Trump’s tax plan cuts wider than Clinton’s
Democrat aims to increase revenue
Hillary Clinton wants to sock the very wealthy with an $800,000-a-year tax increase. Donald Trump says they should get a $1.1 million tax cut.
The poor, meanwhile, make out about the same no matter who is in the White House: a $100 tax cut under Mrs. Clinton and a $110 cut under Mr. Trump, according to an analysis by the nonpartisan Tax Policy Center, which crunched the numbers and said Mr. Trump is more generous to taxpayers but does far more damage to federal revenue.
Indeed, Mr. Trump would open a $6 trillion gap in the federal budget over the next decade, and Mrs. Clinton would raise $1.4 trillion more in revenue. Almost all of that would come from those who make more than $3.7 million a year, the top 10th of a percent of American workers.
Mrs. Clinton tried to sweeten her plan for the poor and middle class, saying she would expand the child tax credit for families with children younger than 5, doubling the maximum credit from $1,000 to $2,000 per child.
Mrs. Clinton said that is just “a down payment” and more relief is on the way.
“Hardworking, middle-class families are struggling with rising costs for child care, health care, caregiving and college,” Mrs. Clinton said. “This new tax credit will make their lives a little bit easier and help restore fairness to our economy.”
Adding the child credit helped improve Mrs. Clinton’s numbers, which show only a modest tax cut for most Americans.
Indeed, most taxpayers would get less than a couple of hundred bucks extra from the IRS under her plans. Those making $48,000 to $83,000 — the middle class — would average $110 extra, and those making $83,000 to $143,000 would average an extra $40 in 2017.
Mr. Trump is far more generous, with those in the middle getting an additional $1,010 in tax relief and those making $83,000 to $143,000 receiving an extra $2,030.
The biggest changes come for the wealthiest. Under Mr. Trump’s plan, the top 20 percent — those making more than $143,000 — would pay an average of $16,660 less. Under Mrs. Clinton, they would pay $6,690 more.
Those differences end up playing out in the federal budget, where Mr. Trump — absent giant spending cuts — would dramatically deepen deficits.
The Trump campaign has said his tax cuts would be deficit-neutral, which would mean those spending cuts would have to come from somewhere. The liberal-leaning Center on Budget and Policy Priorities said the cuts would likely come from programs that help the poor because the wealthy don’t use those programs to the same extent.
Jacob Leibenluft, an economic adviser to Mrs. Clinton’s campaign, said the Trump plan amounted to “massive giveaways to the richest Americans.”
Stephen Miller, a senior adviser to Mr. Trump, dismissed the Tax Policy Center plan as fraudulent and said releasing it “wasted everyone’s time.” He said the Tax Policy Center — a joint operation between the Urban Institute and the Brookings Institution — is biased toward Mrs. Clinton and that the study didn’t calculate the economic benefits of cutting taxes for the wealthy.
Mr. Trump has said that lower taxes will mean more jobs and a bigger economy, reducing the $6.2 trillion in revenue lost because of the rate cuts.
“The Trump plan is revenue-neutral, massively cuts middle-class taxes and has huge child care benefits for low- and middle-income families,” Mr. Miller said.
He also said the Tax Policy Center ignored some of the details of the Trump plan.
The center said Mr. Trump’s aides did not cooperate, so they had to make a number of assumptions they shared with the campaign. It said Mrs. Clinton’s campaign did cooperate and shared details of her proposed child tax credit even before it was announced.
Overall, Mr. Trump’s plan would cut the number of tax brackets and slash rates across the board. The marginal rate on the highest income bracket would drop to 33 percent. His plan cuts the corporate income tax rate to 15 percent, caps the level of deductions taxpayers can claim and eliminates the head-of-household filing status, but adds breaks for child care and increases the earned income tax credit.
Mrs. Clinton’s plan would impose a number of hikes on high-income households, including a 30 percent minimum tax that phases in beginning at $1 million. Among her many other tweaks are eliminating an Obamacare tax that would hit union members particularly hard and rules that would make it tougher to defer capital gains taxes.
Scott Greenberg, an analyst at the Tax Foundation, which is releasing its own analysis this week of the Trump and Clinton plans, said they generally match up with the Tax Policy Center’s analysis: The Trump plan would generally reduce taxes, with most of the gains going to well-off taxpayers, while Mrs. Clinton’s plan is a net tax increase, though many families would pay less.
Mr. Greenberg said Mr. Trump does deserve credit for trying to take some of the complexity out of the tax code.
“Only one of the candidates in the race has even given lip service to the concept of tax simplicity, and that’s Trump,” he said. “Clintons’ tax plan would unabashedly make the tax code more complicated.”
One of the consequences of cutting deductions and eliminating the head-ofhousehold filing status, though, is that it could “cause many large families and single parents to face tax increases.”