Trump Says He’d Cut Taxes If Elected: Why That Might Not be Great for Your Wallet

According to ABC News, Donald Trump is emerging as a leading contender for the presidency in 2024, surpassing not only his fellow Republicans but also President Joe Biden in recent polls. The news outlet suggests that Biden may be losing support among voters, particularly concerning the economy. A survey conducted by ABC News and The Washington Post revealed that only 30% of voters approve of Biden’s handling of the economy.

In August 2023, Trump disclosed to Fox Business his intention to impose tariffs of up to 10% on imported goods and to phase out all essential Chinese imports over four. ABCNews.com highlighted the potential conseq yearsuences of such policies, noting that while American producers would aim to increase production, the short-term result could be a rise in prices for various consumer goods, including electronics.

Furthermore, Trump asserted that any increase in the cost of goods would be counterbalanced by tax cuts. He expressed a desire to ensure the extension of tax cuts established by the Tax Cuts and Jobs Act of 2017, scheduled to expire in 2025.

As previously outlined by GOBankingRates, the TCJA brought about several changes and reductions, such as restructured tax brackets and decreased tax rates for most individuals, excluding those in the 10% and 35% brackets. During the TCJA’s implementation, the majority of taxpayers experienced a decrease in their tax burdens, with standard deductions being raised and estate and gift tax exemptions doubled, primarily benefiting the ultra-wealthy.

Despite Trump’s assertions regarding the TCJA’s positive impact on tax reduction, reports from the 2018 tax season indicated that many Americans received smaller refunds. CNBC.com noted that due to reduced withholding taxes throughout the year, numerous taxpayers were surprised by significant tax bills.

If TCJA-era tax cuts are extended, individuals may continue to see diminished tax refunds, impacting their ability to bolster emergency savings, pay off high-interest debts, and cover expenses, according to a recent survey by GOBankingRates.com. While large tax refunds are not ideal, as they signify the federal government holding onto individuals’ money tax-free throughout the year, unexpectedly owing taxes can lead to financial strain.

Moreover, extending tax cuts could exacerbate the national debt, potentially adding $3.5 trillion, according to analysis from the Congressional Budget Office. This increase in debt could elevate the risk of a government default and prompt a downgrade in the U.S. credit rating.

Additionally, there are concerns that Trump may seek to compensate for lost tax revenue by revising Social Security and Medicare programs. Despite Trump’s assertions of targeting mismanagement and fraud, the Biden administration has vowed to protect these programs. Biden emphasized his commitment to safeguarding Social Security and Medicare, pledging to oppose any attempts to cut benefits or raise the retirement age.

In summary, Trump’s potential return to the White House in 2024 could hinge on his economic policies, including proposed tax reforms and trade strategies, with potential implications for taxpayers and government finances alike.