Two weeks after releasing numbers on Jeb Bush's tax plan, the Tax Policy Center — one of the only nonpartisan economic think tanks respected on both sides of the aisle in Washington — is out with an analysis of the tax plan of the Republican frontrunner, Donald Trump.
Trump's plan, TPC estimates, will cost $9.5 trillion, not including interest payments on the debt incurred as a result; with interest included, the cost rises to $11.2 trillion. That's substantially more than the $6.8 trillion/$8.1 trillion cost of Bush's plan. And like Bush's plan, TPC finds that Trump's is hugely regressive:
It's even more regressive than earlier estimates by the left-leaning Citizens for Tax Justice suggested. CTJ found that the poorest 20 percent would get a $250 or 1.6 percent of income tax cut, while the richest 1 percent would get $227,225 or 12.7 percent back; TPC's numbers are $128/1 percent and $275,257/17.5 percent, respectively.
That's worth repeating. The typical low-income American will get $128 under Trump's plan. The typical one-percenter will get $275,257. The typical 0.1-percenter will get $1.3 million. Overall, TPC finds that 67 percent of the cost of the cut comes from tax breaks to the top 20 percent, and 35 percent from breaks to the top 1 percent.
TPC finds that the most expensive part of the plan — costing nearly $4 trillion over the first 10 years — is Trump's collapsing of the seven current tax brackets, ranging from 10 percent to 39.6 percent, to just three: 10, 20, and 25 percent. Nearly as pricey, at $3.3 trillion, is his increasing of the standard deduction to $25,000 for singles and $50,000 for couples, a near quadrupling of the current deduction, which is $6,300 for singles and $12,600 for couples. Slashing the corporate rate to 15 percent — it's currently a flat 35 percent for companies with profits over $18.3 million — costs another $2.4 trillion for good measure:
Including the interest paid on increased deficits, TPC estimates that Trump's plan would add $11.2 trillion to the debt by 2026 and $34.1 trillion by 2036. Over 20 years, it'd amount to a 79.8 percent of GDP hike in the debt. For comparison, US debt is currently about 75 percent of GDP; Trump's tax cuts would more than double it.
The Tax Policy Center revenue estimates are significantly different from those put forward by the left-leaning Citizens for Tax Justice or the right-leaning Tax Foundation, which both estimated the cost at $12 trillion, about $2.5 trillion more than Tax Policy Center's estimated price tag. There are a few reasons why this could be the case. The other estimates don't include some revenue-increasing provisions in Trump's plan, and appear to model Trump's increase in the standard deduction differently, among other differences.
Why these numbers matter
The TPC analysis confirms what has been obvious since the plan was unveiled: Donald Trump really, really wants to cut taxes on rich people, with much smaller benefits going to the poor. And yet when he debuted his proposal, the media treated it as a departure from Republican orthodoxy:
Some had the audacity to claim that Trump wanted to raise taxes on rich people (ABC has since changed the headline to the slightly less false "Trump Admits His New Tax Plan ‘Is Going to Cost Me a Fortune’"; "admits" is the wrong word, but Trump did tell that lie):
This is nonsense. It has always been nonsense, and TPC's analysis proves it once and for all. Donald Trump wants truly massive tax cuts for wealthy people. That's his tax agenda in 2016.
Correction: This post originally stated that the debt was around 100 percent of GDP. It's more like 75 percent if you exclude debt held by the government itself.