Donald Trump’s proposed tax cuts: Can the U.S. afford them?
Donald Trump has been proposing various tax cuts to different audiences as he campaigns for the presidency. His proposals could come at a great cost.
With less than two months before the November presidential election, Donald Trump has been promising various tax breaks when he goes on the campaign trail.
His proposals include exempting Social Security benefits, overtime pay, and tips from being taxed, and reducing the corporate income tax rate.
The former president has said he plans to finance his proposals by imposing much higher tariffs and withdrawing green energy tax subsidies.
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Republican lawmakers could have difficulties implementing Trump’s proposals
Trump’s promises appear to be geared towards particular sets of voters, but his fellow Republicans in Congress admit some of them would be difficult to fulfill.
According to news website Politico, Republican Sen. John Cornyn of Texas acknowledges some of Trump’s ideas may be unrealistic.
“I understand that candidates, when they campaign, they float a variety of different ideas, but they can’t all be true,” said Cornyn.
“We’re going to have to deal with reality when we’re actually making laws,” he added.
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Donald Trump’s proposed tax cuts: Can the U.S. afford them?
According to independent think tank Tax Foundation, exempting overtime pay from individual income taxes would reduce government revenue by $680.4 billion over 10 years, increasing the tax cuts he has already promised from $6.1 trillion to $6.8 trillion.
This would amount to a deficit of $2 trillion over 10 years considering his tax and tariff plan, according to the research organization. Taking into account further exemptions of all overtime pay from employee-side payroll taxes, including those for Social Security and Medicare, tax revenues would slide by another $1.1 trillion over 10 years.
Trump’s proposals for tax breaks are not only costly, they are also difficult to implement. According to Republican Sen. James Lankford, there are a lot of issues involved in the ex-president’s proposal to make tips tax-exempt. “We have to figure out operationally how that would actually work,” he said, per Politico.