For a man who is running to “make America great again,” Donald Trump’s tax plan is exceedingly expensive. According to an analysis by the Tax Foundation, Trump’s plan would add trillions to the national debt, more than the current sum added after seven years of President Obama’s policies (via Weekly Standard):
When Barack Obama took office, America’s national debt was $10.6 trillion. It's now $19.0 trillion—an increase of $8.4 trillion in just seven years, or $1.2 trillion per year.
One of the key reasons the Tea Party movement was founded was out of frustration with this skyrocketing debt. Yet Republican presidential candidate Donald Trump's proposed tax plan would increase the national debt by $10.1 trillion, according to scoring by the nonpartisan Tax Foundation. And that's after taking into account the increased economic growth that Trump's plan would generate. (Without such growth—and liberal scorekeepers would say the Tax Foundation's model is overly generous in projecting growth—Trump's tax plan would increase deficits by $12.0 trillion.)
It's pretty incredible that just one Trump policy proposal would generate more debt than seven years of Obama.
The Standard added that Sen. Ted Cruz’s plan would increase deficits by $768 billion, but would have a more robust level of economic growth. Yet, the Tax Foundation did say that Trump’s plan would create a better job creating and investing climate:
Our analysis finds that the plan would reduce federal revenues by $11.98 trillion over the next decade. However, it also would improve incentives to work and invest, which could increase gross domestic product (GDP) by 11 percent over the long term. This increase in GDP would translate into 6.5 percent higher wages and 5.3 million new full-time equivalent jobs.
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. 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.
So, is this really going make the country great again? Yes, the Trump plan creates jobs, but we’re all still saddled with an even greater share of the national debt. Granted, no voter should expect anything to be deficit-neutral anymore, but to add more debt than much of the Obama presidency isn’t something conservatives want.
Moreover, and I’m sure Democrats will touch upon this, since Obama took office he’s created 8.7 million new jobs. But even that figure is cut down by the economic torpor, the reduction in job participation, and stagnant wages. In all, the Trump plan does have some positives, but the massive looming cloud of explosion of the national debt yet again imbrues any sense of optimism.
Yet, Clinton doesn’t get a pass either. Her plan would kill jobs and barely increase wages. She also would create another tax rate (a 43.6 percent levy) for those making more than $5 million a year. To no one’s surprise, soaking the rich doesn’t work:
Our analysis finds that the plan would increase revenue by $498 billion over the next decade. The plan would also increase marginal tax rates on both labor and capital. As a result, the plan would reduce the size of gross domestic product (GDP) by 1 percent over the long term. This reduction in GDP would translate into 0.8 percent lower wages and 311,000 fewer full-time equivalent jobs. Accounting for the economic effects of the tax changes, the plan would end up increasing federal tax revenues by $191 billion over the next decade.
If enacted, her tax policies would impose slightly higher marginal tax rates on capital and labor income, which would result in a reduction in the size of the U.S. economy in the long run. This would decrease the revenue that the new tax policies would ultimately collect. The plan would lead to lower after-tax incomes for taxpayers at all income levels, but especially for taxpayers at the top.
For the Clinton camp, it’s going to be hard to explain how her rather abysmal tax plan is going to pay for her large grocery list of policy initiatives, especially since the total price tag is hovering around $1 trillion in new spending over the next ten years. For Trump, he and his supporters will surely tout his slightly more positive analysis, but to label it as “tremendous, luxurious, or terrific” is pie-in-the-sky as well.