Donald Trump's plans would cut taxes on the richest 5% of America — and raise them for everyone else

Former President Donald Trump in Juneau, Wisconsin, on October 6, 2024. - Photo: Scott Olson (Getty Images)
Former President Donald Trump in Juneau, Wisconsin, on October 6, 2024. - Photo: Scott Olson (Getty Images)

Former President Donald Trump has promised to slash — or scrap — a lot of taxes. But his plans to hike tariffs on imports would “more than offset” those tax cuts for all but the richest 5% of Americans, according to a new analysis.

The Republican presidential candidate has pledged to end taxes on social security benefits, tips, and overtime, as well as slash the corporate tax rate to 15% from 21%, which was previously lowered from 35% thanks to his 2017 Tax Cuts & Jobs Act (TCJA). He’s also shown interest in making those tax cuts, which are set to expire next year, permanent while his running mate has floated expanding the Child Tax Credit (CTC).

Together, those provisions could slash hundreds or thousands of dollars off tax bills for American households across every income bracket. However, his pledge to raise tariffs to as much as 20% on all imports and up to 60% or 100% on those from China erases those gains for almost all Americans, according to the Institute on Taxation and Economic Policy (ITEP).

“They would cause substantial price increases on imported goods, severely damage the industries that rely on imports, hurting employment in those industries, and result in price increases for goods for which final production occurs domestically,” the ITEP said of the tariffs, which it noted “would massively disrupt the economy.”

The liberal think tank found that Trump’s policies would give the richest 1% of the country a tax cut of roughly $36,300 if they took effect in 2026. The next richest 4% would see a $7,200 reduction in their taxes, while the rest of the country would see their taxes increase.

The largest increase, $1,790, would be felt by Americans making between $94,100 and $157,500 a year, while those making between $55,100 and $94,100 would pay another $1,530 a year. The poorest 20% of Americans would pay an additional $790 in taxes, while the second-poorest group would have another $1,430 on their bills.

Read More: Donald Trump wants to end taxes on overtime. What else is he promising voters?

But that’s assuming that the 2017 tax cuts are extended past next year to mostly match the TCJA Permanency Act. ITEP’s analysis removed that bill’s provisions related to the state and local tax (SALT) deduction because Trump has said he would not extend the cap on those deductions.

Without that extension, the TCJA will expire at the end of 2025, taking with it the bill’s rules on the standard deduction, individual income tax rates, CTC, SALT, and deduction for small business income. That could increase tax bills by as little as $110 for the poorest Americans or as much as $80,680 for the 1%. In that scenario, not even the wealthiest would be paying less taxes under a Trump administration, according to the ITEP’s figures.

The ITEP’s analysis comes as the Committee for a Responsible Federal Budget (CRFB) estimates Trump’s economic plan would add about $7.5 trillion to the federal debt, compared to $3.5 trillion for Vice President and Democratic nominee Kamala Harris’ plan. According to the group, Trump’s tariffs would raise just $2.7 trillion, while his tax cuts would cost $9.1 trillion.

Harris’ own extensive economic plan — which includes raising corporate taxes and extending portions of the TCJA — would add about $3.5 trillion in debt, according to the CRFB.

For the latest news, Facebook, Twitter and Instagram.