Trump, after watching his party get trounced in the off-year elections recently, decided to temporarily turn his sights from foreign grifting, and White House remodeling, back to the economic issues that supposedly help win him the Presidency and his party the super slim majority in Congress that refuses to pass a budget that actually deals with the wide ranging economic issues impacting the average voter and consumer.
As usual though, Trump is full of big beautiful bullshit with lots of blustery words that actually mean very little when put under even the lightest of scrutiny. Sure, once again he has the “concept of a plan” that I’m sure he’ll have more details for “in two weeks” for how to do this. Because that’s what he’s done for the better part of the decade now – honed to a playbook built on soundbytes that make good hashtags and memes without actually saying anything of substances. Then, when it’s pointed out there is no real policy to execute the gaslighting begins about how that’s not what he said, or even if he said it he didn’t mean it that way, and even if he did mean it that way that you just don’t understand how it works because he’s playing three dimensional chess on a gold board while you’re playing tic-tac-toe with BBQ briquets as chalk.
Currently, he keeps claiming things like, “A dividend of at least $2000 a person (not including high income people!) will be paid to everyone,” and “A dividend of at least $2000 a person (not including high income people!) will be paid to everyone,” among other references he’s made in recent off-the-cuff remarks about giving people a cut of the tariff money while insisting they aren’t actually the ones paying the tariffs.
First, so far, he hasn’t really defined what the distribution mechanism is.
Dividends just don’t “exist” in the Federal government, so , of course Trump’s avoiding calling it anything other than “dividend” which is a distinctly ambiguous term generally not used by the government for returning monies to taxpayers so no one really knows what it means. The assumption is that it’s a concept familiar to Trump ‘s corporate senses since it’s typically a payout to individual shareholders as either cash or additional stocks funded by a company’s profits – not that Trump’s companies would EVER share their profits this way.
By avoiding calling it a “refund” or “rebate,” thus far, which does allow for some freedom in how one interprets the meaning of why, as well as avoiding calling the mechanism a “check,” so far, so he’s allowed his administration to space to not be boxed in to how the dividend is distributed. But, of course, most people hearing divided are, in fact, going to expect cash in hand in some way because they are interpreting it as some kind of direct refund or rebate to what they’ve paid out in increased costs. They are likely expecting a check of some kind because that’s what Trump touted so grandly during the pandemic stimulus. And, many are going to be disappointed in any version of a dividend that doesn’t actual put cash back in their wallets in the most direct fashion. Of course, those stimulus checks required an act of congress to enact and survived a lot of legal wrangling to execute. It might be what most people expect but it’s likely going to be one of the most difficult ways to fulfil Trump’s promises as well.
“It could be just the tax decreases that we are seeing on the president’s agenda. No tax on tips, no tax on overtime, no tax on Social Security, deductibility on auto loans. Those are substantial deductions that are being financed in the tax bill,” said Treasury Secretary Bessent recently. This takes the onus off of having to fund Trump’s dividend idea going forward, because it tries to position the dividend as something already baked into the Big Beautiful Bill that passed earlier this year despite the fact that tariff dividends were NEVER part of those discussions and the bill was passed into law prior to the enactment of many of the tariffs that are now pummeling the economy. However, this is going to be a real difficult prospect to sell voters on the more Trump talks about it since consumers who are burdened by the tariffs ultimately are NOT seeing any kind of tangible monies actual flow back to them, and negates the whole point of it being a dividend to taxpayers.
Furthermore, there’s been discussion from others in the administration that it could be in the form of future tax credits or tax deduction scheme instead of a direct payment. However, these type of changes to the tax code typically require an Act of Congress and not just a Presidential Executive Order directing the IRS to make updates. Considering the difficulty in passing the Big Beautiful Bill in the first place, and in funding the government currently, it is unlikely that ANY such legislation could be passed, and even if it was, it’s highly unlikely the IRS could implement it prior to the start of filing for the 2025 tax year (2026 deadlines). Any attempt to circumvent the usual legislative approach would likely result in lawsuits, which would not only delay, or kill the implementation, but would also cut into the governments so-called “profits” from tariffs that were fueling the “dividend” in the first place.
