Donald Trump’s Tax Plan Costs Government $10 Trillion
Like it or not, Donald Trump is looking more like a presidential candidate that’s in the race for the long haul — and now he’s beginning to offer specifics into what a Trump presidency would look like.
Earlier this week, he released his plan to change the United States tax code. It would consolidate seven tax brackets into four, and create a large base of people who pay no taxes at all. Top earners would see their tax rate fall from 39.6 percent to 25 percent, while those earning $50,000 to $150,000 per year would pay 20 percent. Trump says the plan would lead to growth of upwards of 6 percent per year.
This table from the Tax Foundation illustrates Trump’s proposal:
The Tax Foundation says that Trump’s plan “would cut taxes by $11.98 trillion over the next decade on a static basis. However, the plan would end up reducing tax revenues by $10.14 trillion over the next decade when accounting for economic growth from increases in the supply of labor and capital.”
For businesses, the plan would reduce the income tax to 15 percent and eliminate business tax expenditures, including deferral and interest deductions.
Wait, how can we pay for this?
Trump said he’d make “tremendous cuts” to the federal budget. Here’s what he said during an interview with CNN‘s Don Lemon: “So here’s the thing: There’s tremendous cutting that goes with my tax plan that I haven’t talked about yet, but that will be phase two. So we’re going to have a government that’s going to be much leaner, much better, much meaner, but it’s going to be meaner in the sense… of it’s going to be efficient.”
Meanwhile, the Fiscal Times says it’s difficult to get past the “massive increase” in the deficit that the Trump plan would create.
“Asked how his plan would close the gap, Trump on Monday said that a key element of his plan would be to do away with the carried interest loophole in the tax code, which allows investment managers to pay taxes on their fees as though they are capital gains,” the Fiscal Times said.
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