Trump Says He’d Cut Taxes If Elected: Why That Might Not be Great for Your Wallet
Written by
Dawn Allcot
Edited by
Maria Concepcion
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Donald Trump could be headed for the White House in 2024, based on his standings in polls over fellow Republicans and even President Joe Biden, according to ABC News. Biden could be losing voters over the economy, according to the news outlet. An ABC News / Washington Post poll indicated only 30% of voters approve of how Biden has handled the economy. But what are Trump’s plans for the economy?
Tariffs on Foreign Products
In August 2023, Trump told Fox Business he planned to increase tax on imported products by as much as 10%. He planned a 4-year phase-out of all Chinese imports of essential goods. However, as American producers would have to seek to ramp up production, the price of many consumer goods, including electronics, could rise in the short term, ABCNews.com reported.
Tax Cuts
Trump additionally claimed that an increase in the cost of goods would be offset by tax cuts. He wants to make sure the tax cuts established by the Tax Cuts and Jobs Act of 2017, which are set to expire in 2025, will be extended.
As previously reported by GOBankingRates, some of these changes and cuts include restructured tax bracket spans, and reduced tax rates for all but those in the 10% and 35% tax brackets. Most people paid 1% to 4% less during the time the TCJA was in effect.
Standard deductions increased, making more Americans likely to claim the standard deduction rather than itemize their deductions. Trump also doubled the estate and gift tax exemption under the TCJA, a change that primarily helped America’s ultra-wealthy.
How Tax Cuts Could Affect You
In spite of Trump’s claims that the TCJA helped reduce taxes for Americans, news reports from the 2018 tax season showed Americans getting smaller refunds. With the reduction in withholding taxes throughout the year, many Americans were surprised by large tax bills, CNBC.com reported.
If you didn’t adjust your withholdings, you might still be getting less money back in 2024. This will continue through 2025 if Trump is elected and the government votes to extend TCJA-era tax cuts.
Many Americans rely on their tax refunds to bolster their emergency savings, pay down high-interest debt, and pay bills, according to a recent GOBankingRates.com survey. While you don’t necessarily want a large tax refund, because it just means the federal government has held onto your money, tax-free, all year, you also don’t want to have a tax liability resulting in a big tax bill.
How Additional Tax Cuts Could Affect the U.S.
But extended tax cuts could do more than hurt your wallet at tax time. Making the TCJA permanent could add $3.5 trillion to the U.S. debt, according to an analysis from the Congressional Budget Office. More debt could increase the risk of a government defaulting on its debt, and the U.S. credit rating could drop even further.
Plus, some believe Trump intends to make up for the lost tax money by re-evaluating Social Security and Medicare programs. Although Trump told CNBC he intends to target theft and bad management, the Biden Administration promised not to touch these programs, Reuters reported. “Many of my Republican friends want to put social security and Medicare back on the chopping block again,” Biden said in a campaign speech in New Hampshire, published on the White House website. “If anyone tries to cut social security or Medicare or raise the retirement age again, I will stop them.”
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