WASHINGTON, Sept 10 (Askume) – Vice President Kamala Harris and Republican rival Donald Trump unveiled new tax cuts and spending plans as they sought to convince Americans that their ideas would be more effective in helping them win votes by easing their financial burdens.
Budget forecasters are struggling to keep up with the latest changes, and new ideas may emerge during Tuesday’s Harris-Trump debate, but so far all forecasts point to more new federal debt being added to Trump’s agenda.
Trump said he plans to continue all of the tax cuts passed by Congress in 2017 , exempt Social Security and tip income taxes, and further cut corporate income taxes.
The changes would be based on separate and combined estimates released by four budget forecasters reviewed by Askume – the University of Pennsylvania’s Wharton School Budget Model, the Committee for a Responsible Federal Budget (CRFB), the Tax Foundation and Oxford Economics – and reduce the U.S. primary deficit by more than 10 years.
Harris’s plan includes an expansion of the child tax credit , an additional $6,000 tax credit for newborns, a $25,000 tax credit for first-time homebuyers, and no tip tax to reduce the deficit by $400 billion over a decade.
The estimates are based on static budget scores and compared to the Congressional Budget Office’s current legal “baseline,” which already projects a massive debt increase of $22 trillion by 2034 .
Rolling Analysis
Predictions vary widely depending on the ideas involved in the campaign.
This is in addition to Harris’ recent estimate that taxes on the costs of opening a business would be cut by up to $50,000, as well as a lower capital gains tax than what President Biden has proposed.
The forecast includes Trump’s proposal to cut the corporate income tax from 21% to 15%, but does not include his latest comments that the rate would only apply to companies that produce goods in the United States.
“Campaign issues are moving faster than budget models,” said Shay Akabas, economic policy director at the Bipartisan Policy Center. His popular policy priorities take priority over the fiscal responsibilities of both parties.
Congress will have to approve tax and spending bills, making it difficult for the winner of the November 5 election to carry out his or her priorities without supermajorities in the Senate and House of Representatives.
2025 tax cliff
The main difference between Trump and Harris is how they deal with the 2025 expiration of the individual tax cuts passed by Republicans in 2017, during Trump’s presidency. Without action by Congress, these rates would revert to their previous high levels.
Trump has pledged to permanently extend all tax cuts that are expiring, including those for the wealthiest Americans, which tax and budget experts estimate would increase revenues by about 3.3% over a decade and reduce tax collections by $0.4 trillion to $4 trillion.
Biden promised Harris would extend the 2017 tax cuts only for those making less than $400,000 a year, but that would add $2.5 trillion over a decade to an already estimated $2 trillion spending agenda.
Harris quietly supports the nearly $5 trillion in tax increases in Biden’s fiscal year 2025 budget request , including taxing more than $100 billion in unrealized wealth gains and raising the corporate tax rate to 28%.
This is causing panic on Wall Street , but it will also significantly reduce the cost of their spending plans.
“I think it’s fair to conclude that Trump’s tax approach is more debt-based on a larger scale,” said Steve Rosenthal, a senior fellow at the Urban-Brookings Tax Policy Center.
Trump has not proposed a traditional tax increase to offset his expanded tax cuts. CRFB and the Tax Foundation estimate that exemptions, including those for Social Security income, would reduce revenue by $1.6 trillion.
The conservative Tax Foundation criticized the move, calling it “unfair and fiscally irresponsible” and would weaken Social Security and Medicare.
Trump said his tax cut plan would be paid for by strong economic growth, new import tariffs, Biden’s elimination of clean energy subsidies and the nomination of billionaire entrepreneur Tesla CEO Elon Musk as chairman of a new government efficiency commission.
The Tax Policy Center estimates that Trump’s proposed 10% global tariffs and 60% tariffs on Chinese imports could raise up to $3.8 trillion in revenue over a decade, but the economic impact would reduce other income, including real taxes imposed on households.
The Tax Foundation is the only model that includes an estimate for tariffs as an offset — $2.6 trillion — but even then, it estimates that Trump’s plan would add nearly $4 trillion to the deficit over a decade.
