Donald Trump’s tax plan would boost economic growth, but also expand the federal budget deficit by $10 trillion, according to analysis from the nonpartisan Tax Foundation.
If implemented, the plan would create 5.3 million jobs, expand the economy by 11.5 percent over the long term, and raise wages by 6.5 percent, according to the organziation. Trump’s plan would cut taxes by almost $12 trillion over the next decade. Federal revenue would only fall by $10 trillion when the resulting economic growth is accounted for.
Trump wants to reduce the top income tax rate to 25 percent from today’s 39.6 percent. His plan also ends the estate tax and the alternative minimum tax, both of which largely hit high-earners. The top one percent of income-earners would see their after-tax income rise by 27 percent as a result. At the other end of the spectrum, the bottom-fifth would see their after-tax income rise by 11 percent. On average, Americans would see their after-tax incomes rise by one-fifth.
“Donald Trump’s tax plan would enact a number of tax reforms that would both lower marginal tax rates on workers and significantly reduce the cost of capital,” Tax Foundation economist Alan Cole wrote. “These changes in the incentives to work and invest would greatly increase the U.S. economy’s size in the long run, leading to higher incomes for taxpayers at all income levels. The plan would also be a large tax cut, which would increase the federal government’s deficit by over $10 trillion, both on a static and dynamic basis.”
Trump’s tax plan is not terribly dissimilar in its outlines from that of former Florida Gov. Jeb Bush, who would cut the top income tax rate to 28 percent, increase the standard deduction, and cut the top corporate tax rate to 20 percent. The Bush tax plan would also eliminate the estate tax. But Bush’s plan cuts much less deeply — according to the Tax Foundation, it would only expand the budget deficit by $1.6 trillion over ten years, after the anticipated economic growth is taken into account.
Jason Russell is a commentary writer for the Washington Examiner.
