically on Chinese goods.
On the surface, many middle-income families could see benefits from Trump’s tax plan. Michael Ryan, a finance expert, explained that the proposal involves raising the standard deduction and expanding the Child Tax Credit, which would provide more financial support for those in need.
However, he cautions that high-income earners and corporations are likely to reap the most significant tax breaks.
Experts are skeptical about whether the math behind Trump’s tariff plan can truly replace lost tax revenue.
Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, pointed out that past tax cuts have shown mixed results in generating increased revenue for the federal government through higher spending and hiring.
With the national debt already at a staggering level, he questions how much further taxes can be cut without exacerbating the situation.
Tariffs can also lead to higher prices for American consumers, as businesses may pass on the costs associated with increased import fees. While tax cuts may seem appealing, many people could face rising prices for everyday items like food, clothing, and household goods.
Beene noted that while tax cuts are generally popular, there are valid concerns regarding their long-term economic impact.
Kevin Thompson, the founder and CEO of 9i Capital Group, echoed these sentiments, suggesting that the proposed tax cuts might contribute to inflation.
He explained that more disposable income for consumers often leads to higher prices, which could ultimately hurt the U.S. budget if the economic growth resulting from tax cuts fails to offset revenue losses.
He warned that efforts to revive low-wage manufacturing jobs could inadvertently lead to increased costs, further fueling inflation.
As the election approaches, both Trump and Harris were contacted for comment, but responses were pending. If Trump wins, implementing these tax cuts could be challenging without a Republican majority in at least the House of Representatives.
Currently, the GOP holds a slim majority in the lower chamber, which may change after the election.
Ryan estimates that Trump’s tax cuts could add $5.8 trillion to the national debt over the next decade, potentially driving the debt-to-GDP ratio to 211 percent by 2054. He likened this situation to accumulating credit card debt—initially exciting but ultimately unsustainable.
In summary, while tax cuts are likely to be popular among voters, lawmakers remain cautious about the long-term implications of escalating national debt. As the election approaches, it will be essential for voters to consider both the immediate benefits and the potential consequences of these proposed policies.