First it was a tax cut for hotel and restaurant workers in Nevada, a swing state where Donald J. Trump proposed exempting tips from taxes. Then, in front of powerful chief executives gathered in Washington, Mr. Trump floated cutting the corporate tax rate, helping to ease concerns in the business community about his candidacy.
Now Mr. Trump is calling for an end to taxing Social Security benefits, which could be a boon for retirees, one of the most politically important groups in the United States.
Repeatedly during the campaign, Mr. Trump and Republicans have embraced new, sometimes novel tax cuts in an attempt to shore up support with major constituencies. In a series of social-media posts, at political rallies, and without formal policy proposals, Mr. Trump has casually suggested reducing federal revenue by trillions of dollars.
While policy experts have taken issue with the ideas, Mr. Trump’s pronouncements have real political appeal, at times putting Democrats on their back foot. Nevada’s two Democratic senators and its powerful culinary union have endorsed ending taxes on tips, while the AARP supports tax relief for seniors receiving Social Security benefits.
“You do have to scratch your head a little bit when someone’s going around offering free lunches everywhere,” said Jesse Lee, a Democratic consultant and former Biden White House official. “We’re all for people having their lunch, but we have to raise taxes on the wealthy to pay for it.”
The most recent and most expensive of Mr. Trump’s plans is ending income taxes on Social Security benefits, which could cost the federal government as much as $1.8 trillion in revenue over a decade, according to the Committee for a Responsible Federal Budget. That would burn through the program’s financial reserves more quickly and hasten the moment when the government is no longer able to pay out Social Security benefits in full under current law.
It would also provide tax relief to millions of Americans. Congress started taxing Social Security benefits in the 1980s to help prop up the program’s finances, and now about 40 percent of people who receive Social Security payments owe taxes on the benefits, according to the Social Security Administration. About 70 million people receive Social Security benefits.
To determine whether someone’s benefits are taxed, the government uses a formula that counts half of Social Security payments as income. Individuals making more than $25,000 under that gauge have to pay income taxes on 50 percent of the money they receive from Social Security. Individuals making more than $34,000 have to pay taxes on 85 percent of their benefits.
Low-income retirees without other savings or earnings may not make enough to owe taxes on their Social Security payments. Households making between roughly $60,000 and $200,000 would receive the largest comparative boost under the proposal, according to an analysis by the Tax Policy Center, a think tank.
Romina Boccia, the director of budget and entitlement policy at the conservative Cato Institute, said ending taxes on Social Security would shift more of the burden for paying for the benefits onto younger workers.
“I can see the political calculations behind this proposal, but from a tax fairness perspective and a generation fairness perspective, it is a very bad proposal,” she said.
Still, there is bipartisan support for the concept. Some House Democrats introduced legislation earlier this year that would stop taxing Social Security benefits, while also raising payroll taxes on higher-income Americans to fund the program.
As governor of Minnesota, Tim Walz, whom Vice President Kamala Harris selected as her 2024 running mate, signed legislation that exempted Social Security payments from state taxes for many seniors. Bill Sweeney, the senior vice president for government affairs at AARP, said any changes to Social Security should protect the program’s finances. He added that his group’s members were not shy about their distaste for taxes on Social Security.
“I know they’re calling members of Congress and complaining about this,” he said.
In an interview on Fox Business last week, Mr. Trump brushed aside concerns about the cost of the idea. He said that accelerating the deadline for addressing Social Security’s finances would prompt Congress to fix the program. “You know that we’re going to take care of Social Security,” he said. “We’re not going to do anything to hurt our seniors.”
Beyond his new ideas, Mr. Trump is also seeking to extend many of the tax cuts he signed into law in 2017. Ms. Harris has also effectively promised to extend many of those tax cuts beyond 2025, when they are currently set to expire. She’s adopted a pledge not to raise taxes on any household making less than $400,000 a year.
Even as they prepare to defend much of Mr. Trump’s signature tax law, many Democrats believe they have a better political hand on tax policy. For years, they have pummeled Republican tax plans, arguing that they primarily benefit large companies and wealthy Americans. In addition to supporting tax cuts for low-income and middle-class Americans, Democrats are seeking to raise taxes on wealthy Americans and large corporations.
To try to blunt Democratic attacks, some Republicans have sought to emphasize tax cuts for working-class Americans and small businesses. They hope Mr. Trump focuses on ideas like exempting Social Security from income taxes, rather than further slashing the corporate tax from 21 percent to 15 percent, as he has suggested.
“This feels like an answer to Democratic attacks that Trump is protecting corporate America,” said Ron Bonjean, a Republican consultant. “If there is another debate he can pull these out of his back pocket to say he’s fighting for seniors and he’s fighting for workers who count on tips everyday. It does help politically.”