Trump has made numerous tax promises. Can he keep them?

CNN-

Seeking to appeal to targeted groups of voters during his campaign, President-elect Donald Trump launched a sweeping tax relief package, including promising to eliminate taxes on tips, overtime and security benefits social, for millions of Americans.

Now comes the hard part of keeping all those promises. Although Republicans will control Congress, implementing the president-elect's sweeping tax agenda could be a daunting task. The risk is that if the party fails to deliver on its promises, some Americans who voted for Trump because they yearned for a little help with their high cost of living could end up disappointed.

Lawmakers from both Trump and the Republican Party have said tax relief, including extending tax cuts signed in 2017 and set to expire at the end of next year, is one of the top legislative priorities for the year to come.

Cut taxes for the American people, cut taxes on tips for hard-working Americans, on Social Security for our seniors, Trump transition spokesperson Karoline Leavitt said on Fox News Sunday Morning Futures. These are things that can be done through Congress, and we will work with members on Capitol Hill to craft this legislation so that President Trump can sign it into law immediately and make real changes for the American people.

However, Trump's long tax wish list is very costly and comes at a time when the national debt is growing rapidly. Extending the Tax Cuts and Jobs Act of 2017 could cost more than $4 trillion, and the new president has further promised more than $3.3 trillion in tax relief measures.

Although Trump claims his plan to raise tariffs will replace revenue lost from these tax breaks, experts say that's not possible. Instead, the president's election agenda will result in a nearly $8 trillion hole in the federal budget over the next decade, according to the Committee for a Responsible Federal Budget.

Implementing Trump's slew of new tax proposals could be difficult given revenue constraints and deficit concerns, Marc Gerson, a member of Miller & Chevalier, a Washington, D.C.-based law firm, told CNN specialized in tax matters.

What I imagine is that one or more of the Trump campaign's tax proposals will be included as a sort of tip of the hat, said Gerson, who previously served as a tax adviser for the House Ways and Means Committee when it was run by the Republicans. . Maybe it will be done on a smaller basis or maybe it will be done on a temporary basis.

Notably, when Trump pledged to eliminate tipping taxes, several Republican lawmakers quickly introduced bills, Gerson noted. But exempting overtime is more complicated, and eliminating the tax on Social Security benefits cannot be done under reconciliation, a procedure that allows Republicans to approve legislation in the Senate with fewer than 60 votes. standard. (Republicans will have at least 52 seats, with a race to declare, so they will have to resort to reconciliation to pass the tax package.)

Republican lawmakers in both chambers have already begun studying how to extend the 2017 tax package. Idaho Sen. Mike Crapo, who is expected to head the Senate Finance Committee in the next term, said that everything related to the tax code would be under consideration, including new ideas, and that pro-growth tax policy did not need to be considered. be compensated, Mandi Critchfield, its communications director, told CNN.

Spokespeople for Missouri Rep. Jason Smith, who could continue to lead the House Ways and Means Committee if Republicans maintain control of the chamber, did not respond to a request for comment.

Although cost will be an issue as the tax package is developed, there are many different levers lawmakers can use to adjust the cost of provisions and stay consistent with Trump's campaign promises, said Chris Campbell, former Senate Finance staff director. Republican-led committee and former Deputy Treasury Secretary in the first Trump administration.

Congress will have to work carefully to craft the legislative package that includes the president's tax promises in the most fiscally prudent way possible, Campbell, now CEO of Incamera Solutions, a global consulting firm, told CNN, adding that he would not be surprised if such tax promises were made. a package becomes a priority during the first 100 days of the new administration.

In addition to eliminating taxes on certain income, Trump has also proposed making interest paid on auto loans fully tax deductible; get rid of the controversial cap on state and local tax deductions; end double taxation of Americans living abroad; exempt police officers, firefighters, veterans, and active-duty military personnel from federal income taxes; and even consider abandoning the federal income tax itself.

Among Trump's most repeated promises was an end to taxes on tips, which he unveiled at a June rally in Nevada, a swing state that is home to many hospitality workers. Although his campaign has not released details of the proposal, Trump has indicated that he would eliminate both the federal income tax and payroll taxes, which fund Social Security and Medicare.

It's also unclear how much tips would be tax-exempt, whether the relief would only apply to workers in certain sectors, and whether safeguards would be put in place to prevent others from gaming the system.

Many tipped workers would not benefit from eliminating the federal income tax on tips because they do not earn enough to pay the income tax, according to the Budget Lab at the University of Yale.

Virtually all tipped workers would get a tax break if Trump also eliminated payroll taxes on tips, the Tax Policy Center found. However, these workers would receive reduced Social Security benefits after retirement.

Shortly after Trump promised to eliminate taxes on tips, Republican Sen. Ted Cruz of Texas introduced a bill called the No Tax on Tips Act, which would allow workers to deduct tips paid by cash, check, credit card or debit card on their federal account. income taxes. However, this would not eliminate federal payroll taxes, which total 15.3%, half of which is paid by employers. Rep. Byron Donalds, a Florida Republican, introduced companion legislation in the House.

However, the legislation contains few, if any, safeguards to prevent high-income workers from shifting their wages to tips in an attempt to avoid taxes, according to the Center for American Progress, a left-leaning policy institute. .

Sen. Cruz's bill would open the door to tax abuses that could be a boon for hedge fund managers, lawyers and other high-income professionals, wrote Brendan Duke, senior director of economic policy at the center.

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