The analysis projects that former President Trump's spending and tax proposals could increase the national budget deficit by more than $4 trillion over a decade.
The Wharton School of the University of Pennsylvania's budget model The analysis published Monday It estimates the impact of a series of economic proposals from the Trump campaign, including extending key provisions of the former president's signature 2017 tax plan, eliminating taxes on Social Security benefits and lowering corporate tax rates.
Overall, the analysts estimate that the proposals would result in a net increase of $5.8 trillion in the primary budget deficit from 2025 to 2034 on a “conventional basis,” but $4.1 trillion on a dynamic basis that takes into account “economic feedback effects.”
Extending expiring individual income tax provisions of President Trump's 2017 Tax Cuts and Jobs Act (TCJA) is the most expensive part of the proposal's cost breakdown, with the analysis estimating that the effort “could increase the deficit (before interest expenses) by $3.4 trillion over the next decade.”
“Restoring the original TCJA regime for taxing business investment would add an additional $623 billion, increasing the total cost of the TCJA extension to more than $4 trillion,” the analysis states.
The analysis projects that the cost of eliminating taxes on Social Security benefits could reach $1.2 trillion over 10 years, while cutting the corporate tax rate to 15% could cost $595 billion over the same period.
“Low-, middle-, and high-income households in 2026 and 2034 would all be better off under the campaign propositions on a business-as-usual basis,” the analysis said, but added that “these business-as-usual gains and losses do not include the additional debt burden on future generations who would have to pay for nearly the entire tax cut.”
In a separate analysis on Monday, the group also estimated the budget impact of several economic proposals put forward by Vice President Harris, including strengthening the child tax credit and earned income tax credit, extending the enhanced insurance premium tax credit, providing assistance to first-time homebuyers and raising the corporate tax rate to 28%.
“We project that spending would increase by $2.3 trillion over 10 years while traditional tax revenues would increase by $1.1 trillion, resulting in a primary deficit difference of $1.2 trillion. Taking into account negative economic feedback effects, the primary deficit would increase to $2 trillion,” the report said. According to the analysis.
However, analysts noted in the report that Harris' team had not made clear at the time whether it supported tax provisions included in President Biden's 2025 budget request or “spending provisions in the 2025 budget that were not included in the public release.”
However, Harris' campaign told NBC News: The report released on Monday She supports revenue proposals in the Biden budget that focus on raising taxes on the wealthy and aim to reduce the national deficit by $3 trillion over the next decade.
Analysts also noted that the report did not include estimates for proposals by both sides aimed at eliminating tip taxes on service workers.
“As with the Harris 2024 campaign analysis, we do not take into account the tax exemption for service worker 'tips' that Trump initially publicly endorsed. The 10-year budget cost could vary significantly depending on whether current sources of income can be reclassified as 'tips' to benefit both employers and employees,” the researchers wrote.
“The ability to reclassify income is often the primary source of income accommodation in traditional tax scoring, so a significant amount of additional detail will be required to evaluate this provision.”
