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Former US President Donald Trump, center, greets attendees following a news conference at Trump National Golf Club in Bedminster, New Jersey, US, on Thursday, Aug. 15, 2024

Financial Planning > Tax Planning

Trump Says His Plan to Renew 2017 Tax Cuts Will Pay for Itself

By Sarah McGregor and María Paula Mijares Torres

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What You Need to Know

  • The Republican candidate has vowed to renew the cuts, which are set to expire in 2026.
  • Extending those cuts carries a $4.6 trillion price tag.
  • Trump has also promised to end taxes on tips, a policy his Democratic rival, Kamala Harris, has also partially embraced.

Republican nominee Donald Trump said his plan to renew expiring tax cuts would pay for itself by spurring economic growth as he highlighted his agenda on taxes in a visit to a key swing state in November’s election.

“Growth, we’re gonna have tremendous growth,” Trump said when asked how he would pay for those tax cuts during a campaign stop in Las Vegas.

The former president has said he will renew tax cuts from his 2017 tax law that are set to expire next year — a centerpiece of his economic agenda which has won him support from business leaders and many on Wall Street.

But extending those cuts carries a $4.6 trillion price tag, and risks further growing a federal deficit Republicans have long vowed to tame.

Trump has also promoted additional tax cuts — including eliminating federal taxes on tipped wages, which was the focus of his event Friday at a Mexican-Italian restaurant in Las Vegas. The Committee for a Responsible Federal Budget estimated that such an exemption would cost around $100 to $200 billion over a decade.

Trump said he believed the policy would help win him support from workers in Las Vegas, where hospitality remains the dominant industry, and accused his Democratic rival, Kamala Harris, of pushing tax policies that would place more burdens on workers and small businesses.

“We’re going to let you keep 100% of your income and not be harassed,” Trump said, calling his pitch the “biggest promise” restaurant workers have “had in a long time.”

He assailed Harris for also adopting the no-taxes-on-tips proposal, claiming that she was simply echoing his policy for political reasons and would not follow through.

At a rally later Friday in Glendale, Arizona, Trump reiterated his view that Harris wouldn’t achieve the goal. “It’ll never happen with her; it’s guaranteed to happen with me, no tax on tips,” he said.

The bipartisan embrace of the idea comes as both campaigns are seeking to court key voting groups in Nevada and other battleground states.

Trump’s comments come a day after Harris formally accepted her party’s presidential nomination, setting the two candidates off on a sprint to Election Day. Harris used her acceptance speech to highlight some of her policy proposals in broad terms, saying she would be an advocate for the middle class and implement measures to bring down costs for households.

Courting Service-Industry Workers

Trump has made “no tax on tips” a centerpiece of his stump speech, and his campaign is employing guerrilla marketing tactics to promote the policy. Donors to his campaign can receive stickers that read “VOTE TRUMP FOR NO TAX ON TIPS” to put on their restaurant checks.

Harris, too, chose Las Vegas to make a similar campaign promise to cut taxes on tips — although her proposal would apply only to federal income taxes and leave payroll taxes for Social Security and Medicare intact.

Natalie DeNardo, a mortgage broker who attended the event on Friday, said her father is a bartender at the Bellagio hotel in Las Vegas and he would feel a “huge impact” from the proposed no-tax-on-tips policy. When asked about Harris supporting the same policy, she was skeptical.

“She’s just jumping on the bandwagon,” said DeNardo, 41. “She could have done this in the past three and a half years if she really wanted to.”

Exempting tipped wages from federal levies has the potential to trim the tax bills of the more than 6 million hospitality workers who reported a total of $38.3 billion in tipped income in 2018, the latest year for which Internal Revenue Service data are available. That averages out to about $6,250 per tipped worker.

Despite their overlap on the so-called no-tax-on-tips policy, Trump is pushing for sweeping tax cuts aimed at corporations and higher earners, while Harris is taking over President Joe Biden’s lead, championing proposals to raise the corporate rate to 28% from 21% and hiking taxes on the wealthy, while pledging not to raise taxes on earners making less than $400,000.

Credit: Bloomberg

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