Merge pull request #2171 from PolicyEngine/MaxGhenis/issue2170

Upload Trump Analysis Blog Post

src/posts/articles/trump-2024.md

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+Throughout the election cycle, we at PolicyEngine have covered a few of former President Trump’s policy proposals. This includes: [exempting Social Security benefits](https://policyengine.org/us/research/social-security-tax-exemption#user-content-fn-trust-fund-split) from income tax and [extending the Tax Cuts and Jobs Act](https://policyengine.org/us/research/tcja-extension) (TCJA) individual provisions. Additionally, Donald Trump has signaled that he would repeal the [SALT deduction cap](https://www.cnn.com/2024/09/17/politics/donald-trump-salt-tax/index.html), reversing the $10,000 limit he signed into law with the passage of the TCJA. We at PolicyEngine have combined these three policies into one reform to simulate the effects of at least part of Donald Trump’s economic agenda and analyze its impact on households and the U.S. economy.
+
+Key results:
+
+- Costs $5.8 trillion from 2025 to 2034, assuming no behavioral responses, or $5.4 trillion when applying the Congressional Budget Office’s labor supply responses.
+
+- Increases net income for 81.6% of Americans and lowers poverty by 4.6% in 2026, assuming no behavioral responses.
+
+- Increase hours worked and earnings by 0.82% and 0.79% in 2026, respectively when applying CBO elasticities.
+
+[_Try our personalized calculator:_](https://policyengine.org/us/2024-election-calculator) See how Donald Trump’s economic agenda would affect your household, including other policies like tariffs and income tax exemptions for tips and overtime.
+
+## Donald Trump’s Tax Plan
+
+Donald Trump has released several more policy proposals during the cycle. These reforms include:
+
+- Excluding [tipped income](https://www.youtube.com/watch?v=9J0fUTiJLVc&t=1920s) and [overtime pay](https://www.cnn.com/2024/09/12/politics/trump-overtime-pay-taxes/index.html) from taxation
+
+- Deducting [interest on car loans](https://www.cnbc.com/2024/10/14/trump-wants-to-make-auto-loan-interest-tax-deductible-heres-who-benefits.html) from taxable income (presumably as an itemized deduction)
+
+- Imposing [across-the-board tariffs](https://www.pbs.org/newshour/economy/trump-favors-huge-new-tariffs-how-do-they-work), with higher rates on imports from China
+
+- Extending TCJA's corporate tax provisions
+
+While this analysis does not include these proposals, we at PolicyEngine have released a [2024 election household calculator](https://policyengine.org/us/2024-election-calculator) containing the reforms examined in this analysis and the listed provisions above. Read our previous reports on how [exempting Social Security benefits](https://policyengine.org/us/research/social-security-tax-exemption) and [extending the TCJA's individual provisions](https://policyengine.org/us/research/tcja-extension) would independently affect American households and the U.S. economy.
+
+## Household Impacts 2026
+
+Implementing all three policies would have varying effects on American households. To understand their impact, we have analyzed several family compositions with various earnings, social security benefits, and state and local expenses.
+
+**Table 1: Change in Net Income Based on Household Composition**
+
+| Marital Status | Children | Earnings   | Social Security Benefits | State and Local Tax | Change in Net Income                                                                                                                                        |
+| -------------- | -------- | ---------- | ------------------------ | ------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------- |
+| Single         | 0        | $0         | $24,000                  | $0                  | [$0](https://policyengine.org/us/household?focus=householdOutput.netIncome&reform=69665&region=enhanced_us&timePeriod=2026&baseline=2&household=49220)      |
+| Single         | 1        | $30,000    | $0                       | $0                  | [$1,020](https://policyengine.org/us/household?focus=householdOutput.netIncome&reform=69665&region=enhanced_us&timePeriod=2026&baseline=2&household=49231)  |
+| Married        | 0        | $70,000    | $24,000                  | $0                  | [$3,911](https://policyengine.org/us/household?focus=householdOutput.netIncome&reform=69665&region=enhanced_us&timePeriod=2026&baseline=2&household=49225)  |
+| Married        | 2        | $150,000   | $0                       | $0                  | [$5,055](https://policyengine.org/us/household?focus=householdOutput.netIncome&reform=69665&region=enhanced_us&timePeriod=2026&baseline=2&household=49234)  |
+| Married        | 3        | $1,000,000 | $0                       | $100,000            | [$39,158](https://policyengine.org/us/household?focus=householdOutput.netIncome&reform=69665&region=enhanced_us&timePeriod=2026&baseline=2&household=49239) |
+
+For a single retired adult receiving just above the [average Social Security retirement benefit](https://faq.ssa.gov/en-us/Topic/article/KA-01903#:~:text=Views:,most%20convenient%20way%20to%20apply.) (first example), their net income would see no change as their benefits face zero taxation under the current structure. While net income does always rise with increased earnings, it does for most households which can be viewed in Table 1. This trend can be mainly attributed to the reduction in income tax rates from extending the TCJA. Additionally, families with children see an increase in net income due to the changes in the child tax credit (assuming their earnings are below the phase-out threshold). Households with high earnings, like in example five, see the largest gains. If they have real estate taxes that can be deducted using the SALT deduction, they benefit even more. Figure 1 shows how net income changes as household income rises for a married couple with two children (example four).
