Trump is giving away the store on taxes

Former President Donald Trump is tossing out tax cut proposals like candy on the campaign trail, even as his fellow Republicans wonder how they can afford to renew expiring federal tax breaks.

As his presidential campaign heads into the final stretch, Trump says he wants to slash levies on everything from overtime pay and Social Security benefits to tips and domestic manufacturing.

The flurry of ad hoc proposals would cost trillions, on top of the eye-popping $4.6 trillion it will cost if lawmakers act to prevent taxes going up on a huge swath of Americans at the end of next year when big chunks of the GOP’s 2017 tax cuts will expire.

The proposals are designed to win over specific voting blocs — seniors in Florida, service workers in the swing state of Nevada, hourly employees in the Rust Belt — but they're putting congressional Republicans in a delicate spot. They’d rather be focusing on making the case to voters for reupping their 2017 tax cuts, something Trump supports but rarely dwells on.

Republicans have been blindsided by many of Trump’s proposals and there has not been a great show of enthusiasm for his ideas in Washington. Many Republicans declined to discuss the plans in detail, but some acknowledge he is promising more than they can deliver.

“I understand that candidates, when they campaign, they float a variety of different ideas, but they can’t all be true,” said Sen. John Cornyn of Texas, a senior tax writer who is running to replace the retiring Mitch McConnell as Republican leader in the chamber. “So how do you bring them back to Earth? And that’s going to be the hard job we're going to have next year.”

“We’re going to have to deal with reality when we’re actually making laws.”

Trump this week proposed dumping a cap on state and local tax deductions, a move that would overturn a pillar of his own Tax Cuts and Jobs Act. Republican leaders have repeatedly defended the “SALT” provision in the face of fierce criticism, including from some within their caucus.

There are not only major questions over the cost of Trump’s new proposals, but also more basic issues of how, and if, they would even work. Tax experts from across the political spectrum have panned many of them as poorly conceived.

At the same time, some of Trump’s proposals, like his call to scotch taxes on overtime work, have put Democrats in an uncomfortable position, since many are reluctant to oppose tax breaks benefiting working- and middle-class voters.

They’ve accused Trump of pandering and cited Trump administration policies that hurt hourly workers and touted their history of supporting lower-income workers — but many stop short of saying they oppose exempting overtime pay from tax.

And presidential candidate Kamala Harris and other Democrats have widely adopted Trump’s idea of excusing tips from tax, though the idea makes tax experts wince.

All of that underscores Trump’s continued ability to set the agenda in Washington, even when he's not in office, and even with only half-formed ideas floated on social media. Should he win in November, it also threatens to seriously complicate what already promises to be a wrenching debate next year over the tax code.

Aside from nixing taxes on Social Security benefits, tips and overtime work, Trump also wants to cut the corporate rate to 20 percent, from 21 percent, suggesting in one interview that he likes round numbers better. He has also called for a special 15 percent tax rate for domestic manufacturers.

He’s proposed a new deduction for newborn expenses, and his running mate, JD Vance , has called for increasing the maximum child tax credit to $5,000, though it's unclear whether Trump supports that.

All of that would come despite increasingly dire warnings about the government’s budget. The deficit is now running a once-unthinkable $2 trillion, and the cost of interest payments on the debt is spiraling — up 35 percent so far this year, budget forecasters said last week, to nearly $900 billion. That’s more than the government has spent this year on Medicare.

Trump wants to finance his plans with much higher tariffs and by repealing green energy tax subsidies, but even conservative-leaning budget analysts say the numbers don’t come close to adding up, and some Republican in Congress aren’t so sure about higher tariffs or scrapping renewable energy credits either.

Harris too has proposed big-ticket items, as Republicans are quick to note, including a $50,000 deduction for small businesses, a $25,000 credit for first-time home buyers and a $6,000 child tax credit for newborns. But she’s also offered a more comprehensive slate of ways to cover those costs.

And Trump’s proposals are taking fire over not only their cost, but also because they don’t appear to be fully thought through.

They’re frequently vague, leaving experts to puzzle over how they’d work. Many are seen as unfair because they would treat similarly situated taxpayers very differently. His tip proposal, for example, means that a restaurant waiter would pay a significantly lower rate than someone with the same income who happens to work in an industry in which tipping isn’t the norm.

And many would be hard to administer — which, ironically, given Republicans’ antipathy for the IRS, would invite more scrutiny from the agency.

Trump’s proposal to charge domestic manufacturers only 15 percent is reminiscent of a tax break for domestic manufacturers that used to be in the code that was plagued by huge fights between the IRS and businesses over what sorts of activities qualified.

Likewise, Trump’s proposal to exclude tips from tax could prompt people to construe other income as tips in order to claim the break, and his overtime proposal could prompt some to manipulate their hours — working many hours one week, and fewer the next — in order to qualify.

“There’s a lot of issues and questions with that,” said Sen. James Lankford (R-Okla.), another tax writer. “We have to figure out operationally how that would actually work.” Added fellow tax writer Sen. Bill Cassidy (R-La.): “Everything would become overtime.”

The off-the-cuff nature of Trump’s policymaking presents a sharp contrast to the person poised to become the Senate’s top tax writer, should Republicans win control of the chamber, Idaho’s Mike Crapo .

He’d be Trump’s partner on tax, responsible for much of the heavy lifting of moving a bill through Congress — and the mild-mannered, Harvard-trained, always-cautious Crapo does not do ad hoc.

Asked about the flurry of proposals, Crapo, characteristically, was noncommittal.

“I get asked about everything Trump says, and whether I support it, and my answer is always the same: We’re looking at everything in the tax code right now, getting ready for next year,” he said.

“And I don’t have a problem if he, or anybody else, wants to talk about fixes to the tax code.”