Trump Tax Cuts Would Cost More Than Almost All Federal Agencies
What You Need to Know
The sheer magnitude of the Trump campaign’s tax promises make it highly unlikely they all would pass.
Major portions of Trump’s 2017 tax cuts are set to expire at the end of 2025.
Trump has offered very few options to raise more federal revenue.
Republican nominee Donald Trump and running mate JD Vance are campaigning on a grab bag of tax cut proposals that could collectively cost as much as $10.5 trillion over a decade, a massive sum that would exceed the combined budgets of every domestic federal agency.
Even if Congress were to eliminate every dollar of non-defense discretionary spending — projected to be $9.8 trillion over the next 10 years — it still wouldn’t offset the estimated expense of the wide-ranging tax cuts Trump and Vance have floated in recent weeks.
The price tag is based on rough, initial estimates from tax and budget specialists because the Trump campaign hasn’t released detailed policy plans for its tax promises.
The Trump campaign said in a statement the former president will cut wasteful spending and increase energy production to pay for the tax cuts and lower the national debt. The campaign didn’t offer more detail.
Though Democrat Kamala Harris also has proposed a few large tax cuts — she would exempt tips from taxation and expand the child tax credit — the impact on the nation’s finances pales in comparison. She calls for offsetting the lost income, which one think tank estimates at $2 trillion, with tax increases on corporations and wealthy individuals.
The sheer magnitude of the Trump campaign’s tax promises make it highly unlikely they all would pass even in a Congress controlled by Trump allies. The Republican ticket’s tax proposals include extending Trump’s 2017 tax cuts, a big expansion to the child tax credit and exemptions for tips and Social Security payments.
“Congress is not going to pass a $10 trillion deficit-financed tax cut,” said Kyle Pomerleau, a senior fellow with the right-leaning American Enterprise Institute.
Republicans have long argued that tax cuts boost growth. But it’s not clear how much Trump’s proposals, which largely cut levies for individuals rather than businesses, would spur new economic activity.
The combined cost of the Trump plans is so big that if Congress were to try to pass the tax cut proposals and keep spending flat, it means they could continue to fund the military, federal benefit programs, like Social Security, pay interest on the debt — and nothing else.
That means eliminating major federal agencies that handle duties such as law enforcement, border security, air traffic control, tax collection and international relations.
Harris and President Joe Biden released a detailed budget proposal this year to cut federal deficits $3 trillion over a decade, by raising taxes on corporations and wealthy individuals and other measures. Those plans mirror some of the offsets Harris has proposed but previously have run into powerful opposition from major business lobbies.
Without those compensating tax increases, the Harris proposals could increase the deficit by as much as $2 trillion over the next decade, according to the University of Pennsylvania Penn Wharton Budget Model.
Trump’s supporters are accustomed to his impromptu, broad-stroke policy pronouncements, while key Democratic constituency groups demand detailed policy proposals and a firm plan offsetting the cost.
Harris is continuing to roll out policy ideas piecemeal. On Tuesday, she called for an expanded deduction for start-up businesses and her campaign has signaled that more policy plans could be released in the coming weeks.
Tax Agenda
For both candidates, much will hinge on how well their party does in congressional elections, said Wendy Edelberg, a former Federal Reserve and Congressional Budget Office economist who’s now director of the Brookings Institution’s Hamilton Project.
