Trump dangles tax relief targeted toward the voters he’s hoping to win

Donald Trump has dangled in front of voters what many Republican candidates before him have offered in the past.

“If you vote for me, I’m going to reduce your taxes,” the former president told a New York crowd this week.

How Trump plans to cut taxes, though, depends on whose support he is seeking.

In Nevada, a purplish state that teeters on the votes of the blackjack dealers, servers and hotel workers who keep Las Vegas running, Trump vowed to eliminate federal taxes on their tips. For the country’s most reliable voting bloc – people over 65 – Trump offered a different incentive: “Seniors should not pay tax on Social Security!” he wrote on social media. To the blue-collar workers his campaign is aggressively competing for, Trump this month pledged to get rid of taxes on their overtime wages.

“It’s time for the working man and woman to finally catch a break, and that’s what we’re doing,” Trump said in Tucson, Arizona, specifically mentioning police officers, nurses, construction workers and other skilled laborers among those who would benefit.

And his latest proposal – a bigger deduction for people who pay higher state and local taxes – he pitched as “saving thousands of dollars for residents of” his former home state of New York (which he insists he can win) but also Pennsylvania, the most fought-over battleground of the 2024 cycle.

All together, his promised tax cuts would cost trillions of dollars.

In his third White House bid, Trump has sought to simplify his party’s messaging to appeal to more working-class voters. Catchy slogans like “No tax on tips” and “Make America Affordable Again” have replaced bedrock Republican orthodoxy – including deficit reduction – and lengthy policy statements in the streamlined platform his campaign forced on the GOP during their July convention in Milwaukee.

His tax proposals this time around are ready-made to fit on campaign signage at his events and to be featured in television ads, of which there are several airing in battleground states. A super PAC aligned with Trump has even put “No Tax on Tips” onto stickers for supporters to spread by plastering on their restaurant bills.

However, while the string of narrowly focused-but-vague tax cuts Trump has promised may sound good to some voters, their lack of details makes it hard to know exactly who would benefit.

Also, the measures would come at a steep cost to the federal budget and, likely, to the Social Security and Medicare programs. Trump has not said how he’d pay for this tax relief, other than to point to tariffs, which he argues will bring in trillions of dollars in revenue – though even if they did, it likely wouldn’t cover all of his promises, some experts have said.

“What you’ve got is stuff that is, I call it hyper-targeted,” said Howard Gleckman, senior fellow at the nonpartisan Urban-Brookings Tax Policy Center, who noted the contrast between the Republican nominee’s recent promises and the broad-based and relatively detailed tax measures Trump floated in his 2016 presidential campaign. “You can almost see the focus group that was behind each of these proposals.”

The proposals from Trump speak directly to an American public still shell-shocked by an inflation boom and come with a promise to put more money in their pockets if they put him back in the Oval Office. Lingering angst over prices and pay remains a top concern of many heading into the election to the benefit of Trump, who most voters tell pollsters is better suited than Vice President Kamala Harris to handle the economy.

That gap in the polling between Trump and his Democratic rival when it comes to the economy, though, has narrowed since Harris replaced President Joe Biden on the ticket. Like Trump, Harris has put forth a series of populist economic proposals – including her own pledge to end federal taxes on tips. Trump has accused Harris of copying him.

The vice president, meanwhile, is leaning in on targeted tax credits and deductions to offer relief to specific Americans. To help families with the cost of child rearing, she has proposed restoring the American Rescue Plan’s popular expansion of the child tax credit to as much as $3,600 per year, up from $2,000, and called for it to be made permanent. Plus, she wants to create a $6,000 child tax credit for families with newborns.

For those looking to become homeowners, Harris’ plan would provide up to $25,000 in down payment support and a $10,000 tax credit for first-time buyers. And Harris has proposed increasing a tax deduction for new small businesses to $50,000, up from $5,000.

Trump’s tax cut promises

The former president kicked off his tax cuts bonanza at a June rally in Nevada, where he vowed to eliminate taxes on tips.

But the proposal may not mean much for some tipped workers since they earn too little to pay federal income taxes. Some 60% of households with workers who receive tips would benefit, and their average tax cut would be about $1,800, according to the Tax Policy Center.

If Trump also eliminates payroll taxes, which support Social Security and Medicare, then virtually all tipped workers would get a tax break, totaling an average of more than $2,100 when including both income and payroll taxes, the Tax Policy Center found. However, these workers would then get smaller Social Security payments after they retire.

Plus, ending taxes on tips would hurt the federal budget, reducing revenue by between $150 billion to $250 billion over a decade, according to the Committee for a Responsible Federal Budget, a watchdog group.

Next up were senior citizens. Trump announced in late July that Social Security recipients would no longer have to pay taxes on their benefits if he were elected.

The move would benefit many older Americans, at least initially. It would lower taxes on US households by an average of $550, but the amount would vary greatly by income level, according to the Tax Policy Center. However, lower-income seniors would see little, if any, change since they don’t owe taxes on their Social Security payments. The biggest winners would be middle-income and upper-middle-income households, which would see the largest boost as a share of after-tax income.

However, eliminating the tax would also weaken both Social Security’s and Medicare’s trust funds, which are already on shaky financial ground. The Social Security retirement trust fund would be depleted more than a year earlier, and Medicare’s hospital insurance trust fund would run dry six years earlier, according to the Committee for a Responsible Federal Budget. Once the trust funds are exhausted, the entitlement programs would not be able to fully pay benefits. Seniors whose payment cuts are larger than their tax savings would lose out, with lower-income recipients being hurt the most.

Also, eliminating the tax would increase federal deficits by between $1.6 trillion and $1.8 trillion through 2035, a committee analysis found.

Earlier this month, Trump announced he would end taxes on overtime pay, which would be a boost for hourly and some salaried workers. Without more details, though, it’s hard to know who would benefit and how much they’d save in taxes. But the right-leaning Tax Foundation projected that eliminating federal income taxes on all overtime pay could cost $680 billion over a decade, while getting rid of both income and payroll taxes would increase the price tag to $1.1 trillion.

Most recently, Trump announced on Truth Social ahead of a New York rally that he would jettison the $10,000 limit on state and local tax, or SALT, deductions – a cap that he signed into law as part of his 2017 tax cuts law. It largely affects higher-income people in high-tax blue states who itemize their deductions.

Eliminating the cap would increase the cost of extending the 2017 Tax Cuts and Jobs Act by $1.2 trillion over a decade, according to the Committee for a Responsible Federal Budget, which called such a move “costly, distortionary and regressive.” Some 92% of the relief would go to the top 10% of households, while less than 1% would go to the bottom 60%.

Trump’s lurch toward economic populism isn’t limited to just tax cuts. At the New York rally, Trump promised to temporarily cap interest rates on credit cards at 10% “while working Americans catch up.” The average credit card rate is just under 21%, while the average rate on retail store cards is a record high 30.45%. Credit card debt has topped $1 trillion, and more people are falling behind on their payments.

The conservative Heritage Foundation, however, is not a fan of putting a limit on credit card rates, likening it to “price controls” – a term Trump has used to bash Harris’ proposal to ban corporate price gouging.

Whether any of these proposals become law remains in doubt since they would require approval by Congress, which could remain very divided after November’s election.

Trump told a Nevada audience he would end taxes on their tipped wages on Day One – an unrealistic timeline that his campaign later backtracked on.

“President Trump will ask Congress to eliminate taxes on tips,” spokeswoman Karoline Leavitt told CNN in June.

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