Monday, December 16, 2024

Donald Trump has made at least 10 new tax cut promises. Can he keep any of them?

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It was last week at a campaign stop when — for the second time in as many days — Donald Trump revealed a new and potentially expensive tax promise.

The topic du jour was a call to make car loan interest fully tax deductible. The day before, he promised another cut for Americans who live abroad.

The two proposals were, by Yahoo Finance’s count, at least the 9th and 10th distinct tax cut promise Trump has made in recent months. They include his calls for fully extending his 2017 tax cuts with modifications and an array of add-ons such as eliminating taxes on tips, overtime and Social Security benefits.

But he has offered little in the way of ideas to pay for it and may face opposition even from his own party in enacting them if he wins.

As for the cost of all these promises, the closest thing to a total tab comes from the Committee for a Responsible Federal Budget (CRFB). It finds that Trump’s tax promises could cost over $9 trillion over the next decade.

But that total doesn’t yet include the two new proposals unveiled last week as well as other promises that don’t have enough detail to calculate.

Kamala Harris, of course, has her own tax cut ideas but the sheer scale of Trump’s promises are notable.

The list has been met with a combination of shock and dismissive eye-rolls from tax experts, but the critics have done little to dissuade him from unveiling out new proposals regularly and dangling the promised new benefits directly to the groups of voters most interested.

Trump is also promising one significant tax hike (though he’d never call it that) in the form of a new wave of tariffs that experts say could add thousands to US family budgets. Tariffs are taxes that are paid by importers at US points of entry with the additional costs often passed on to final consumers.

Here’s a quick pass through Trump’s many promises and the many challenges they would face before becoming law:

Former US president and Republican presidential candidate Donald Trump addresses the Detroit Economic Club at the Motor City Casino in Detroit, Michigan, on October 10, 2024. (Photo by JEFF KOWALSKY / AFP) (Photo by JEFF KOWALSKY/AFP via Getty Images)

Former president and Republican presidential candidate Donald Trump addresses the Detroit Economic Club on Oct. 10. (JEFF KOWALSKY/AFP via Getty Images) (JEFF KOWALSKY via Getty Images)

Many of Trump’s ideas are clearly intended to appeal directly to blocs he needs to win in November.

“Do we have any people that work in restaurants?” he asked a recent crowd in Reading, Pa., before reiterating his promise of no tax on tips. Likewise, his latest auto loan idea was unveiled in Motor City aka Detroit.

When the audience includes seniors, his focus switches to removing taxes on Social Security benefits. Trump’s plan there would cut into the program’s funding source and has led to worry it could lead to an even faster decline in the safety net program.

Indeed, these series of targeted proposals have, in addition to their cost, also been criticized by economists for potentially warping incentives if, say, the tips or overtime are not taxed but regular wages are.

A recent analysis from the Budget Lab at Yale focused on how implementing these ideas would heighten “horizontal inequities” in the tax system. In other words, two people making the same amount of gross pay could pay vastly different taxes depending on whether their compensation does or does not include tips or overtime.

Democrats have been even less kind. “These tax proposals he’s floating out of desperation are as fake as his tan,” Senate Finance Committee Chair Ron Wyden offered in a statement. “Trump knows Republicans in Congress have no intention of passing this stuff, but he goes ahead and blurts it out anyway.

ASHEVILLE, NORTH CAROLINA - AUGUST 14: Republican presidential nominee former President Donald Trump arrives to speak at a campaign event at Harrah's Cherokee Center on August 14, 2024 in Asheville, North Carolina. Trump is speaking on the economy as the presumptive Democratic nominee Vice President Kamala Harris surges in the polls in swing states. (Photo by Grant Baldwin/Getty Images)ASHEVILLE, NORTH CAROLINA - AUGUST 14: Republican presidential nominee former President Donald Trump arrives to speak at a campaign event at Harrah's Cherokee Center on August 14, 2024 in Asheville, North Carolina. Trump is speaking on the economy as the presumptive Democratic nominee Vice President Kamala Harris surges in the polls in swing states. (Photo by Grant Baldwin/Getty Images)

Republican presidential nominee former President Donald Trump arrives to speak at a campaign event last August in Asheville, N.C. (Grant Baldwin/Getty Images) (Grant Baldwin via Getty Images)

Trump has weighed in on the key 2024 issue of housing affordability by unveiling a GOP platform that promises to “promote homeownership through Tax Incentives and support for first-time buyers.” That’s an idea the CRFB estimates could cost between $100 and $350 billion if enacted.

