Former President Donald Trump recently participated in a campaign town hall meeting in Lancaster, Pennsylvania, where he outlined his tax reform ideas. According to CNBC's analysis, Trump's proposals could potentially offer total or partial income tax exemptions to approximately 93.2 million Americans, which is just under half of the U.S. electorate.
As part of his economic pitch to voters, Trump has suggested a sweeping tax overhaul that includes various income tax breaks. Some of the key proposals include eliminating income tax on tips, Social Security benefits, and overtime pay. Additionally, Trump mentioned in an interview that he would consider tax exemptions for firefighters, police officers, military personnel, and veterans. If implemented, these exemptions would impact tens of millions of taxpayers.
The reforms proposed by Trump aim to transition away from the income tax system and replace it with revenue generated by hardline tariff proposals. Trump has pledged to impose a 20% universal tariff on all imports from all countries, with a specific 60% rate for Chinese imports. However, analysts view Trump's plan to move away from income taxes as unrealistic, citing historical data and economic trends.
Despite Trump's ambitious tax proposals, they would significantly reduce federal tax revenue by an estimated $3 trillion from 2025 to 2034, according to the Tax Foundation. Moreover, his plan to make the 2017 tax cuts permanent, which are set to expire in 2025, would further impact the federal budget.
However, even if Trump were to win the election against Vice President Kamala Harris, his tax overhaul would require a Republican majority in the House of Representatives to pass. Currently, Republicans hold a slim majority in the House, and the outcome of the November election will determine the future of Trump's tax proposals.