Trump’s giant tax cuts look a lot like Jeb Bush’s previously announced, wealthy-tilted plan, except with even lower rates. Those with the very lowest incomes do not pay any income taxes, which Trump claims would remove 75 million people from the tax rolls. To this question, Trump answered that his proposal will not affect the country’s deficit or debt.
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“Hey, I’m Rand Paul, and I’m trying to kill the tax code”. “It’ll grow the American economy at a level that it hasn’t seen for decades, and all of this does not add to our debt or our deficit”.
Trump’s claims about the benefits of his plan for low-paid workers, a few of whom would no longer have to pay any federal income taxes (they would still have to make contributions to Social Security and Medicare), were also accurate, in a sense. Instead, they’ll get to send an “I win” letter to the Internal Revenue Service. Specifically, it says that “in 2011, government benefits accounted for approximately two-thirds of the reduction in income inequality observed between market income and after-tax income”.
Trump would also lower the 35 percent corporate rate to 15 percent.
Put another way, the Trump plan creates another way for hedge fund and private equity money managers to game the tax system.
The billionaire real estate mogul said he plans to pay for the tax cuts by eliminating and reducing unspecified deductions and loopholes, both on the “very rich” and corporations. “This will be like a rocket ship for the economy”, Trump boasted to NBC’s Matt Lauer. Trump’s plan would eliminate the federal inheritance tax, a cut that could produce a windfall for his own children.
“This is not a proposal that lives up to the expectations that he personally set up”, said Michael Strain, deputy director of economic studies at the American Enterprise Institute, a center-right free-market think tank. “The rich love this plan”.
Trump’s plan borrows heavily from the GOP embrace of supply-side economics, which holds that lower tax rates generate more economic activity and eventually more tax revenue from that greater activity.
But there is one way the wealthy will pay under Mr. Trump’s plan that will catch advisers’ attention.
Donald Trump’s Republican rivals wasted no time criticizing the tax plan he released this week.
In fact, although Trump’s messaging thrust may generally appeal toward the disenchanted center, in its details his plan is a more traditional tax-cuts-for-all Republican plan. The top one percent would see a 21.6% bump in after-tax income. Estimates peg the amount of money US firms have overseas at more than $2 trillion, although Trump said he believes the figure is far higher. Leave aside the details about whose taxes would get cut by how much.
Most economists say such a high growth rate is unrealistic. He said he will take on “the hedge fund guys” and their carried interest loophole.
The Florida senator would cut the corporate tax rate to 25% and, like Mr Bush, he’d end the tax on overseas earnings after exacting a 6% repatriation tax. In a reference to the elimination of all those loopholes and deductions, Williams said: “I don’t see enough there to offset these big rate cuts”.
“You can’t make that up in any way other than shifting the burden to the middle class” or running deficits, Gill said. Only 30% of taxpayers itemize and a lot of them are wealthy. Even completely zeroing out their deductions – which, to be clear, is not what Trump proposes, since he wants to keep the costly mortgage interest and charitable deductions intact – wouldn’t make up for the revenue losses from a 14.6-point top tax rate reduction.
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Trump said he would couple his tax plan with savings from cutting wasteful government spending, by renegotiating trade deals and demanding reimbursement from America’s allies for the cost of USA military protection.
