This year, Donald Trump has gotten a few headlines for some of his supposedly 99 percenter policies. He said he wanted to hike taxes on hedgies. “We have an amazing tax plan,” he said. “We’re going to be reducing taxes for the middle class, but for the hedge-fund guys, they’re going to be paying up.” He described highly paid corporate executives as a “a total and complete joke.” He even indicated that he might end up raising taxes on himself. “You’ve seen my statements, I do very well, I don’t mind paying some taxes,” he said. “The middle class is getting clobbered in this country. You know the middle class built this country, not the hedge-fund guys, but I know people in hedge funds that pay almost nothing and it’s ridiculous, okay?”
Okay! Statements like these won him some accolades as an economic populist, a rare Republican who was more interested in cutting taxes for middle-class families than for rich ones. But not so fast. The highly respected Tax Policy Center has come out with a detailed — well, sort of detailed, more on that later — analysis of Trump’s tax plan. And for all the talk about getting rid of the carried-interest loophole, Trump’s tax plan would inevitably blow a giant hole in our national finances in order to give the very wealthiest families a huge tax cut.
The TPC cobbled together what it could from Trump’s various campaign pronouncements. Researchers even asked for more details to run a proper analysis, but never heard back from the Trump camp. (Leonard Burman, a co-founder of the research group, told journalists this morning that he even joined LinkedIn Pro to try to get to a policy official on the campaign.) But they had enough: collapsing the marginal tax brackets down to three, with a top rate of 25 percent; repealing the alternative minimum tax; taxing dividends and capital gains at 20 percent; increasing the standard deduction; and reducing the corporate rate from 35 percent to 15 percent.
That results in nearly $10 trillion in revenue losses between 2016 and 2026. Trump has promised to make some of that up with spending cuts. But Republicans have generally shied away from defense cuts, and Trump has vowed not to touch Social Security and Medicare. That would mean that he would have to gut virtually every dollar of non-defense discretionary spending: Say good-bye to highways, federal education funding, space exploration, the National Institutes of Health, and so on. There’s a “perception out in the world that there’s a bunch of spending that would be easy to cut,” Burman said, citing Americans’ myopic perception of the size of the foreign-aid budget. Under Trump’s plan, “if you eliminated all non-defense discretionary spending, you would not be able to balance the budget in 2025.”
It also results in giant, giant tax cuts for the rich. The average low-income household would get a tax cut of $128, or about one percent of after-tax income. Middle-income households would get a cut of $2,700, or 5 percent. The top one percent of households would get a cut of $275,000, or 17.5 percent. The top 0.1 percent would get an average tax cut worth more than $1.3 million, or almost 20 percent of post-tax income. So much for economic populism — with Trump, it is entirely rhetorical. He’s pandering to lower-income white voters’ fears of immigrants taking their jobs, and promising them tax cuts. He’s not actually offering a tax plan that would work primarily for their benefit.
As for the Donald’s own tax burden? “I can’t figure out any way” that he would not pay less, Burman said.