Still, the former and future president’s victories in both the Electoral College and the popular vote give him a strong mandate to govern. Making the most of the moment, momentum and popular mandate to fix the economic disaster that retirement leaves behind President Joe Biden and Trump’s opponent whom he defeated in 2024, Vice President Kamala HarrisHe would be wise to prioritize preserving and expanding the economic legacy from the first term of 2017-2021, and to do so within the (relative) grace period of his first 100 days back in the Oval Office.

That means making Trump’s groundbreaking 2017 Tax Cuts and Jobs Act permanent and expanding the child tax credit. Here’s how Trump can do this without increasing the deficit.

While the primary macroeconomic benefit of the TCJA—a reduction in the corporate tax rate from a globally abnormal 35% to a European average of 21%—is permanent, some of the law’s most significant individual income tax provisions will eventually expire. If Congress and Trump had not enacted an extension, not only would individual income tax rates rise sharply, but the child tax credit and standard deduction would also be cut in half.

The doubled child tax credit and standard deduction gave the middle and working classes real increases in disposable income. It has also meant a significantly simplified tax-paying process for tens of millions of people in the United States. While two-thirds of tax filers before the TCJA took effect used the standard deduction, only 1 in 10 disproportionately wealthy tax filers now prefer the complexity of itemizing their tax deductions.

Trump may move on to other proposed tax cuts in the future, but time is of the essence for the TCJA. Recall that expired individual provisions of the TCJA should not be extended will result in a tax increase For 62 percent of taxpayers. Trump should pay to preserve the TCJA and further increase the CTC for the working class by eliminating two diminishing and expensive tax breaks: the state and local tax deduction and the mortgage interest deduction.

While the TCJA caps the SALT deduction at $10,000 and the MID at $750,000, both are expected to expire.

Making all the necessary tax cuts would cost about $2.2 trillion in lost revenue over the next decade, according to a dynamic analysis by the Tax Foundation. Economists also estimate that eliminating the SALT deduction would create just over $2 trillion in federal revenue over a decade, with an annual gain of more than $200 billion in federal revenue starting in 2026.

The SALT cut is bad for economics, but it’s even worse for politics. Uncapped, the majority of the SALT deduction will go to the top 1% of earners. Before the TCJA, the unlimited SALT deduction meant that the federal government funded 40% of all income collected at California’s highest marginal tax rate. Even if the $10,000 cap is applied, more than 75% of earnings go to the top 20% of earners. In fact, allowing the SALT deduction cap to expire would increase taxes on working-class people in red states to fund progressive government experiments like taxpayer-funded Medicaid for illegal immigrants.

In contrast, eliminating the SALT deduction to make permanent the individual provisions of the TCJA would cause wealthy blue state residents to pay for the policies they voted for. Beyond these immediate benefits to the middle and working class, making TCJA provisions permanent to want It will increase GDP by 0.5% and employment by approximately 700,000 jobs.

MID is similarly an obvious candidate for a chopping block. St. According to economists at the Federal Reserve Bank of St. LouisThe MID is regressive, similar to the SALT deduction, but it also reduces homeownership rates and housing affordability. Eliminating the MID would result in a 5% increase in homeownership and a 4% decrease in house prices. It could also fund further expansion of the child tax credit, beginning to fulfill a key campaign promise made by Vice President-elect J.D. Vance.

With the $750,000 cap, the MID deduction would cost the federal government approximately $30 billion per year, but if the cap were to expire the cost balloons It will exceed 60 billion dollars in 2026. Complete elimination of MID could add at least $60 billion to annual federal revenue.

The TCJA increased the CTC from $1,000 to $2,000 per child per year; of that amount, $1,400 can be refunded to low-income individuals who pay little or no net federal income taxes. Under the TCJA, the CTC is beginning to phase out single filers who earn at least $200,000 and joint filers who earn at least $400,000.

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Assuming the repeal of the SALT deduction will be used to extend the bulk of the TCJA and further expand the CTC from $2,000 to $3,000 cost just over $60 billion a year. In other words, we have another tax cut for the rich that could provide an anti-family, pro-natalist tax cut for the working and middle classes.

A multiracial and disproportionately working-class coalition delivered Trump to the White House in hopes of reversing the damage wrought by Bidenomics. Trump should reward his voters by averting painful tax hikes, making his economic legacy permanent, and beginning an expansion of growth and domestic policies that provide relief without worsening the persistent deficit crisis.