In the wake of Donald Trump’s election to a second term in office, Republicans are promising sweeping measures they claim will strengthen the economy. Leading up to and since the election, Trump has called for an extension of his 2017 tax cuts, tariffs on imported goods, and more.
Many of those who supported him publicly claim their vote was influenced by their negative feelings about the economy. The rising price of groceries, gas, and everyday goods have placed a strain on working class families across the country.
In reality, inflation in the United States has declined steadily since Biden’s Inflation Reduction Act passed in 2022. The average American family has saved thousands each year on healthcare, electricity, and other costs since the act was passed.
Even still, prices on most goods remained higher than before the pandemic. And even though inflation in the United States has been lower than most countries, stagnation in wages left Americans feeling the difference in their wallets.
Donald Trump seized on that reality, promising to usher in a new era of economic wellbeing for all Americans.
His platform focused on reminding voters the prices for most goods were lower during his presidency. And despite the reality that his first term started with a strong economy inherited by Barack Obama, and ended with an economic collapse, voters looked past the blatant racism and misogyny in his platform and latched on to his economic message.
According to leading economists, however, Trump’s plans are likely to primarily benefit the richest Americans, while making life increasingly difficult for the middle and lower class.
Trumps tax plans likely to only benefit the richest Americans
An analysis from ITEP (Institute on Taxation and Economic Policy) suggests Trump’s policies give the wealthiest 5% of Americans tax cuts. The other 95% of Americans would experience an overall tax increase.
The report took into account several of Trump’s proposals, including:
- An extension of his 2017 tax cuts.
- Tax exemption on certain types of income.
- Cutting the corporate tax rate.
- Repealing green energy tax credits from the Biden administration.
- Placing a 20% tariff on all imported goods, and a 60% tariffs of goods imported from China.
Altogether, these proposed tax policies would give the top one percent of Americans, making over $900,000, a tax cut of more than $36,000. Middle class Americans would see an overall increase in the total taxes they pay by roughly $1500. Even those in the bottom 20% of income in America would see an $800 increase in the taxes they pay.
Any initial cuts for middle and working class Americans would be wiped out by tariffs
For working and middle class Americans, any income tax reductions would be washed out by Trump’s tariffs.
For example, according to the ITEP report, an American making $60,000 would see a roughly $1900 reduction in their immediate income taxes. However, Trump’s tariff’s would cost them nearly $3400 more each year due to a rise in the price of goods.
Conversely, an American making $1,000,000 a year would pay $42,000 more on goods as a result of tariffs. However, that extra cost would be offset by a nearly $81,000 tax cut, on average.
And as Trump prepares to enter office, efforts from the Biden administration to strengthen the economy continue to show signs of success.
New reporting this week indicates families will spend an average of $58 on a Thanksgiving dinner for 10 people. That number is down 5% from 2023 and down 9% from 2022.
It remains to be seen how many of Trump’s economic plans will be implemented with support from Congress.
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