Donald Trump has promised to end taxes on everything from tips to Social Security and overtime if he is re-elected to the White House. But he has not detailed how he would finance those ideas and avoid running a massive budget deficit, other than arguing that he would usher in an economic boom.
He argues that his ideas would improve Americans’ personal financial position and the overall American economy. A debate over the tax law will be a dominant legislative issue next year as the tax cuts Trump signed into law in 2017 are set to expire. If re-elected, Trump could push Congress to pass some or all of his proposals, although that could be difficult if Democrats ultimately gain control of the House of Representatives or the Senate.
Estimates from outside economic analyzes of the costs of the various tax cuts have ranged between nearly $6 trillion and $10 trillion over ten years, depending on which ideas become policy and how they are implemented.
A look at Trump’s various tax-related ideas:
In June, Trump announced his plan to exclude employee tips from federal taxes. He said he got the idea from a waitress at his Las Vegas hotel.
“To those hotel workers and people who get tips, you’re going to be very happy because when I get into the office, we’re not going to tax tippers, people who tip people,” Trump said, adding: “We’re going to can be done immediately, first in the office.
Trump made the announcement in Nevada, a key state with six electoral votes and home to the highest concentration of tipped workers in the country. Nevada has an average of 25.8 waiters and waitresses per 1,000 jobs. President Joe Biden won the state in 2020, but the Trump campaign hopes to play a role this fall.
Trump has not specified whether he wants to exempt tips from just income taxes or also from payroll taxes — which fund Medicare and Social Security.
Vice President Kamala Harris has echoed Trump’s call not to tax tips, making a pledge that would apply to workers in the hospitality and service industries. its own Nevada rally two months after her Republican opponent’s announcement.
Trump has also promised tax cuts for older Americans, posting on Truth Social in July that “SENIORS SHOULD NOT PAY TAXES ON SOCIAL SECURITY!”
The challenge is that taxes on Social Security benefits help pay for the program. The loss of revenue could mean that Social Security would not be able to fully pay out its benefits in 2033, two years earlier than the current estimate, said Brendan Duke of the liberal Center for American Progress.
According to the Social Security Administration, recipients currently must pay federal income taxes if combined income – 50% of the benefit amount plus any other income – exceeds $25,000 per year if filed individually, or $32,000 if filed jointly.
While in the Senate, Harris co-sponsored a bill that would require the wealthy to pay higher Social Security taxes and make benefits more generous for some. The White House has said its views on the program are similar to Biden’s, but Harris has not discussed Social Security in detail during her campaign.
Trump has also said he would support legislation to eliminate overtime taxes.
“That gives people more incentives to work,” Trump said in September at a campaign rally in Tucson, Arizona. “It gives the companies a lot, it’s a lot easier to get the people.”
Harris did not say whether she would also call for cuts in overtime taxes.
Trump’s plans also include proposed breaks for businesses. He is called up lowering the US corporate tax rate from 21% to 15%, but only for companies that produce in the US
“We put America first,” Trump said. “This new American industrialism will create millions and millions of jobs.”
As president, Trump signed legislation in 2017 that lowered the corporate tax rate from 35% to 21%.
Harris has said she believes big corporations and the ultra-rich having to pay more taxes – including a 28% rate for businesses – and wants to use that revenue to stimulate the construction of 3 million homes and provide tax breaks for parents.
Before a September rally on Long Island, Trump vowed to “get SALT back,” suggesting he would eliminate a cap on state and local tax deductions that was part of the tax cut legislation he signed into law in 2017.
The so-called SALT cap has led to larger tax bills for many residents of New York, New Jersey, California and other high-cost, high-tax states, and is a major campaign issue in those states, especially among New York Republicans who served in the districts Biden won.
Some Democrats have pushed to lift the $10,000 limit, a move many Republicans oppose. Some, including Trump’s former chief Republican Party foe Nikki Haley, have called for making the 2017 tax cuts permanent. Part of that idea is on record The Republicans’ 2024 platformalthough the permanent provision specifically mentions portions “that doubled the standard deduction, expanded the child tax credits, and stimulated economic growth for all Americans.”
Harris has not said she would try to keep the Trump-era tax cuts in place, which are set to expire at the end of next year. But like Biden, she has pledged not to raise taxes on Americans making less than $400,000 annually.
In his push to bring more foreign jobs and manufacturing back to the U.S., Trump has repeatedly said he wants higher tariffs on imported goods and has said the idea would not increase inflation. He has floated the idea of a universal tariff as high as 20% on all imports and even higher tariffs on Chinese products and on U.S. companies that move factory jobs abroad.
In a recent speech to the Economic Club of New York, Trump suggested that tariffs could be used to solve seemingly unrelated problems, such as the rising costs of childcare in the US, as part of a broader promise that tariffs could raise trillions of dollars to finance his agenda without passing those costs on to consumers in the form of higher prices. That’s a view that many economists disagree with, because tariffs directly increase the prices for purchasing goods.
Particularly when it comes to the US auto industry, it’s an idea he recently invoked again in Savannah, Georgia, where Trump said he a rate of 100% on every car imported from Mexico. Trump called for a “new American industrialism” and suggested that the only way to avoid these accusations would be for an automaker to build the cars in the US.
Harris has described Trump’s ideas for tariffs as a “sales tax” on American households that could cost a typical family about $4,000 a year.
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Kinnard reported from Columbia, South Carolina, and can be reached at http://x.com/MegKinnardAP. Associated Press writer Josh Bock in Washington contributed to this report.