Then, there’s any of the other non-direct mechanisms that have been dreamed up not just by staff scrambling to make good on the President’s most recent unvetted promises, but among the right-wing talking heads that with speculate just about anything to try and paper over the policy minefield as a result of the President’s mindless meandering. All of these non-traditional approaches come with their own complexities to implement and the same litigious trappings that one has come to expect from supporters of an Administration that has no respect for the rules in the first place.
Second, in addition to not being clear on the actual mechanism for this dividend, there’s also a questions still remaining of who would qualify.
Trump did note the dividend should “not including high income people” which is another ambiguity. Who is “high income” in this instance?
There were approximately 144,900,000 individual, non business/corporate, taxpayers n the U.S. who filed Federal tax returns for the most recent IRS released numbers in 2024. Removing just the top 10% of earners creates an eligible base of 130,410,000, while clipping the top 25% of earners leaves 108,675,000 eligible. However, this method creates a noticeable variance from the usual progressive tax bracket system people are accustomed to. The pandemic-era stimulus checks enacted by Trump were made available based closer to the way individuals are used to filing. Those distinguished individuals up to $75,000 per year and couples earning up to $150,000 making the eligible base more covering 100,000,000 taxpayers impacting more than 165,900,000 people from the GOA’s estimates at the time which is similar to the proposals around filings of $100,000 or less, which could reach about 150,000,000 people. Another proposals a maximum filing income cap using the median adjusted gross income of $50,399, that would still produce 77,000,000 recipients.
If every individual, non business/corporate, taxpayer were to get the same $2,000 refund that would be $307,600,000,000 in dividends owed. Reducing the number down to the level targeted from the Pandemic stimulus would cost aprox $200,000,000 in dividends. If it were pared down to only the median adjusted gross income-and-below earners, that would still produce $154,000,000,000 in dividends.
Of course, although not yet discussed as part of Trump’s policy the implementation might not be a flat $2,000 divided to all, but could be done progressively similar to how the Pandemic stimulus money was paid out differently at different income levels. What the dividend floor would be, and how it would be progressively distributed across income levels is still an unknow. This would, of course, help offset some of the dividend costs, but, it’s also likely that anyone not getting the full value of the dividend will be disappointed when they find out they aren’t getting the full value Trump’s currently promising.
Furthermore, businesses, primarily importers, are those who are most directly impacted by the tariffs. They are the first to absorb the costs, which they can then try and pass back to the manufacturer/ distributor bring the product into the country or to the next-in-line consumer of the product once it is in the country. Yet, despite crushing some of these businesses, there’s nothing in the dividend policy as currently discussed to compensate them. It is unlikely that the importers would continue to absorb the costs if they felt like they weren’t included in some way in the relief. This could mean anything from passing additional tariff burdens down to the consumer since they have a dividend to offset the rising costs, to lawsuits as an attempt to become party to and/or to block the dividends to consumers, to petitioning lawmakers to include some relief for them as well down the road, etc. All of which complicate the concept of an idea that the President’s floated so far.
And, although it’s a long shot, if it’s “people” getting the dividend, it might be noteworthy to recall that corporations are treated like people in considerable instances, including when it comes to the Supreme Court’s interpretation of them for Citizens United.
Third, the dividend money “received” by the taxpayer isn’t the only expense to contend with here.
Distribution of the dividend in any for is going to have overhead costs which vary greatly depending on if this is a direct-to-taxpayer scheme like a check, or a tax credit, or something else, and managing that portion of the dividend expense is as important as understanding the face-value costs here. Even if it was only a dollar per dividend distributed, a lowball figure if ever there was one, that’s still adding millions of dollars to the total cost of financing these dividends in the first place.
And, as with everything this administration does that breaks the governmental norm, the likelihood of this triggering all kinds of challenges in the courts is going to add to the expense to consider.
Plus, as with everything this administration does, it’s never just about doing it, it’s about the pomp and circumstance of going it, because if there’s one thing Republicans in general, and MAGA in particular are good at it is bluster and none of those ceremonies, rallies, or whatever you’re going to call them ever come cheep, especially if this kind of trickery is expected to help influence voters to support the GOP for the upcoming mid-term elections.
Forth, it’s also not clear what exactly is funding these dividends either.
