By the time you finish parsing Donald Trump’s newly released tax plan — assuming that you’re jonesing to do so — you might find yourself pining for the days when all he offered were insults and demagoguery.
I hesitate to take his tax plan seriously, and devote the requisite keystrokes to unpack it, because I still suspect that he’ll take his Brand and go home when the winter primary season gets serious. Still, his blueprint begs for analysis, because it shows us that Trump, for all his populist I’m-for-the-little-guy bombast, in truth aspires to be just another trickle-down Republican, a dispenser of supply-side fairy dust who would coddle the rich and deepen the deficit.
On TV Sunday night, he said of his tax plan, “I think we’re going to have something that’s going to be spectacular.” Yeah well. Spectacular for whom?
I won’t take you into the policy weeds — if that’s your preference, go for it — but these highlights should suffice: Trump wants to cut the highest earners’ income tax rate from 39 percent to 25 (the latter would be the lowest rich-bracket tax rate since 1931). He wants to cut the corporate tax rate from 25 percent to 15. He would cut the maximum tax rates on capital gains and dividends from 23.8 percent to 20. And he wants to wipe out the federal inheritance tax — which is very convenient for him, because if that were to happen, his kids would reap a windfall.
He does have a sweetener for some folks at the other end of the income scale. He says that people who makes less than 25 grand (and couples who make less than 50 grand) should be exempt from paying any income taxes at all. The Trump document declares that, instead of paying taxes, “they get a new one-page form to send the IRS saying, ‘I win.'” (What other policy document has ever featured such a boffo sound bite?) But this sweetener isn’t as awesme as it sounds. Tax experts say that 45 percent of lowly households currently pay no income tax, and that Trump will merely bump that share closer to 50.
All told, most of his tax breaks benefit the higher brackets — in most ways, this is your standard regressive Republican plan — and even though he has complained in the debates about “people making hundreds of millions of dollars a year” by exploiting tax loopholes, his plan doesn’t specifiy which, if any, loopholes he aspires to close. (Presumably, he would hire terrific people to come up with big beautiful details.)
But worst of all — shades of Reagan in the ’80s and W. in the ’00s — his heavily weighted upper-bracket tax breaks would spread copious red ink on the federal ledger. Put simply, he’d deepen the deficit, because he’s proposing to slash way too much revenue. Even Ryan Ellis of Americans for Tax Reform, the low-tax advocacy group that cracks the whip in Washington, says there’s no way that Trump’s plan can balance the budget. In his words, “It just doesn’t square up.”
Trump has a simple answer, of course. (Doesn’t he always?) He simply says — shades, again, of the Republican supply-siders of yore — that the requisite amount of tax revenue will be magically generated because the economy will be unleashed to grow at an annual pace rarely if ever seen in American history. He said Sunday on 60 Minutes, “We’re going to absolutely be able to pay for it. My economy will expand so rapidly.”
Um. Trump is promising 6 percent annual growth. Historically, we’ve been lucky to get spurts of 3 percent.
As the smart folks at The Economist magazine point out, Trump’s promise “would certainly pay for huge tax cuts, but is a fantasy.” And Kyle Pomerlau of the nonpartisan Tax Foundation reportedly says, “Even accounting for additional economic growth from the plan, it still wouldn’t be able to claw back the revenue losses.”
(It’s possible, of course, that Trump’s Republican fans won’t care a whit if his tax plan craters the budget deficit. Republicans tend not to get upset about deficits unless a Democrat is in the White House.)
So what we have here is your basic con job, courtesy of a guy who purports to be a straight-talking, mold-breaking outsider. Turns out, Trump isn’t new; he’s deja vu. Conventional candidates have long promised that tax breaks — coupled with vague vows to close loopholes — will somehow fuel the economy and balance the budget, but reality has never seemed to cooperate. As Howard Gleckman of the nonpartisan Urban-Brookings Tax Policy Center notes, “Politicians of both parties have been playing the game forever, and (Trump) is just doing it, too.”
Yup. Turns out, he’s just another politician.