In the first presidential debate of 2024, tax policy—and who it really benefits in this country—were among the issues most fiercely debated by Donald Trump and President Biden. Trump repeated his vow to extend his 2017 tax cuts and falsely claimed that Biden wants to raise taxes “by four times.” Biden shot back by describing how Trump’s tax cuts “rewarded the wealthy” and that he just wants them to “pay their fair share,” since he’d raise taxes only on those earning over $400,000 a year.
While cutting taxes for the rich may be out of step with a majority of American voters—60% of whom feel that wealthy people don’t pay their fair share, per a Pew Research poll in April—Trump often touts his tax cut promise, especially when he’s in front of audiences made up of major donors and corporate executives.
“You’re all people that have a lot of money,” he told a group of donors gathered at Mar-a-Lago for a fundraising dinner in December to support North Carolina gubernatorial candidate Mark Robinson. “You’re rich as hell. We’re gonna give you tax cuts.” He’s repeated that promise multiple times since then—and it seems to appeal to wealthy people and Wall Street executives who have been opening their checkbooks and contributing to his campaign.
Biden has emphasized that he’ll let both the personal income and corporate tax cuts included in Trump’s Tax Cuts and Jobs Act (TCJA) die when they expire in 2025: “If Trump gets elected, he’ll cut taxes for him and his rich friends at the expense of working families. We can’t let that happen,” the president said on social media on June 12. And Biden has revived talk of his wealth tax proposal—a 25% tax on Americans with a net worth of more than $100 million.
Tax Cut Promises Galvanize Wealthy Business Leaders
Trump’s tax cut promise has been praised by Silicon Valley and Wall Street executives, and he and the Republican National Committee raised $141 million in May, dwarfing the $85 million raised by Biden and the Democratic National Committee. Trump’s cash haul included high-profile donations to his campaign and the Republican National Committee by billionaires like hedge fund king Stephen Schwarzman ($6,600) and banking fortune heir Timothy Mellon ($50 million).
The issue has galvanized conservatives, uniting MAGA world and even Trump critics like former Vice President Mike Pence, whose new Advancing American Freedom foundation launched a $10 million campaign to push an extension of the tax cuts to lawmakers on Capitol Hill and voters around the country. And it’s emerged as a key talking point in congressional races from Nevada to upstate New York.
The embrace of Trump’s tax cuts by conservatives comes despite the fact that the extension would cost an extra $4.6 trillion over the next decade, per the Congressional Budget Office, and is projected to help increase the federal debt to 211% of GDP by 2054 (right now, it’s about 100% of GDP). And while proponents employ populist rhetoric, the cuts are heavily skewed to the advantage of wealthy Americans, delivering an average $175,000 reduction to the top 0.1% (those with an annual income greater than $4.5 million), per an analysis by the Center for American Progress. Trump’s tax package included a permanent corporate tax cut from 35% to 21%; a 20% deduction for pass-through income for businesses like partnerships and sole proprietorships, which mainly benefits wealthy households; a cut in the tax rate from 39.6% to 37% for married couples with over $600,000 in taxable income; and a doubling of the amount that the wealthiest households can pass on tax free to their heirs from $11 million per couple to $22 million.
And that’s just the start of the potential tax relief for wealthy Americans, given Trump’s ambition to repeal the Affordable Care Act, which includes taxes for high-income Americans—eliminating those would provide the top 0.1% with an average $225,000 tax cut. Combined with the original Trump cuts, this would result in an average $400,000 tax reduction for the wealthiest sliver of Americans.
Tax proposals in the Project 2025 blueprint released by the conservative Heritage Foundation to guide an incoming Trump administration that would disproportionately benefit the wealthy are the repeal of tax increases passed as part of Biden’s Inflation Reduction Act—such as the stock buyback excise tax and the book minimum tax. Karoline Leavitt, national spokesperson for the Trump campaign, which has not stated a position on those specific proposals, insisted to Capital & Main that the Trump camp is “not connected” to Project 2025.
Shrinking government programs that benefit the poor and middle class is as central to Project 2025, and to the larger conservative agenda, as are tax cuts for the rich. The plan proposes to eliminate Head Start, for example, which would “vastly restrict the number of available child care slots, dramatically increase child care costs for families living in poverty and undermine economic growth and exacerbate inequality,” said Casey Peeks, the senior director of early childhood policy at the Center for American Progress.
By sharply decreasing revenues, tax cuts “limit policymakers’ ability and willingness to make public investments that pay off in tangible and important ways for individuals, families, communities and the country as a whole,” testified Samantha Jacoby, senior tax legal analyst for the Center on Budget and Policy Priorities, before the Senate Committee on the Budget in May.
Trump Tax Cuts Didn’t Benefit Most Americans
The Trump tax cuts remain popular in some battleground states like Arizona, where only 22% of voters say they would be less likely to support a candidate who favored extending those cuts.
But recent analysis shows that the Trump tax cuts largely failed to deliver the economic benefits that were promised to most Americans. While the Trump administration claimed its corporate tax cut would lead to a $4,000 increase in household income (and even up to a $9,000 increase), it actually resulted in “no change in earnings” for those who made less than $114,000 while providing big increases in salaries for top executives,” according to the Center on Budget and Policy Priorities, which called it a “trickle-down failure.”
Eighty-two extremely wealthy households—including the Bechtel family that founded the engineering firm, media mogul Michael Bloomberg and the heirs of Texas pipeline billionaire Dan Duncan—collectively received more than $1 billion in savings from the Tax Cuts and Jobs Act, per a ProPublica analysis of income tax records. The bill was skewed to their interests partly due to the influence of their lobbyists, who worked with lawmakers friendly to the billionaires: “The flurry of midnight deals and last-minute insertions of language resulted in a vast redistribution of wealth into the pockets of a select set of families, siphoning away billions in tax revenue from the nation’s coffers,” reported the outlet, citing campaign disclosures and government records.
A similar dynamic is playing out this time around, with a rush of lobbying activity supporting an extension of the tax cuts. A top aide to House Ways and Means Committee Chairman Jason Smith, who has been outspoken in his desire to extend the cuts, went to work for well-connected lobbying firm Rich Feuer Anderson, which started a tax unit to lobby on the issue and represents major clients like BlackRock, Amazon, JPMorgan Chase and the International Institute of Bankers.
The conservative American Legislative Exchange Council (ALEC), which is funded by family philanthropic entities like the Bradley Foundation and Charles G. Koch Charitable Foundation, recently flew many of its members to Washington to hand deliver a letter pushing the benefits of a tax cut extension during meetings with Smith, House Oversight Committee Chairman James Comer and House Judiciary Chairman Jim Jordan, among others. The letter framed the Trump cuts as a boon to ordinary people rather than to the rich. “Every day, hardworking Americans face the challenges of paying bills, buying groceries, and securing shelter,” wrote ALEC chairman Ty Masterson. “Allowing the TCJA to expire exacerbates these difficulties, making financial stability increasingly elusive. It’s imperative that lawmakers at all levels recognize the profound positive impact these tax cuts have had on our families, homes, and lives.”
The group, which drafts model policies that are often copied and pasted by lawmakers into actual legislation, did the same with a resolution to extend the Tax Cuts and Jobs Act. Spokespersons for ALEC and the Heritage Foundation did not reply to requests for comment from Capital & Main.
This piece was originally published by Capital & Main, which reports from California on economic, political, and social issues.