President Trump promised to make major tax cuts for Americans on the campaign trail, vowing to cut taxes on tips and overtime pay, social security taxes, and reduce corporate income taxes.
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The policies could pad people’s pockets in the long run, but what’s the reality of these campaign promises becoming law? Experts say there could be a few roadblocks, and eventually consequences, for consumers.
“Jacksonville’s Retirement Coach” Adam Wolf, a certified financial planner and public accountant, says there are more factors to consider when discussing tax cuts other than more money ending up in your pocket.
“When it comes to tips, overtime, I don’t think that’s ever going to pass because I think we [have to] get down to the fairness of that,” Wolf said. “You know, why should tips and overtime not be taxed, but other forms of income taxed.”
Wolf says everyone is paying less taxes today because of Trump’s Tax Cuts and Jobs Act of 2017.
It was the largest tax code overhaul in three decades but many tax benefits that helped individuals and families will expire in 2025. The Trump administration will be tasked with extending the legislation and implementing new tax cuts promised on the campaign trail.
An estimate from the Congressional Budget Office projects that extending the Trump tax cuts could add $4.6 trillion to the national deficit without any new tax policy measures.
“Our country needs money right now. So I don’t think we can continuously reduce taxes for the foreseeable future,” Wolf said.
Dr. Tucker Omberg, an economist at Jacksonville University, says the deficit will need to be considered eventually.
“The deficit has been growing continuously,” Omberg said. “COVID caused a giant spike in the deficit, and it doesn’t show any signs of slowing down whether that eventually comes due in the form of raising taxes again or reducing benefits for programs like Social Security.”
He continued, “Inevitably, it will probably have to be a combination of both things, which neither party wants to do.”
A GOP majority could help Trump pass legislation for more tax cuts. Omberg said Trump is relying on economic growth from those tax cuts to offset any revenue losses.
“The headline issue for Americans last week seemed to be inflation,” Omberg said. “[Consumers] are worried about the price of goods going up, and Trump’s economic policy is kind of a double-edged sword on that, and the extension of the Tax Cuts and Jobs Act certainly wouldn’t hurt for lowering prices, but a 20% tariff would almost certainly be reflected in higher rates of inflation, higher prices for consumer goods.”