Trump tax plans could exempt 93 million Americans from income taxes

October 21

Former President Donald Trump’s tax reform ideas could offer total or partial income tax exemptions to roughly 93.2 million Americans, or just under half of the U.S. electorate, according to CNBC’s analysis of several estimates.

As part of his economic pitch to voters, Trump has floated a sweeping tax overhaul, including a slate of income tax breaks.

So far, the Republican presidential nominee has officially proposed eliminating income tax on tips and Social Security benefits, along with overtime pay. And last week, in an interview on the sports media site OutKick, Trump said he would consider tax exemptions for firefighters, police officers, military personnel and veterans.

If implemented, those exemptions would impact tens of millions of taxpayers.

Roughly 68 million Americans receive Social Security benefits each month, according to the Social Security Administration. And in 2023, about 4 million workers were in tipped jobs, according to an estimate from Yale University’s Budget Lab.

The U.S. Department of Veterans Affairs approximated in March 2023 that there were 18.6 million living veterans. There are 1.3 million active-duty military personnel, according to the Department of Defense. And there are 800,000 sworn law enforcement officers and roughly 500,000 paid firefighters.

Taken together, these reforms could leave about 93.2 million people off the hook for at least a portion, if not all, of their income taxes.

That accounts for about 38% of the 244 million Americans eligible to vote in 2024.

This total excludes the many more people who would be exempt from part of their income taxes if Trump executed his proposed elimination of taxes on overtime pay.

These exemptions are part of Trump’s larger vision to transition away from the income tax system and replace it with the revenue he says would be generated by his hardline tariff proposals. Trump has pledged to impose a 20% universal tariff on all imports from all countries with a specific 60% rate for Chinese imports.

Given that tariffs are paid by U.S. importers and those costs have historically been passed on to consumers, Trump’s strategy would likely end up replacing income taxes with a kind of invisible sales tax.

“In the old days when we were smart, when we were a smart country, in the 1890s and all, this is when the country was relatively the richest it ever was. It had all tariffs. It didn’t have an income tax,” Trump said at a sit-down with voters in New York on Friday for “Fox & Friends.” “Now we have income taxes, and we have people that are dying.”

Analysts see Trump’s scheme to move away from income taxes as something of a pipe dream.

“Spoiler alert: We don’t think tariffs will replace income taxes,” Evercore analysts wrote in a June report.

The Harris campaign did not immediately respond to CNBC’s request for comment about Trump’s proposed tax plans.

Trump’s proposed erosion of the income tax system comes as he also pledges to make his 2017 tax cuts permanent, which are due to expire in 2025.

All together, Trump’s tax proposals would reduce federal tax revenue by an estimated $3 trillion from 2025 to 2034, according to the nonpartisan Tax Foundation.

But even if Trump were to win the November election against Vice President Kamala Harris, his tax overhaul will not see the light of day without a Republican majority in the House of Representatives, which is where all tax bills originate.

Republicans currently control the House with a razor-thin margin. Control of the chamber will hinge on the outcome of a small number of competitive districts in November.

Source link

#Trump #tax #plans #exempt #million #Americans #income #taxes

Pelican News

Source Link