Donald Trump Says His Tax Plan Helps Everyone. The Evidence Says Otherwise.
A dive into the two major candidates’ tax promises.
By Sean Morrow, More Perfect Union
Former President Donald Trump was convicted last month of 34 counts of falsified business records. But there’s something else he’s falsifying that’s way more relevant to your life: the claim that his tax plan benefits you in any way at all.
A number of tax policies passed during Trump’s first term in 2017 are set to expire next year, and the winner on November 5 will shape what comes next. Both Trump and President Joe Biden have been talking about what they'd do, and have an extensive record of what they've already done, and the difference is stark.
For Trump’s part, the former President has been promoting his tax plan on the campaign trail.
"I will give you lower taxes. We're going to cut it still lower,” he said during a May 24 rally in the South Bronx. “Look at all the things we did. Taxes, and think of it. Biggest tax cut in history,” he said at the National Rifle Association’s annual convention last month.
And at the Minnesota GOP’s Lincoln-Reagan Dinner last month in St. Paul: “We got rid of the estate tax on your farms and small business.”
But how much will Trump’s tax plan actually help people who can’t afford to attend a $500-a-plate fundraiser?
Let’s start with the 2017 Tax Cuts and Jobs Act, one of Trump’s few major legislative victories during his first term. Trump claimed that the law would provide tax relief to all Americans, but as the Center on Budget and Policy Priorities found that after the plan went into effect, the highest-paid Americans saw six times the increase in take-home pay that the lowest-paid saw.
Materially speaking, that means someone in the lowest tax bracket received an extra $40 annually, while someone in the highest tax bracket got an extra $50,000.
So, while Trump isn’t exactly lying, the tax break to the average person in the highest tax bracket is more than the average person in the lowest tax bracket makes in an entire year.
The estate tax is even less likely to apply to you or anyone you know. Since the 2016 election, Trump has been going on and on about the estate tax, which national Republicans and the billionaires who back them have been calling the “death tax” for years.
The estate tax is a tax on inheritances, so when someone dies and leaves money to their family, the IRS gets a chunk of that. But as it stands, it only applies to a tiny amount of people, and even then it’s barely a dent; the tax is only levied on the part of an inheritance that’s above $5.49 million per person.
Before Trump’s 2017 tax bill, fewer than 1 percent of Americans paid the estate tax. Trump made that number slightly smaller: he saved money for around 3,300 extremely wealthy Americans.
So not only does the tax only affect the very wealthy, but it also only affects a small portion of their inheritance. If you inherit $7 million, you’re only paying tax on $1.5 million.
But the former President treats this like a working people issue. This election, he specifically keeps talking about how he’ll cut the estate tax for “farmers” and “small businesses,” implying that anyone who disagrees with the cut doesn't love their family.
“A lotta people, you know, they love their family,” Trump said at the Reagan-Lincoln dinner. “If you don't love your family, then you shouldn't leave [money] to 'em. Is there anybody in the room that doesn't love their family? In which case, this tax doesn't help you much.”
But the biggest cut Trump made in 2017 was to the corporate tax, which Trump has very savvily dubbed “the business tax.” The TCJA cut the corporate tax rate from 35 percent to 21 percent, and Trump pledges that if he’s elected to a second term, he’ll push to cut it even further to 15 percent.
President Trump and his cronies have promised the tax cut would make you, the average worker, anywhere from $4,000 to $9,000 more in take-home pay. Former National Economic Council deputy director Bharat Ramamurti, who left the Biden administration in 2023, says otherwise.
“It's been seven years since that tax cut was passed in 2017, so we have a lot of data about who actually benefited from it,” Ramamurti told More Perfect Union. “Basically anybody making under about $115,000 a year saw a $0 increase in their wages because of that tax cut.”
“At the end of the day,” he continued, “What you saw was that all of those tax savings for large corporations were sent back to shareholders in one form or the other.”
The Institute for Policy Studies looked into 64 mega-corporations and found that despite combined profits of $657 billion, they paid an average effective tax rate of just 2.8%.
Executives won big too: of those 64 companies, 35 paid their top executives more than they paid in income taxes.
So billionaire executives and shareholders saw a direct benefit to their bottom line from the 2017 Trump tax bill—and they’re salivating for another Trump tax bill. Billionaire Nelson Peltz, who apologized for supporting Trump after January 6th, made a total turnaround and held a private meeting for Trump with a bunch of other billionaires, like Steve Wynn, Elon Musk, and Isaac Perlmutter.
One reason could be fear. Most of Trump’s tax cuts expire in 2025, and whoever wins — along with whoever controls Congress — will determine the new rates.
During a private meeting with CEOs Thursday, Trump said he was going to push to cut the corporate tax rate from 21 percent to 20 percent, and also that he would end taxes on tipped income, to which the CEOs laughed, according to CNBC. (After Trump told a crowd at a rally in Las Vegas last week that he’d end taxes on tipped income, a Culinary Union Local 226 official said that “Nevada workers are smart enough to know the difference between real solutions and wild campaign promises from a convicted felon.”)
Trump also reportedly told Republican lawmakers during a separate D.C. meeting Thursday that he wants to eliminate taxes and replace them with tariffs on imported goods. A 10 percent across-the-board tariff on imports and a 60 percent tariff on Chinese imports would cost middle-income households about $1,700 per year and reduce after-tax income for households in the bottom half of income distribution by more than 3 percent, according to a report last month by the Peterson Institute for International Economics.
As for President Joe Biden, the changes to tax policy have not been as dramatic during his first term. Biden proposed $2 trillion in new taxes to help cover the cost of the Build Back Better plan, but ultimately what passed in the Inflation Reduction Act included a 15 percent minimum tax on corporations that report more than $1 billion in annual income. The law also provided billions in new funding to the Internal Revenue Service to recover unpaid and overdue taxes.
In his latest budget proposal, Biden called for increasing the corporate tax rate back to 28 percent, which would bring an estimated $1.35 trillion in revenue that would’ve otherwise gone to corporate stock buybacks and executive pay.
The Biden administration also claims they would further increase taxes on the wealthy, setting the tax on all personal income over $400,000 for single filers by nearly 40 percent. Remember: salaries over $400,000 wouldn’t be taxed at that rate, just any income over $400k. That would raise around $246 billion.
Biden’s plan would also cut capital gains tax breaks, removing a method by which financial professionals hid income and skirted taxes, and shrink the ‘pass through’ loophole; that’s a Trump tax break that lets business owners hide up to 20 percent of their income and avoid paying taxes.
The Institute on Taxation and Economic Policy found that these combined changes would raise $5 trillion in projected revenue. The Biden administration claims this revenue would go back to working Americans through child tax credits, earned income tax credits, and health insurance premium credits.
Continuing the Trump tax cuts, on the other hand, would add $4.6 trillion, according to the Congressional Budget Office. And you know that if there’s a deficit, it’s not defense contractors or billionaire bankers that’ll see the losses, it’s the programs that help working Americans — and keep your personal tax bill low.