I’m an Accountant: 5 Ways Trump’s Platform Could Cost Middle-Class Taxpayers More Each Year
Written by
Laura Beck
Edited by
Levi Leidy
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As the 2024 presidential race heats up, former President Donald Trump’s tax proposals are once again in the spotlight. While Trump’s campaign promises tax cuts for all income groups, a closer look reveals that his platform could potentially lead to increased costs for middle-class taxpayers.
GOBankingRates spoke with accountants about the potential impacts of Trump’s proposed policies on the average American family.
Disproportionate Corporate Tax Cuts
Trump has proposed lowering the corporate tax rate from 21% to 20%. While this might seem like a minor change, Lawrie Carrozza, managing director of Foresight Accounting, pointed out a significant issue.
“Although small business operators would benefit slightly by a reduced corporate tax rate, this policy would mainly benefit large corporations with billions in profit,” Carrozza said. “These tax savings could be passed onto the middle class instead of giving large corporations a tax break.”
Carrozza suggested a more nuanced approach. “Trump should consider offering reduced corporate tax rates based on the size of the entity instead. For example, a larger corporate tax rate cut for companies with a turnover less than say $2 million and no corporate tax rate cut for companies with a turnover above $2 million.”
Increased Prices Due To Tariff Policies
Another potential hit to middle-class wallets comes from Trump’s proposed tariff policies.
“A 10%-20% tax on all imports and a 60% tax on Chinese imports would increase the prices on those imports,” Carrozza explained. “Many Americans rely on cheap imports to reduce their cost of living pressures.”
While Carrozza noted that “the reduced income tax rate could counter-balance this issue for the middle class,” he also cautioned that the overall benefit depends on individual consumption patterns. “Overall, they could be much better off provided the taxpayer is not a big consumer of imported goods.”
This means that middle-class families who rely on imported goods could see an increase in their daily cost of living.
Funding Shortages in Education
Kathy Gilchrist, accountant and CFO at CFOKathy, shared that Trump’s focus on education might be detrimental to middle-class taxpayers.
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“He has threatened school funding, which would hurt teachers and the general public who will have to make up the funding shortages with more taxes and more spent on school supplies,” she said.
Limited Deductions for Salaried Workers
Trump’s tax policies might affect different types of earners. For example, people on salaried income or hourly wages aren’t able to make the same kind of deductions that high-income earners and businesses can.
This limitation on deductions could result in middle-class salaried workers paying a higher effective tax rate compared to business owners and high-income individuals, even if their nominal tax rates are lower.
Potential Cuts to Public Services
While not directly stated in Trump’s tax platform, the corporate tax cuts and potential tariff-related revenue fluctuations could lead to reduced government income. “Reduced government revenue might lead to cuts in public services, and deregulation could weaken worker protections, potentially leading to lower wages and job insecurity,” shared Eliza Gwendalyn, certified bookkeeper and founder of Book Media.
This could also put a strain on services for many Americans. “There’s also a risk that these policies could strain the Social Security system and increase economic volatility, which could negatively impact middle-class families in the long run,” said Gwendalyn.
The Penn Wharton Budget Model estimates that Trump’s proposals would add $5.8 trillion to the federal deficit over the next decade. This increase in the national debt could lead to long-term economic consequences that will be felt by middle-class taxpayers.
The Final Word
Trump’s tax policies for middle-class taxpayers remains a subject of debate and conjecture. The key takeaway from the experts is that while Trump’s platform promises some tax cuts, the end result can be a mixed bag.
As Gilchrist shared, “Even when he does something helpful for the middle class, it’s usually paired with an even bigger benefit for the rich, like was the case with his 2017 tax cut bill.” The changes might end up making everyday life more expensive for middle-class families in the long run.
Editor’s note on election coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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