Donald Trump unveiled his latest economic plan on Monday – and in its emphasis on tax cuts, the contrast with Hillary Clinton’s plan could not be more stark. It’s ironic that the Republicans first populist nominee in modern history has put forward a fiscal plan that would massively favor the wealthy. (For the Morning Joe video, click here.)
On the revenue side, while Mr. Trump has scaled back his original tax cutting plan, his new plan would still cost between $7 billion and $9 billion in lost revenue over the next decade. Most of this lost revenue would come from lower rates on individuals – just three brackets at 12%, 25% and 33%. (Last September, Mr. Trump proposed a top tax rate of 25%, down from 39.6%; this proposal has been removed from his website.)
The Republican nominee also proposed a maximum tax on business of 15%, down from 35% at present. He said that this rate would apply to Limited Liability Companies (LLC’s) and partnerships, raising the prospect that self-employed Americans could pay 15% while those receiving wage income would pay 33%. Lastly, he said he would eliminate the estate tax, even though it now applies only to estates of more than $10.9 million per couple and affects only the wealthiest 0.2 percent of Americans — roughly 2 out of every 1,000 people who die.
In contrast, Mrs. Clinton has proposed raising $1.2 trillion over the next 10 years, principally by raising taxes on the wealthy, including a 4% surtax on individuals making more than $5 million. She also supports the “Buffett Rule” that is designed to ensure that millionaires don’t enjoy lower tax rates than middle-class Americans.
Mr. Trump has been largely silent about his plans on the spending side. However, he has said that he wants to spend more on veterans (an estimated $500 billion over the next decade) and the additional deficits resulting from his lower tax rates would lead to hundreds of billions of dollars of extra interest payments. He also emphasized in his speech on Monday that he wanted to improve America’s infrastructure but has yet to detail any plans for how that would be accomplished.
Mrs. Clinton has also emphasized improving our infrastructure and has included $300 billion in her budget plans for this purpose. She would also like to increase spending on many discretionary, non-defense programs that have been cut in recent years, including college education. And her plan provides $300 billion for paid family leave and nearly $500 billion for a variety of other initiatives.
Not surprisingly, the impact of Mr. Trump’s plans on the deficit would be dramatic – an estimated $7.5 trillion to $10 trillion of additional shortfalls over the coming decade. This is particularly surprising coming from a candidate who has railed with regularity about America’s “$19 trillion of debt.”
Mrs. Clinton says that her new spending is fully paid for by her tax increases on the wealthy, a contention that has been supported by independent analysts.