Paul L. Caron

Tuesday, December 22, 2015

Tax Policy Center:  Trump Tax Plan Adds $10 Trillion To Debt, Slashes Taxes For Top 0.1%

TrumpLeonard E. Burman, Jim Nunns, Jeff Rohaly & Joseph Rosenberg (Tax Policy Center), An Analysis of Donald Trump's Tax Plan:

This paper analyzes presidential candidate Donald Trump’s tax proposal. His plan would significantly reduce marginal tax rates on individuals and businesses, increase standard deduction amounts to nearly four times current levels, and curtail many tax expenditures. His proposal would cut taxes at all income levels, although the largest benefits, in dollar and percentage terms, would go to the highest-income households. The plan would reduce federal revenues by $9.5 trillion over its first decade before accounting for added interest costs or considering macroeconomic feedback effects. The plan would improve incentives to work, save, and invest. However, unless it is accompanied by very large spending cuts, it could increase the national debt by nearly 80 percent of gross domestic product by 2036, offsetting some or all of the incentive effects of the tax cuts.

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 Figure 2A

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The more sweeping a tax proposal, the less likely it could ever be enacted. There’s no need to waste time studying or reacting to these. They are only statements of political preference.

The last sweeping tax change, in 1986, required trust between the two political parties. Good luck with that after 30 years of bridge burning.

There's one bit of good news here. Because most income tax provisions are now permanent, the current law baseline is very nearly the same as the current policy baseline. No more waste of time debating which baseline is more correct. Now we can debate whether an unsustainable baseline makes any sense at all!

Posted by: AMTbuff | Dec 22, 2015 8:14:31 PM

At least Trump spends his own money, not the Government's (see NYU story above).

Posted by: mike livingston | Dec 23, 2015 5:01:23 AM