Trump Tax Plan GoalsWith great fanfare, President Trump and Congressional Republicans unveiled their new tax plan with three promises:
- The plan would not cut taxes for America’s richest households.
- The plan would slash middle class taxes.
- The plan would not increase the deficit.
Broken PromisesUnfortunately, the Trump tax plan fails on all three counts, according to the Tax Policy Center (TPC). The TPC analysis, using values from previous GOP tax proposals where the Trump proposal was unclear, showed “modestly wealthy and upper-middle-class families getting hit with tax hikes, lower-income and middle-class families provided with small tax cuts, and the very rich and big businesses benefiting far and away the most.”
Using slightly different assumptions, Lily Batchelder, a former deputy director of the National Economic Council, said "In broad brush strokes, they’re doing nothing for the bottom 35%, very little and possibly raising taxes on the middle class, and they’ve specified tax cuts for the wealthy."
And The Deficit?As for the deficit promises, those are based on the supposed accuracy of a system known as "dynamic scoring," which the GOP hopes to use to show that federal revenue remains largely unchanged after tax cuts.
The premise behind the dynamic scoring conversation was tested in recent years, when Sam Brownback and his Republican legislature put it to the test in Kansas. Brownback promised that his tax cuts would generate so much economic growth that there would not be any significant revenue loss. In practice, revenue dropped sharply, and the Kansas government was forced to institute massive cuts to popular services and engage in a huge borrowing spree.
Many of the same tax changes from the Kansas Experiment are part of Trump's plan. Congress would be well-advised to learn from the Kansas Experiment's failure. The Kansas Experiment does have its defenders, of course. Their claims have been debunked.
Who Benefits?So, who benefits from Trump's tax proposal? Despite his denials to the contrary, it appears that Trump would reap huge benefits from his plan.
Trump's estate stands to save an estimated $1.1B based on the repeal of the estate tax.
Based on a New York Times analysis of Trump's 2005 tax return (the most recent one available in the public record), Trump would have saved an estimated $43M on that year's return under the new rules.