Donald Trump has been many things in this election campaign, but specific about policies he’d pursue as president isn’t one of them. So it was newsworthy Monday that he laid out a (somewhat) detailed plan to reform the tax code.
As Trump’s most common foil in this race has been Jeb Bush, let’s take a look at how the two men’s plans compare. First, the statutory individual income-tax brackets:
As you can see, the so-called headline rate is lower pretty much across the board in Trump’s plan than in Bush’s. But as we all know, one’s actual tax liability can vary greatly from these statutory rates because of other factors. So let’s also look at some of those:
That bottom line about overall revenue effect is a telling one. Whereas Bush says he “want(s) to lower taxes,” Trump describes his plan as “fully paid for.” Of course, we’ll need some third-party analysis to confirm each man’s narrative about his own plan — and so far, most of what we have is mind-numbingly simplistic. (“Trump/Bush would lower tax rates! The rich will save trillions! Never mind I have no idea what the effect of all the other changes to the tax code would be!”)
UPDATE: We now have something more substantial than back-of-the-envelope calculations to go by. The Tax Foundation estimates Trump’s plan would not, in fact, be “fully paid for” — not by a long shot. Rather, it would reduce revenues by $10 trillion to $12 trillion over 10 years, depending on whether one accounts for the additional economic growth and job creation the plan likely would stimulate. (Expect Trump to calling the Tax Foundation a “bankrupt” non-profit run by “losers,” or some such, any minute now.) By comparison, the Tax Foundation said Bush’s plan would reduce revenues by $1.6 trillion to $3.7 trillion over 10 years. (The rest of the post has been edited to reflect this estimate.)
But before we decide which candidate is being more fiscally responsible, let’s wait to see what each one says he’d do about the other part of the equation, spending. If either Bush or Trump wants to balance his tax reduction with reduced spending, shrinking the size of the federal government as a whole, that’s better than keeping both taxes and spending the same. (Although it’s hard to see how federal spending could shrink by $1 trillion or more per year, given rising costs for Social Security and Medicare, among other things.)
And as Kevin Williamson explains at National Review, a plan to keep spending the same is really a plan to let spending grow:
“Every Republican tax-reform plan should be rooted in this reality: If you are going to have federal spending that is 21 percent of GDP, then you can have a.) taxes that are 21 percent of GDP; b.) deficits. There is no c.
“If, on the other hand, you have a credible program for reducing spending to 17 or 18 percent of GDP, which is where taxes have been coming in, please do share it.
“The problem with the Growth Fairy model of balancing budgets is that while economic growth would certainly reduce federal spending as a share of GDP if spending were kept constant, there is zero evidence that the government of these United States has the will or the inclination to enact serious spending controls when times are good (Uncork the champagne!) or when times are bad (Wicked austerity! We must have stimulus!). So even if we buy Jeb Bush’s happy talk about growth, or Donald Trump’s, the idea that spending is just going to magically sit there, inert, while the economy zips forward and the tax coffers fill up, is delusional.”
The reverse, of course, is true about Democratic plans to, say, spend trillions and trillions more dollars: If you are going to have federal spending that approaches 30 percent of GDP, then you can have a) taxes that are 30 percent of GDP or b) deficits. There is no c.
Not that I’m disagreeing with Williamson here. He’s right: Candidates should show how the ledger balances, preferably at a lower level.