Trump’s Tax Cuts Would Add $24.5 Trillion to the Debt

Entitlement programs are those that everybody are eligible for : Social Security and Medicare. It's a handy term that allows Republicans to talk about cutting these programs while a lot of their followers think they are talking about cutting programs for other people.

Fiscal Times

By Eric Pianin
December 23, 2015

Donald Trump’s tax-cut plan could add as much as $24.5 trillion to the national debt over the coming 20 years unless it is accompanied by steep cuts in spending and entitlement programs, a new analysis finds.

The paper published by the Tax Policy Center, a joint venture by the Urban Institute and Brookings Institution, provides a sobering reminder that many of the generous tax cut plans being floated by Trump, former Florida Gov. Jeb Bush and other candidates carry enormous long-term price tags. Some of them, if adopted, would spark a renewal of the long-term debt crisis and could undermine the very economic recovery that GOP and Democratic presidential candidates alike are promising.

The numbers are startling, according to the new report: Trump’s proposals for consolidating and slashing individual and corporate tax rates and getting rid of the estate tax would reduce federal revenues by an estimated $9.5 trillion over the coming decade and an additional $15 trillion over the subsequent 10 years. And that’s before accounting for the government’s added interest costs from having to borrow substantial sums to make up for the revenue shortfall and keep the government operating.

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Of course Trump would like to eliminate it. He was able to get so rich because he came from a very rich family, and was able to borrow an amount because of that which he couldn't have done if he were an average person.

How in the heck would eliminating the estate tax help average Americans? In 2015, only the amount of the estate over $5.43 million is taxed, and it increases with inflation. What eliminating the estate tax would do is accelerate the hoarding of money in the hands of a small percentage of the population, and allow their children an unfair advantage in life.
So if the estate is worth $6million ($6,000,000), the estate tax is levied on $6million - 5.43million = $0.57 million = $570,000.

Comment from a Facebook friend: That's the net worth after all the tax shelters are used. The true value of the estate could easily be in the tens of millions of dollars. Of course, this is one of the arguments that the neo-liberal economists love to use to lobby in favor of the estate tax' elimination, but the numbers don't lie -- even with all the deductions and loopholes that the wealthy can legally use, the revenue from the estate tax is still significant.

Only 0.2% of estates are currently affected by the estate tax.

In the example above, the tax owed would be 40% of $570,000,
or $228,000. This is the tax on an estate worth typically several tens of millions of dollars.

So if the actual value of the estate were $10million, the effective estate tax rate could be 228,000/10,000,000 = 0.0228 = 2.28%