The to-date tariff revenues of $195,000,000,000 collected so far represent tariffs that were already in force in addition to the supplemental tariffs that Trump continues to impose ad-hoc since taking office in January. Meaning, the to-date revenues include both an estimated $75,000,000 collected from pre-existing tariffs (the 2024 full year revenues on the same tariffs covered $77,000,000), and the more than $120,000,000 estimated collected from the newly enacted Presidential tariffs, many of which are currently under legal scrutiny by the Supreme Court. Are the dividends for all tariffs or just the most recent sub-set?
By the way, ALL of these revenue numbers are a far cry from the $3 Trillion number Trump continues to cite for his Tariffs, which is from one of the initial GAO 10-year estimated revenue from new tariffs, some of which have either been enacted at lower than originally proposed rates, or not at all, meaning even the estimation is out-of-date at this point.
Additionally, these are revenue numbers for tariffs, and not representative of any other expenses already being charged back to the tariffs. For example, deducting some negative budgetary impact from those policies, the estimated available monies from the newly enacted tariffs is estimated to be only about $90,000,000. And, Trump, as well as others in his administration, have proposed that a portion of the tariff revenues should be used to help pay down the nation’s running debt. However, the mechanism for using tariff revenue towards debt obligations has not be provided, nor has either the percentage of the tariff revenues to be used or the target amount of the debt to be offset. Similarly, and perhaps having confused the two, Trump as proposed that the tariff revenues could be used to help cover the deficit, which is usually understood to be the difference between the annual budget and the annual revenues used to fund the budget. Again, however, the mechanism for using tariff revenue towards the annual deficit obligations has not be provided, nor has either the percentage of the tariff revenues to be used or the target amount of the budgetary deficit to be offset. Either of these scenarios would likely leave even less of the tariff revenue available to produce some kind of consumer “dividend.”
Fifth, would the dividend be taxable?
Honest question here, because there’s a lot of variance on how government distributed money is handled. For example, currently Federal tax refunds are not taxable on the next Federal return you file, but they may be considered taxable to some local jurisdictions depending on certain circumstances, and a state or local tax refund may be taxable in certain circumstances on Federal taxes, and so on. The Pandemic Stimulus checks were not considered taxable because they were considered a tax credit rebate, but it was not without a lot of legislative discussion on how to position the stimulus distributions and not everyone agreed at the time they should be tax-free distributions. Similarly, the IRS guidance on “middle-class tax refunds” usually provided to taxpayers by State and Local governments are generally not considered Federally taxable except in certain circumstances. But, other payouts, such as your Unemployment Insurance, Social Security, etc. are considered taxable income at the Federal, State, and Local level in most instances when they are distributed. Where something like this “dividend” would fall greatly depends on how it’s implemented.
Sixth, it’s yet to be discussed if this is a one-time distribution of a “dividend,” or if we assume that after FY2025 many of these tariffs will persist than some kind of ongoing dividend could continue as well.
A one-time dividend has much different impact than that of an ongoing experience with a variety of implications, including at what interval an ongoing dividend would need to be re-evaluated and under what criteria that evaluation would be marked.
Seventh, and finally, another consideration are some of the broader impacts of any version of a “dividend” which have yet to be considered in this policy conversation
Take, for example, the short term impact of the Pandemic Stimulus checks that supercharged parts of the economy as that money was spent and then the subsequent downturn that it’s exhaustion created, while other parts of the economy felt no real impact at all because already cautious consumers hoarded it in savings accounts instead of spending it because they were bracing for the possibility of an even worse economic reality and used it to help replenish their already depleted rainy day funds. Considering the current K-shaped economy looks similar to the pandemic era one, a similar outcome could happen here which would further muddy the recovery and divide voter and consumer sentiment.
Get the impression yet that Trump has a half baked idea he is leveraging as a promotional talking point to counteract the accusations he doesn’t understand what the average voter was pissed about on Nov 4, or the ongoing criticism he’s weathered for a pale economic over the last nearly 11 months, or to distract from the upcoming Epstein files fight that’s going to his the House floor, or any of his recent health issues? Yep, feels a lot like throwing spaghetti against the wall and hoping the false promise of free money temporarily changes the narriative.
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