In recent years, former President Donald Trump's tariffs and tax cuts have sparked significant debate. His tariffs, imposed on goods from Canada, Mexico, and China, included a 25% tariff on imports from Canada and Mexico and a 10% tariff on Chinese goods. These tariffs aimed to reduce U.S. imports by 15%, which could generate around $100 billion a year for the federal government. However, they also disrupted supply chains, raising costs for businesses and potentially eliminating jobs. For instance, gas prices in the Midwest could surge by 50 cents per gallon, and the price of some cars sold in the U.S. could rise by up to $3,000. Additionally, U.S. full-time employment could decrease by almost 600,000 jobs as a direct consequence of these tariffs. The Gilded Age featured extraordinary wealth for a small elite while many lived in poverty, highlighting the ongoing concern of wealth inequality exacerbated by such policies.
On the other hand, Trump's tax cut proposals sought to extend parts of the 2017 tax law, which could cost $466 billion by 2026. They included lowering the corporate tax rate and exempting certain income types from taxes. Critics pointed out that over two-thirds of the benefits from these tax cuts would go to the wealthiest fifth of Americans. The richest 1% would see an average tax cut of $78,000 in 2026. Meanwhile, the middle fifth would only receive 10% of the benefits, and the poorest fifth would get just 1%.
The budgetary impact of these tax cuts could be significant. They might decrease federal tax revenue by $4.5 trillion from 2025 to 2034. Although there could be a slight increase in long-term GDP, the overall economic effects remain uncertain. The Congressional Budget Office found that tax cuts for the wealthy could shrink the U.S. economy in the long run and add $4.6 trillion to the deficit. Critics argue that these tax cuts benefit the rich at the expense of working families, calling for fairer tax policies to support smaller businesses and workers.