Trump’s latest targeted promise to make interest on car loans work in a similar way as the current mortgage interest deduction for homeowners.

“We’re going to make it fully deductible, the interest payments,” Trump said in unveiling the idea, saying it would revolutionize the auto industry and comparing the idea to the invention of the paper clip.

Trump’s other new promise is a pledge to eliminate “double taxation” for Americans living overseas.

“You have to make sure that you are registered and you are going to vote, because I’m going to take very good care of you,” Trump promised that audience in a web video.

Trump has also made a wide array of promises directly linked to the 2017 Tax Cuts and Jobs Act. Those tax changes that Trump himself signed into law came with an expiration date on major provisions at the end of 2025.

The GOP nominee is pledging to fully extend expiring provisions of those tax cuts. It’s his most expensive promise and one that he repeats at nearly every campaign stop but one that his allies on Capitol Hill may be shifting away from.

That 2017 law also lowered the federal corporate tax rate to 21%. Trump now wants it even lower and has settled on 15%, calling it a “Made in America tax credit.” It’s a rate he previously worried privately was too low and another front where his party might not be fully behind him.

Former US President and Republican presidential candidate Donald Trump dances onstage as he concludes his remarks during a campaign rally at Johnny Mercer Theatre Civic Center in Savannah, Georgia, on September 24, 2024. (Photo by CHANDAN KHANNA / AFP) (Photo by CHANDAN KHANNA/AFP via Getty Images)Former US President and Republican presidential candidate Donald Trump dances onstage as he concludes his remarks during a campaign rally at Johnny Mercer Theatre Civic Center in Savannah, Georgia, on September 24, 2024. (Photo by CHANDAN KHANNA / AFP) (Photo by CHANDAN KHANNA/AFP via Getty Images)

Former President and Republican candidate Donald Trump dances onstage before a banner touting a 15% corporate tax rate during a campaign speech in Savannah, Ga., on September 24. (CHANDAN KHANNA/AFP via Getty Images) (CHANDAN KHANNA via Getty Images)

Trump has also pledged to reverse a separate provision of the 2017 law that put a $10,000 cap on state and local tax (SALT) deductions. That cap was included at the time to help offset some other costs but is deeply unpopular in coastal — and often Democratic run — states with higher local taxes.

Trump unveiled that idea in (where else) New York, where anti-SALT sentiment runs deep.

Finally, Trump has teased additional unspecified cuts “for working families” as part of next year’s tax negotiations but hasn’t offered any additional details there.

It all adds up to a massive slate of pledges that pushes the bounds of even presidential campaign trail promises.

Vice President Harris is making plenty of pledges of her own. Like Trump, she is promising no taxes on tips as well as tax credits for homebuyers.

She is also set to push for a limited extension of those 2017 tax cuts, but allow provisions for Americans making over $400,000 to expire.

According to the CRFB, she likely to increase the debt by $3.5 trillion through 2035. President Trump’s ideas, meanwhile, would mean much more: $7.5 trillion in new red ink.

And is Trump even done with the promises? That seems unlikely with about three weeks remaining until voting ends and plenty of campaign stops ahead.

One big possibility: an expansion of the child tax credit that Harris has made a centerpiece of her campaign and GOP Vice Presidential nominee JD Vance has expressing support for expanding.

Ever since Vance’s August comment Trump has been, according to aides, considering throwing his weight behind “a significant expansion” there.

Ben Werschkul is Washington correspondent for Yahoo Finance.

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