Dueling Trump and GOP Tax Plans Would Both Cause Much Larger Deficits

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https://www.thefiscaltimes.com/2016/11/10/Dueling-Trump-and-GOP-Tax-Plans-Would-both-Cause-Much-Larger-Deficits

By Rob Garver
November 10, 2016

There are plenty of unknowns as the nation looks ahead toward a Donald Trump presidential administration paired with a Republican-dominated Congress, but one thing that seems fairly certain is that there will be considerable pressure to rewrite the federal tax code in fairly dramatic ways. Both Trump, during his campaign, and House Republicans, in June, released fairly detailed descriptions of what they would propose, and while they aren’t identical, both would move policy in the same direction across a broad range of tax and budget questions.

Assuming that Trump and House Speaker Paul Ryan are able to rally Republicans behind some sort of melding of their respective plans, the short version of what to expect is this:

-- On income taxes: Very good news for the wealthy, who would benefit in vast disproportion to the rest of the country from proposed tax cuts. Little net change for low- and middle-income taxpayers.

-- Business taxes: Excellent news for businesses, which would see a slashing of the corporate income tax and likely a move toward “destination based cash flow” taxation of profits, meaning that only income from the domestic sales of goods and services would be taxed.

-- On the budget deficit: Terrible news for anybody who cares about bringing spending in line with federal revenue. Experts say that either proposal would drive up the federal deficit drastically as compared to current law.

Independent analyses of both the Trump income tax proposals and the House Republican proposals show that they would both concentrate tax cuts on the very wealthiest of the wealthy, and that the concentration in benefits would increase over the years until it was effectively all going to top earners.

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