Former President Trump Proposed Tax Plan

In our previous note, we produced a note highlighting Vice President Kamala Harris' tax proposal.  In this note, we are providing you the details of Former President Donald Trump’s tax proposal. Our next note will lay out a side-by-side comparison of both of the Presidential campaign proposals. 

Fiscal Policy Findings 

Through FY2035, Trump’s tax proposal would contribute $10.20 trillion to the federal deficit, $3.70 trillion in tax revenue, and $1.0 trillion of interest cost, resulting in a total deficit increase of $7.50 trillion. 

Tax Changes

Economist finds the top one percent of Americans, or Americans making over $914,900 per year, will receive a tax cut of $36,300 on average. Americans in the lowest income percentile will experience a tax increase of roughly $800, on average. 

Middle-Class Americans within the middle 20% and fourth 20% quartile absorb a higher burden of Trump’s tax allotment while the top 1% and next 4% quartile receive the greatest benefit from the Republican candidate’s proposal.

The former President plans to extend tax cuts he implemented from the 2017 Tax and Jobs Act and eliminate taxes on income from tips, social security, and overtime pay. Trump plans to generate tax revenue from taxing imported goods.

Tariffs’ on Imported Goods

The Trump campaign proposes a 60% tariff on goods coming from China and tariffs up to 20% on goods imported from other countries. Economists conclude tariff increases on imported goods will increase the cost of goods, which would make the consumer foot the bill on Trump’s proposed tariff increase. Here's how:

Double Taxation

Trump announced he supports ending double taxation on Americans who live and work abroad. Currently, the United States tax its citizens on total income regardless of where the income is generated or where they live. In leading countries, the United States stands alone with its policy on crossborder taxation, whereas most countries have systems in place that tax individuals based on where they live.

Americans living abroad can have tax obligations both to the U.S. and to the country where they reside, though U.S. tax laws have some features to mitigate those dual burdens. Current tax exclusions include foreign earned income exclusion, the foreign housing exclusion and the foreign housing deduction.

The U.S. policy on double taxation dates back to the 1860s and the income tax created was intended to finance the Civil War.