Donald Trump is running for president on a massive tax cut for high earners, and Hillary Clinton is proposing just the opposite, according to new analyses of the candidates’ updated tax plans published Tuesday.
Trump’s tax plans, which have been totally overhauled since the primaries, would cut taxes by $6.2 billion over 10 years, the Tax Policy Center estimated in a new report released Tuesday. Those tax cuts, almost one-sixth of anticipated federal revenue over the decade, would largely go to high earners, with about half going to the top 1 percent. The plan also would eliminate the majority of corporate tax revenue.
In sharp contrast, Clinton’s tax plans, including the expanded child tax credit her campaign unveiled Tuesday and other new provisions, would raise taxes by $1.4 trillion. Nearly all, or 93 percent, of the tax increases would fall on the top 1 percent of earners, and about two-thirds of the tax increases would hit the top 0.1 percent of earners.
In other words, Clinton is calling for the top 0.1 percent filers, people making more than $3.7 million, to get hit with an $800,000 tax increase next year. Trump is proposing that they get a $1.1 million break.
The two presidential tax platforms “really couldn’t be more different,” said Len Burman, the director of the Tax Policy Center, which is a nonpartisan, nonprofit think tank.
Clinton’s campaign immediately seized on the news to emphasize a running criticism of Trump’s plans, namely that it would cut taxes for the rich while also raising taxes on certain families. Calling Trump’s proposal an “extreme form of trickle-down ecoomics,” adviser Jacob Leibenluft said that “the report shows Trump will give as much tax relief to the top 1 percent as everyone else combined – even as he raises taxes on millions of working families with children.”
Trump’s campaign, however, responded with a denunciation of the Tax Policy Center, accusing it of bias because Burman worked in Bill Clinton’s administration. Stephen Miller, Trump’s policy director, called it a “fraudulent analysis” and accused the Center of “gross malfeasance,” arguing that it had failed to model the campaign’s specific provisions.
Trump’s plan is a “complete rewrite” from the plan he ran on in the Republican primaries, Burman said. That version of the plan would have added more than $11 trillion to the federal debt, nearly doubling in it in 10 years, the Tax Policy Center previously found.
Trump revised his plan largely to make it less costly to the Treasury. Yet it would still have a hefty price tag, adding $7.2 trillion to the debt in 10 years when added interest costs are considered. Although other changes to Trump’s plan brought it closer into alignment with the aims of House Republicans, the reform’s enormous revenue losses would be an obstacle to it advancing if Trump were elected.
Critically, however, the think tank’s analysis does not take into consideration the faster economic growth that might be spurred by the plan, meaning that it misses the point of lowering tax rates on work and investment. The center said it does plan to release such a “dynamic score” of the plan that would include revenues from faster economic growth, but that it was unable to do so because of a problem with the model’s code, a problem that the Trump campaign singled out in criticizing the analysis.
Yet even that dynamic score is unlikely to show the Trump reform sparking major growth, because any pro-growth provisions are likely to be counteracted by the increase in the federal debt raising the cost of borrowing and investing.
By the same token, a dynamic analysis would be expected to show the Clinton tax plan hurting growth by raising tax rates on labor income and investment. Because the tax hikes would lower deficits, however, the federal debt would rise more slowly, aiding growth.
While Clinton’s tax hikes on the rich are meant to pay for new spending programs, such as free public college for moderate-income families, she also aims to cut taxes for lower-income families, through the child tax credit and other targeted breaks. The bottom four-fifths of income earners would get a cut of $100 to $200.
Clinton has promised that families earning less than $250,000 wouldn’t see any tax hikes. While the Tax Policy Center paper finds that none of the taxes would directly affect them, some families earning between $150,000 and $250,000 would be net losers because Clinton’s tax hikes for businesses would reduce their earnings.
