Trump Campaign 2024: Tax and Spending Proposals
A Detailed Analysis
Topic:
Politics
by MPeriod
Posted 2 months ago
The 2024 Trump Campaign tax and spending proposals aim to extend the Tax Cuts and Jobs Act (TCJA) and implement other significant changes to U.S. tax policy. These proposals would result in substantial revenue losses and increased deficits over the next decade. The analysis presented here outlines the fiscal and economic impacts of these proposals, revealing both short-term benefits and long-term challenges.
Key Takeaways
- Primary deficits are projected to increase by $5.8 trillion over 10 years on a conventional basis and by $4.1 trillion on a dynamic basis that accounts for economic feedback effects.
- Tax revenue losses are primarily driven by the extension of individual tax cuts, which account for $3.4 trillion of the revenue decline.
- While GDP increases slightly during the early years, it is expected to decline by 0.4% by 2034 and by 2.1% by 2054 due to increased federal debt.
- All income groups benefit from the tax cuts in the short term, but future generations bear the brunt of the debt burden.
Budgetary Effects of Trump Campaign Proposals
Conventional Estimate: Trump Campaign Proposals (2025-2034)
The primary fiscal impact of the Trump campaign’s proposals comes from the permanent extension of the TCJA, which results in a $4 trillion reduction in tax revenues over the next decade. Individual tax cuts make up the bulk of the revenue loss, with an additional $600 billion reduction in corporate taxes.
Deficits and Debt
Without significant offsets, the Trump proposals are projected to increase primary deficits by $5.8 trillion over 10 years on a conventional basis. When accounting for dynamic economic feedback effects, which slightly mitigate revenue losses, the primary deficit is reduced to $4.1 trillion.
Economic Effects of Trump Campaign Proposals
GDP and Long-Term Growth
While GDP is expected to rise modestly during the first decade (2025-2034), it eventually declines relative to current law. By 2034, GDP falls by 0.4%, and by 2054, it falls by 2.1%.
| Provision | Cost (2025-2034) |
|---|
| Individual tax cuts | -$3.4 trillion |
| Corporate tax cuts | -$623 billion |
| Total revenue loss | -$4.0 trillion |
The reduction in investment and labor hours due to increased federal debt puts downward pressure on wages, which are expected to remain flat through 2034 and decline by 1.7% by 2054.
Distributional Effects: Winners and Losers
Short-Term Gains Across All Income Groups
In the near term, low-, middle-, and high-income households benefit from the tax cuts provided by the TCJA extension. This is primarily due to the expansion of the Child Tax Credit (CTC), the standard deduction, and the lower personal and corporate tax rates.
| Economic Indicator | 2034 | 2054 |
|---|
| Gross Domestic Product (GDP) | -0.4% | -2.1% |
| Capital Stock | -2.4% | -7.8% |
| Hours Worked | -0.7% | -0.7% |
| Average Wage | -0.8% | -3.3% |
- Households in the bottom income quintile will see an income increase of 1.2% in 2026 and 2.5% in 2034.
- Top income earners benefit the most, with households in the top 0.1% gaining over $330,000 in 2026.
Long-Term Burden on Future Generations
While current households benefit, future generations face significant losses. For example:
- A 20-year-old in the bottom quintile will gain $13,400 from the policy, but a similar household born 30 years later would be $21,800 worse off.
This intergenerational transfer results from higher national debt, which will require future taxpayers to finance today’s tax cuts.
Trump’s Tax Cuts and Jobs Act (TCJA): Budgetary Impact
The Tax Cuts and Jobs Act (TCJA) of 2017 included several temporary tax cuts, many of which are set to expire by 2025. The Trump campaign proposes a permanent extension of these provisions, which would result in a total revenue loss of $4.0 trillion over the next decade. Key provisions include:
| Income Group | 2026 | 2034 |
|---|
| First Quintile | $265 | $420 |
| Second Quintile | $600 | $785 |
| Middle Quintile | $1,115 | $1,425 |
| Top 0.1% | $330,475 | $100,965 |
Extending these tax cuts will provide short-term relief to taxpayers but will also contribute significantly to the overall increase in federal deficits.
Economic and Budgetary Outlook by 2054
Looking ahead to 2054, the economic impact of extending the TCJA remains modest. While capital stock and hours worked will see small increases, GDP is expected to rise by only 0.2% relative to current law, with average wages also showing minimal gains. On the flip side, federal debt will rise by 16.3%, creating additional pressure on future taxpayers.
Summary of Long-Term Economic Effects
| Economic Indicator | 2034 | 2054 |
|---|
| GDP Growth | 0.3% | 0.2% |
| Capital Stock | 0.4% | 0.4% |
| Hours Worked | 0.4% | 0.3% |
| Debt Held by Public | 10.1% | 16.3% |
Conclusion: Trump Campaign’s Fiscal and Economic Impact
The 2024 Trump Campaign tax and spending proposals, centered around the permanent extension of the Tax Cuts and Jobs Act, are projected to increase deficits significantly while providing short-term benefits to households across the income spectrum. However, the proposals come with long-term consequences, particularly for future generations, who will bear the debt burden and experience slower wage growth and reduced economic opportunities.
Key Considerations:
- The $4.0 trillion revenue loss driven by the TCJA extension will increase federal deficits.
- Short-term gains in after-tax income benefit all income groups, with high-income earners seeing the most significant increases.
- Future generations face economic losses, with a 16.3% rise in public debt by 2054.
