Newspaper article The Christian Science Monitor

What about Trump's Policies? an Analysis of His Tax Plan

Newspaper article The Christian Science Monitor

What about Trump's Policies? an Analysis of His Tax Plan

Article excerpt

A nonpartisan review of the tax reform plan Republican presidential candidate Donald Trump unveiled in September notes some positives, but also raises serious questions about its economic impact.

In a 32-page report released Tuesday, the Tax Policy Center gave Mr. Trump credit for a plan that would "boost incentives to work, save, and invest and that has the potential to simplify the tax code."

While much of Trump's plan resembles proposals by other candidates, including Jeb Bush, there were some novel elements in the document. For example, the Trump plan would tax the future profits of foreign subsidiaries of United States companies when they were earned instead of taxing them when the money is brought back to the US.

"It was interesting for a Republican to be proposing eliminating deferral," said TPC Director Leonard Burman. "Virtually all of the other Republican plans would go in the other direction and say foreign profits would be exempt from US tax."

But the TPC study sharply disagrees with candidate Trump's statement that his tax plan would grow the economy "at a level that it hasn't seen for decades." The TPC study also takes issue with the statement on the Trump campaign website that the tax proposals would not "add to our debt and deficit, which are already too large."

The Trump plan would chop tax rates for individuals and businesses, boost the standard deduction to nearly four times its current level, and repeal estate and gift taxes. The result, Mr. Burman says, "is a very large revenue loss" for the US Treasury.

TPC calculates that the Trump tax plan would reduce federal receipts by $9.5 trillion between 2016 and 2026. In the following 10 years, the revenue loss would be $15 trillion.

"Without implausibly large spending cuts - 82 percent of discretionary spending, 92 percent of Medicare, something like that - the deficits would balloon and would push up interest rates, increase the cost of capital, and almost surely hurt the economy in the long run," Burman said. …

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