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Donald Trump is making a long list of tax cut promises that he’ll struggle to make good on in Congress.
The former president announced Tuesday that he’d seek to eliminate the limit on state and local tax deductions that he himself imposed in his signature 2017 tax law. That was the fifth separate new tax break he’d supported in three months; he wants to eliminate tax on tips, overtime pay and Social Security benefits, plus lower the corporate tax rate to 15%.
That sounds good to Republicans and even some Democrats. But Trump’s tax proposals threaten to balloon the deficit and limit the GOP’s options if it manages to retake all of Congress and the White House in November. Decreasing revenues by enacting even one or two of Trump’s pitches would make it that much harder for Republicans to extend his 2017 tax cuts for individuals, which expire next year.
Several of Trump’s fellow Republicans are already acknowledging that his tax-cutting dreams won’t all become reality.
Asked about the former president’s fusillade of tax promises, Louisiana Sen. Bill Cassidy told Semafor: “If you want to do that, you’ve got to raise taxes someplace else.”
Sen. Rand Paul of Kentucky put it even more simply: “All politicians overpromise and underperform.”
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Trump’s binder full of tax cut plans will face blowback from GOP deficit hawks, who have gained sway during President Joe Biden’s administration. And even if Republicans take total control of Washington after Election Day — no guarantee — they’ll need near-total party unity to clinch Trump’s deficit-busting tax agenda.
Economist Erica York at the conservative-leaning Tax Foundation projected Trump’s tax pledges would cost at least $8.5 trillion over a decade. Ending limits on the state and local tax deduction would cost roughly $1 trillion on its own.
Given those estimates, Republicans in Congress would likely have to talk Trump down from some of his priciest ideas or scale them back. The GOP, from party leaders to occasional rebels like Paul, is largely united on the importance of preserving the Trump tax cuts that are set to expire — which will cost about $4.6 trillion.
Republican lawmakers are clear-eyed about how hard it would be to tack on the high cost of Trump’s new ideas to that pricey extension. Plus, many of them also hope to hike defense spending.
“It does become a math problem, and it becomes an economic problem,” said Sen. John Kennedy of Louisiana. “Am I for reducing taxes? Sure. But you can’t consider it just in a vacuum.”
One former GOP congressman said his ex-coworkers are privately fretting about the budget-busting impact of their tax ambitions.
“It’s clear from my discussions with Republican colleagues that the exploding national debt is top of mind. It comes up unsolicited,” Peter Roskam, an Illinois Republican and architect of the 2017 tax law who’s now at the BakerHostetler law firm, told Semafor. “They are sobered by it and see it framing the 2025 tax Armageddon.”
Despite Roskam’s faith in GOP fiscal rectitude, key Republicans aren’t convinced they need to pay for another round of tax cuts. Sen. Mike Crapo, who’s in line to helm the tax-writing Finance panel if Republicans win back the Senate, said Congress didn’t pay for extending tax cuts in 2012 and he’s not inclined to revisit a “precedent” that preserves the status quo.
“The deficit is a big issue,” the Idaho Republican told Semafor. “My personal policy is that pro-growth tax policy doesn’t need to have an offset.”
Ultimately, the Congressional Budget Office would determine the cost of each piece of the GOP’s agenda, and the Senate parliamentarian would rule on what can be passed with a simple majority vote, avoiding a filibuster.
The uncertain outcome of that scrutiny, which squashed some liberal Democrats’ dreams three years ago, is leaving powerful Republicans noncommittal on Trump’s tax ideas.
South Dakota Sen. John Thune, the No. 2 Republican who is running for GOP leader, told Semafor that “you have to figure out how to wedge” Trump’s array of new ideas into an extension of his 2017 cuts.
Crapo favors keeping the $10,000 limit on state and local tax deductions, and chief House GOP tax-writer Jason Smith of Missouri has agreed. Yet neither would rule out Trump’s new bid to remove the cap.
Trump campaign spokeswoman Karoline Leavitt vowed that Trump would be able to follow through on his promises.
“President Trump’s agenda to defeat inflation and unleash economic growth will have a mandate of broad-based support,” she said.
The View From Democrats
Most Democrats deride the bulk of Trump’s tax promises as unrealistic, contrasting them with Vice President Kamala Harris’ bid to finance her own breaks for families and small business by hiking the tax burden on billionaires.
“This is a campaign charade. You throw out issues that sound good and don’t do the real work,” Senate Finance Chair Ron Wyden told Semafor.
However, a few slices of Trump’s tax agenda could draw Democratic support; Harris has also embraced eliminating taxes on tips, and blue-state Democrats from Senate Majority Leader Schumer on down have aligned behind eliminating the state and local tax deduction cap.
The View From Joseph and Burgess
Republicans are certain to push tax cuts as big as they can get if they retake Washington. Still, it’s almost certain that even with an all-GOP Congress, Trump won’t get everything he wants – and neither will party leaders on the Hill.
Things could get even more complicated if Trump tries to use the sweeping tariffs he’s proposed as a way to pay for new tax cuts, an idea that would spark more fretting among Republicans.
In fact, congressional Republicans are already showing more enthusiasm for some of Trump’s ideas than for others.
Trump’s plan to eliminate taxes on service workers’ tips, for instance, quickly sparked new bills to back him up. But Sen. Pete Ricketts is the sole GOP Senate sponsor of legislation to phase out taxes on Social Security benefits.
And the GOP’s own deficit hawks might want to pump the brakes on even part of Trump’s tax agenda, which would cause problems in a narrow majority. (Then-Sen. Bob Corker did this in 2017, exacting a deficit-protection price for his tax vote.)
If Republicans end up narrowly in control of the House and Senate, that would give enormous leverage to individual members like Paul – who knows how to use it.