Donald Trump's Tax Plan Sparks $250 Billion Warning

donald trump's tax plan sparks $250 billion warning

Republican presidential candidate, former U.S. President Donald Trump gives remarks to the press at the National Republican Senatorial Committee building on June 13, 2024 in Washington, DC. Trump has said he will eliminate taxes on tipped income if he wins in November.

Donald Trump's plans to eliminate taxes levied on tips could cost up to $250 billion, a think tank has warned.

On June 16, the nonpartisan Committee for a Responsible Federal Budget released a report that said Trump's 2024 presidential election proposal to remove taxes on tipped income could cost the federal budget billions of dollars in the coming years. Earlier this month, the former president told a crowd of his supporters in Sunset Park, Nevada, "When I get to office, we are going to not charge taxes on tips."

Under the law, all cash and noncash tips received by an employee are classed as income and are therefore subject to federal income taxes.

"We estimate exempting all tip income from federal income and payroll taxes would reduce federal revenues by $150 to $250 billion over ten years on a static basis and could reduce revenue significantly more once behavioral effects are incorporated," the CRFB said in the report.

"Although the Trump campaign has not outlined its proposal in detail, we assume it would make tip income exempt from federal income and payroll taxes. On a static basis, we estimate this would reduce revenue by $150 to $250 billion between Fiscal Year (FY) 2026 through FY 2035, depending on how fast tip income grows and over what distribution of income it is concentrated," the report continued. Newsweek has contacted Trump's campaign team for comment via email outside normal working hours.

The CRFB reported that the amount the policy could cost the federal budget could be as high as $500 billion if workers' tips increased by 100 percent, although the think tank said this is only an illustrative point if wages were lowered because of the policy.

"I am the ONLY Candidate who has ever called for delivering relief to our wonderful Service Workers by NOT TAXING THEIR TIPS," Trump wrote on Truth Social on June 9, though former Representative Ron Paul suggested ending federal taxation of tips while running for president in 2012.

Since then, the former president has encouraged his supporters to leave the campaign message on receipts when tipping for a service. Speaking in Florida on June 14, Trump said: "No tax on tips, OK? It's done. Done. And we need to spread the word so that every time you leave a tip for the next five months, you put on the receipt, 'Vote for Trump because there's no tax on tips.'"

Kid Rock has seemingly followed the former president's instructions. On June 15, the musician posted a photo of a receipt from Jeff Ruby's Steakhouse on X, formerly Twitter. The image shows that he left a $400 tip and wrote on the receipt, "A vote for Trump is a vote for no tax on tips!!" Trump later posted the photo on Truth Social.

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