Trump's Tax Cut Promises. Are They for Real?

Many of Trump’s past promises – an infrastructure package, Mexico paying for the border wall -- fell flat. Now this serial liar has queued up a great many new promises on tax cuts. Can he be believed?

Donald Trump’s Money Wheel

And so it begins. Remember the slew of tax cuts Donald Trump promised as he ran for president?

Just a day after Trump actually won the job, one of his key advisers, along with some Republicans on Capitol Hill, are already starting to throw cold water on them, according to a story by Andrew Duehren, who covers tax policy for the New York Times.

Remember Trump’s promises the last time he won the presidency? He said he’d pass a big, beautiful infrastructure package, but no dice there. He said he’d build a big, beautiful border wall, and that Mexico would pay for it. But he completed only 47 miles of primary wall, and US taxpayers paid for it. This year, he posed in front of a border wall built under Barack Obama.

Campaigning in 2016, Trump said he would repeal and replace Obamacare, but he still only has a “concept” of a plan to do this. He said he’d change our libel laws, grow the economy by 4% a year, guarantee six weeks paid leave for workers, change the vaccination schedule for kids, triple the number of ICE deportation officers, and end birthright citizenship, among other promises. But none of that got done.

Maybe you can blame the start of the pandemic for him falling short on such a large number of promises, maybe not. But again, if you recall, he promised early on that his administration had Covid under total control and that it would quickly disappear, ignoring public health officials who knew better.

So, with those thoughts in mind, let’s take a moment to take a walk through Trump’s promises this time around, led by his vow to keep intact the huge tax package he signed into law in 2017 that largely benefited the wealthy and big corporations, a goal that guaranteed GOP support. That package, due to end of the close of next year, cut the corporate tax rate to 21% from 35%, and Trump now says he plans to lower it to just 15% moving forward.

You want to bet on whether that dramatic gain for corporations will somehow “trickle down” to the rest of us?

He's also promised to reduce what taxpayers pay in every income bracket, along with restoring a deduction for state and local taxes, ending taxation of Americans living abroad, establishing tax credits for family caregivers and auto-loan interest, and cutting taxes on social security benefits, worker tips and overtime. Phew! It’s exhausting just listing them all.

In his first comments after learning he had won, Trump said “I will govern by a simple motto: Promises made, promises kept. We're going to keep our promises.” Could all of Trump’s promises be kept? Sure, but it would be a first for him, and the results could be problematic in many ways.

Tax law can be complex. And even with a one-party government like we have now, there will be philosophical differences that could make it difficult to pass these tax cuts that affect widely different groups of people. Remember the chaos that occurred in Congress as Republicans battled to fill the House leader’s post?

We’re already hearing capitulation from some Trump team insiders. Consider the views of John Paulson, a hedge fund billionaire who was a key adviser to the Trump campaign on economic issues and a potential nominee for Treasury Secretary.

“You need to keep the concept of what he wants to achieve and put guardrails around it so you achieve the goals, but lower the revenue impact,” Paulson told the NYTimes. “I have discussed that with members of his economic team, and they’re all cognizant of that.”

Instead of not taxing Social Security payments at all, as Trump said he would do, the MAGA Congress could raise the income threshold for tax-free benefits, reducing how many retirees could take advantage, Paulson told the NYTimes. Other tax cut proposals could face similar “guardrails,” substantially trimming the number of people affected.

Here’s how a key member of Congress is equivocating: “There’s just going to have to be a lot of dials adjusted. I have to thread the needle to pass a bill,” said Rep. Jason T. Smith (R-Missouri), who appears poised to hold on to the chair of the tax-writing House Ways and Means Committee, just before lawmakers left Washington in September. ”We also have to make sure we’re fiscally smart.”

Fiscally smart, hmmmm. If just the tax package benefiting the wealthy and big corporations is extended as advertised, and with a MAGA Congress in place it probably will be, the ten-year cost of that alone will be around $4.6 trillion, according to the Congressional Budget Office.

Restoring the deduction for state and local taxes would cost around $1.2 trillion and, remember that this move would largely benefit places where homes are costly, like New York and California, states that voted against Trump. You think Trump and a MAGA Congress will push hard for this one?

Come on, folks, he’s the guy who described Democrats as the “enemy from within,” as his MAGA minions nodded behind him.

Overall, if every tax cut he’s promised is passed in the form he proposed it, which is highly unlikely, the cost to the government will be more than $9 trillion over the next decade, according to the Committee for a Responsible Federal Budget. Now throw in the cost of rounding up 10 to 15 million, or maybe 20 million illegal immigrants (using Trump’s highly-suspect numbers), and we’re starting to see a nation in a bit of financial trouble.

When Trump’s fallen into financial trouble personally in the past, he simply declared bankruptcy … six times, right, or around there? But that’s not an option for a nation. Who will pay in the long run? In one way or another, the 98% of Americans who aren’t wealthy will somehow end up paying a lot more than we’ll be helped by Trump’s tax cuts.

You know it, and I know it. And heaven help our kids and grandkids whose taxes will be paying higher borrowing costs on an unsustainable national debt.

Perhaps our burden will start with Elon Musk finding ways to undercut programs that help older Americans live with dignity in their retirement, and poor folks survive in an increasingly tough economic environment. Heaven knows he won’t be making us any safer in our homes, on the job or on the street in a Trump-supported push to eliminate government regulations.

Could everyday folks gain from the tariffs Trump says he’ll impose on goods from international foes and friends alike? He says so, but a tariff is basically an economic wolf in sheep’s clothing, according to many financial experts. They’re paid by importers, and the costs are typically passed on. Walmart and Target are among the biggest US importers. You think they won’t raise prices on their products to cover their higher costs?

Trump will boast about how much the tariffs are bringing into the federal government, likely dramatically increasing the numbers to make them sound better. But the bottomline is that tariffs are pretty much taxes on everyday folks that Trump hopes will stay hidden under a different guise. Yeah we’re back to the wolf in sheep’s clothing simile.

Stay focused, folks. As Napoleon Bonaparte, yet another a strongman leader, is quoted as saying: “If you wish to be a success in the world, promise everything, deliver nothing.”