On CNN, economist Justin Wolfers explains how Trump's tax and tariff plans effectively cut taxes for the wealthy at the expense of working- and middle-class families
Wolfers: “Trump may be cutting taxes in total but, in fact, 95% of Americans might end up paying higher taxes”
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From the October 23, 2024, edition of CNN's CNN Newsroom
JIM ACOSTA (ANCHOR): How does Trump's tariff plan play into all of this too? If folks are concerned about the high price of things, the tariff plan from Donald Trump may have a big impact on that.
JUSTIN WOLFERS (UNIVERSITY OF MICHIGAN ECONOMIST): Yeah, it’s a huge factor in this election. Look, there's a real debate about tariffs in some domains, like should we have tariffs on electric vehicles. But on other things, the United States just doesn't grow coffee. So, if we put a 10% or 20% tariff on coffee, guess what? The price of coffee just went up 10 or 20%. And that's true for an enormous array of things. And so when you look closely at what Americans spend their money on, it looks like the Trump tariffs — which to be clear, should be called a tax — those taxes raise the cost of living for a typical family by about 2 or $3,000 each.
So, what you've got on the one hand is you're going to raise money with tariffs, which actually hit middle-income families and working-class families the most, because everyone buys stuff. And then we're going to spend that money on the Trump tax cuts, which mostly go to corporations and the wealthy. And that's why, when you do the math, it’s this crazy thing; Trump may be cutting taxes in total but, in fact, 95% of Americans might end up paying higher taxes. It’s just the richer 5% that are going to benefit at the end of the day.