On Wednesday the White House released a new brief outline of President Trump’s tax reform plan that claims to unleash America’s economic potential through reducing the tax burden on companies and American workers.
Claiming that Trump’s tax reform plans will boost economic growth above the current 2-3 percent GDP range by lowering the corporate tax rate from 35 percent to 15 percent, doubling the standard tax deduction, and simplifying the tax code from seven brackets to four brackets – 0 percent, 10 percent, 20 percent and 25 percent, the White House maintains that over the next 10 years the sustained increase in growth will create 12 million new jobs, $ 10 trillion in additional economic activity, and $ 3 trillion in budgetary savings.
It is unclear where the White House obtained those rosy economic projections, although in one sentence a citation was listed stating, “tax cuts, like those included in President’ Trump’s tax reform package, boost economic growth, according to the Tax Foundation.”
An April 26th article from the Tax Foundation described President Trump’s latest April 26th tax reform plans (see tweet below) as “less specific than the tax proposal released by the Trump campaign in September 2016.”
— Zeke Miller (@ZekeJMiller) April 26, 2017
In another section of the latest White House tax reform outline that was released yesterday, there’s a vague citation describing trickle down economics.
“Tax reform, including tax cuts, encourages the investment needed to create jobs so Americans can get back to work at well-paying jobs, according to Freedom Partners” the White House outline states.
Some other economists who reviewed President Trump’s latest tax reform plans have come away with a more pessimistic economic outlook that shows his tax reform proposals could add trillions to the federal deficit.
According to the non-partisan Tax Policy Center, affiliated with the Brookings and Urban Institute, which estimated President Trump’s April 26th tax reform plan in a July 12, 2017 article, it states that the tax plan consistent with Trump’s April outline could cut federal revenue by up to $ 7.8 trillion over the next decade and by $13.1 trillion over the following decade.
The Tax Policy Center also claims that without revenue-raisers, nearly all U.S. households would receive a tax reduction, averaging about $4,400.
However, President Trump’s tax cuts would be highly regressive with the wealthiest Americans getting much more than those with low or middle incomes.
The wealthiest Americans in the top 1 percent range would receive an average tax cut of $270,000 or nearly 18 percent of after-tax income, compared to a 3 percent tax cut for middle class Americans earning between about $50,000 and $86,000, and just a 1 percent tax cut for Americans earning $25,000 or less.
Not a surprising tax reform proposal from a Republican billionaire U.S. president who has appointed more Republican billionaire cabinet appointments to key White House positions than any other past U.S. president.
The Tax Policy Center also pointed out that President Trump’s tax reform plan contains no revenue raisers that are needed to compensate for the lost federal revenues attributed to his deep tax cuts.
“Without the revenue-raisers, the tax framework would reduce revenues by $7.7 trillion in the first 10 years and by $14 trillion in the second decade. With the tax increases, the revenue loss would be $3.4 trillion over the first 10 years and $5.9 trillion in the following decade” the Tax Policy Center wrote in their July 12th article.
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