+
+**Figure 1: Change in Net Income for a Married Couple with Two Children Based on Household Income**
+
+![](https://cdn-images-1.medium.com/max/2000/0*-tv04W6Sakp0seYs)
+
+## Federal Budgetary Impact
+
+Donald Trump’s three policies would reduce federal revenues by $5.8 trillion over ten years when utilizing [static modeling](https://policyengine.org/us/policy?focus=policyOutput.policyBreakdown&reform=69665&region=enhanced_us&timePeriod=2025&baseline=2). [When considering behavioral effects](https://policyengine.org/us/policy?focus=policyOutput.policyBreakdown&reform=69666&region=enhanced_us&timePeriod=2025&baseline=2) (applying [CBO’s central elasticities](https://www.cbo.gov/sites/default/files/112th-congress-2011-2012/reports/43674-laborsupplyfiscalpolicy.pdf#page=4)), the cost drops to $5.4 trillion. In 2025, the [budgetary impact](https://policyengine.org/us/policy?focus=policyOutput.budgetaryImpact.overall&reform=69665&region=enhanced_us&timePeriod=2025&baseline=2&household=49239) of the proposals is much smaller as the extension of the TCJA’s individual provisions does not come into effect until tax year 2026. Additionally, the number of total hours worked and earnings would decrease in 2025 before increasing as compared to the current baseline in subsequent years. As mentioned in our TCJA analysis, the [CBO projects](https://www.cbo.gov/publication/59710) that federal deficits would total $20 trillion over the next decade. Implementing all three policies, without any offsets, would raise deficits by roughly 27% using our dynamic estimate.
+
+**Table 2: Federal Budgetary Impact of Three of Donald Trump’s Tax Policies (in billions $)**
+
+| Year    | Static   | CBO Labor Supply Responses |
+| ------- | -------- | -------------------------- |
+| 2025    | -171.2   | -177.2                     |
+| 2026    | -522.4   | -497.4                     |
+| 2027    | -548.3   | -522.0                     |
+| 2028    | -572.8   | -541.6                     |
+| 2029    | -598.8   | -568.8                     |
+| 2030    | -627.0   | -597.0                     |
+| 2031    | -653.4   | -623.2                     |
+| 2032    | -685.1   | -652.8                     |
+| 2033    | -715.6   | -684.1                     |
+| 2034    | -745.2   | -713.7                     |
+| 2025-34 | -5,839.8 | -5,400.6                   |
+
+## Income Distribution 2026
+
+Enacting these reform policies would [increase the net income of 81.6%](https://policyengine.org/us/policy?focus=policyOutput.winnersAndLosers.incomeDecile&reform=69665&region=enhanced_us&timePeriod=2026&baseline=2&household=49239) of Americans in 2026. 0.6% of Americans see lower net income, likely due to state tax interactions. A larger share of households in the upper half of the income distribution would benefit compared to those in the lower half. Our distributional estimates assume no behavioral responses.
+
+![](https://cdn-images-1.medium.com/max/2000/0*0PnM-e-gieyUTSW1)
+
+In 2026, the average household benefit when enacting these reforms is [$3,570](https://policyengine.org/us/policy?focus=policyOutput.distributionalImpact.incomeDecile.average&reform=69665&region=enhanced_us&timePeriod=2026&baseline=2&household=49239). However, the families in the top income decile would receive an average benefit of $16,608, while the lowest decile would receive just $345, assuming no behavioral responses.
+
+![](https://cdn-images-1.medium.com/max/2000/0*9BPsZ7C5woD91CYq)
+
+Donald Trump’s three policies would also [reduce the Supplemental Poverty Measure by 4.6%](https://policyengine.org/us/policy?focus=policyOutput.povertyImpact.regular.byAge&reform=69665&region=enhanced_us&timePeriod=2026&baseline=2&household=49239) in 2026, assuming no behavioral effects. Additionally, senior and child poverty would drop by 7.0% and 8.2%, respectively.
+
+![](https://cdn-images-1.medium.com/max/2000/0*DMAUDgM1BG7e3wv9)
+
+## Conclusion
+
+Implementing three of Donald Trump’s tax proposals would reduce federal revenues by $5.8 trillion (static) or $5.4 trillion (dynamic) over the next decade unless paired with offsetting measures. These reforms would increase the net income of 81.6% of Americans while lowering it for 0.6% in 2026. 59% of benefits would flow to the top income quintile, while the bottom quintile would receive 2%. Additionally in 2026, Donald Trump’s tax provisions would lower poverty by 4.6% (static) and increase earnings by 0.79% (applying CBO elasticities).
+
+As policymakers evaluate reforms such as these, analytical tools like PolicyEngine offer critical insights into the impacts on diverse household compositions and the broader economy.
+
+We invite you to explore our [additional analyses](https://policyengine.org/us/research) and use [PolicyEngine](https://policyengine.org/us) to calculate your own tax benefits or design custom policy reforms.

src/posts/posts.json

@@ -907,5 +907,14 @@
     "authors": ["nikhil-woodruff"],
     "filename": "autumn-budget-24-fuel-duty.md",
     "image": "autumn-budget-24-fuel-duty.png"
+  },
+  {
+    "title": "Donald Trump's Economic Agenda",
+    "description": "PolicyEngine projects three provisions of Donald Trump’s tax plan would cost $5.4 trillion over the next ten years.",
+    "date": "2024-10-31 17:30:00",
+    "tags": ["us", "election", "donald-trump", "featured"],
+    "authors": ["david-trimmer"],
+    "filename": "trump-2024.md",
+    "image": "trump-2024.webp"
   }
 ]