Trump exaggerates Clinton tax impact

During last week’s presidential debate, Trump admitted that he took advantage of the tax loophole, but he also alleged that George Soros and Warren Buffett, billionaires and Clinton supporters, also used these loopholes.

TPC’s analyses only looked at the candidates’ tax plans and did not look at any spending changes the candidates have proposed. The following snips are from the second link. In the case of his tax plan, he would give a big break to “flow through” companies, such as those he owns. Income tax rates on the wealthy would be decreased under his plans. It showed high-income people found many ways to reduce their tax burden, the most common of which in 2013 – the most recent year available – was total miscellaneous deductions. His plan would also introduce a number of new childcare expense-related credits and deductions while eliminating both the personal exemption and head of household filing.

Trump’s plan would grow the economy by 1.12 percent above the baseline in 2018, but then shrink it by 0.43 percent in 2027 and by 6.73 percent in 2040.

Trump will add $5.3 trillion to the debt in the next decade. Trump would slash the top corporate tax rate from 35 percent to 15 percent. But by 2027, his plan would create 692,082 fewer jobs than would the current economy without his tax plan. He really is a vastly successful businessman, really is donating the vast majority of his fortune to charity, and really does have ideas about how to make the tax code fairer.

In the big picture, though, analysis of the tax plans by themselves presents us with a stark choice in direction, one we’ve been wrestling with for some time.

The TPC found the top 10 percent incomes get almost 88 percent of the tax change benefits. Judge Learned Hand summed up this position best in 1934: “Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one’s taxes”.

But Buffett’s rebuttal to Trump did admit that he hasn’t always paid taxes in the millions. The elimination of these features of the tax code would make filing simpler for both individuals and businesses. I think it underestimated the “free public tuition” plan by about $100 billion, but that does not fundamentally change the conclusion: The Clinton plan is largely “debt neutral”. As he disclosed in his press release, he paid federal income taxes of $1.85 million on this 2015 taxable income. She’d slap a 4 percent surtax on incomes over $5 million, impose a minimum 30 percent tax on those earning over $1 million and cap itemized deductions for higher earners.

“In particular, if the tax cut substantially increases government debt, it then can produce a negative dynamic score, as the debt competes with private capital for household savings and global capital flows”, the report said. His proposed budget cuts could also hurt typical families: His plan focuses potential cuts on a small area of the federal budget that includes areas such as environmental protection, consumer product safety and education. She would double the size of the child tax credit, for both low- and middle-income families and would expand its coverage so that some 14 million additional families would become eligible.

The reason, in large part, is the relative impact the two plans have on the federal deficit and debt.

The Tax Foundation estimates this will increase growth by as much as 8 percent but will result in between $2.6 trillion and $3.9 trillion in lost revenues in the next decade. Under his plan, the investors would not pay taxes at the individual rate, but at the much lower corporate rate. This would reduce long-run wages by 2 percent and employment by 700,000 full-time equivalent jobs. For instance, Morrissey said the plan applies only to mothers, and employers might be less likely to promote women as a result.

The U.S. tax code is notoriously complex. Most of her new revenue would come from high-income taxpayers, not businesses. He promises to “reduce taxes across the board”, and pledges to favor “working and middle-income Americans” by giving them a “massive tax reduction”, according to his campaign site. “This unfortunately produced widespread complacency in Washington about the need for structural budget reforms”, the group said in a statement, noting that the recently ended fiscal year saw the federal deficit jump to $587 billion from $439 billion the previous year.