Trump's tip tax exemption could add $150bn-$250bn to deficit |
Donald Trump's new proposal to exempt tips from taxation could potentially add $150bn-$250bn to the federal budget deficit over 10 years, according to the Committee for a Responsible Federal Budget. This estimate suggests that the impact on the deficit would be comparable, if not larger, than the projected revenue loss from extending the 2017 tax cuts for small businesses and pass-through companies. "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 stated. The tax exemption for tips is part of Trump's strategy to appeal to younger voters. Speaking in Florida on June 14th, he 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.'"