Former President Donald Trump made two new recent campaign trail tax promises, proposing to make auto loan interest deductible and lowering or possibly eliminating taxes on Americans living abroad.
The proposals were announced in a speech and a statement to the Wall Street Journal, and the campaign didn’t offer any advance warning or follow-up detail. The announcements follow a long string of new tax cut proposals from both candidates aimed at capturing more votes in a tightly contested campaign.
There is an exclusion for foreign earned income that benefits Americans living abroad. It is indexed to inflation and reached $126,500 for 2024. It is unclear whether Trump is proposing to increase this cap or exempt individual foreign income from U.S. tax completely. The proposal was announced in an Oct. 9 statement to the Wall Street Journal: “I support ending the double taxation of overseas Americans.”
In an Oct. 10 speech in Detroit, Trump also pledged to make auto loan interest tax deductible, though whether that he proposed a cap or an above or below the line deduction is not clear.
While these proposals would be relatively small compared to the overall budgetary impact of Trump’s campaign platform, the increasingly crowded array of promises could be hard to actually achieve legislatively and increase pressure to find politically expedient revenue increases. Recent estimates from independent experts place the lost revenue or cost to the federal government of Trump’s campaign trail proposals at several trillion dollars more than the simple extension of the Tax Cuts and Jobs Act, his signature economic law, at a time when the U.S. is already at its highest peacetime debt-to-gross-domestic-product ratio, a common measure of debt compared to the economy. Because of structural debt concerns, as well as possible budgetary maneuvering necessary to pass tax legislation next year, the anticipated tax and fiscal debate next year could turn into a zero-sum game, pitting certain tax promises against others.
For a deeper dive into the proposals of each campaign, see our overview of what’s at stake in tax policy in this election, and what each candidate has proposed, in our 2024 election overview series on The D.C. Dispatch page.
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