Middle Class America: Donald Trump’s Tax Plan is Going to Cost You
There are a lot of reasons to be wary of, or straight-up dislike Republican presidential nominee Donald Trump. Trump’s campaign has been powered by his reputation as a strong, successful businessman, and he’s won over millions of voters by convincing them that his business acumen (proven by his billionaire status) will translate to effective government leadership. But recent releases of Trump’s taxes and financial records have cast doubt on whether he is what he says he is.
His 1995 tax return, leaked anonymously to the New York Times, showed that he would have been able to write off a nearly $1 billion loss, and avoid paying income taxes for many years. His team called his tax strategy “genius,” but it still rubbed a lot of people the wrong way. The real friction, however, comes from a pretty big discrepancy in how Donald Trump handles his own personal taxes, and his plan for everyone else, if he is elected president.
Donald Trump’s tax plan, as has been reported, is going to be more of a boon to top earners than it will to the middle class. A recent analysis all but confirms it — and if you’re planning to vote based on tax plans, or at least consider each candidate’s tax plan as important in formulating your decision, you’ll want to pay extra attention.
The analysis was done by a former tax specialist for Obama’s administration and the Senate Finance Committee, and current New York University professor Lily Batchelder, and says the plan will “significantly raise taxes for millions of low- and middle-income families with children, with especially large tax increases for working single parents.”
The Donald Trump tax plan
Batchelder’s analysis continues, saying, “Trump claims his plan would cut taxes for every income group, with the largest tax cuts for working- and middle-class families,” but after crunching the numbers, she concludes that “Donald Trump’s latest tax plan would cost more than $5 trillion over 10 years.”
The data suggests that taxes would actually go up for 7.8 million American families. Batchelder points to four specific reasons why this would happen, namely that head of household and personal exemptions would be repealed, the 10% bracket would be replaced by a 12% bracket, and that, “Trump’s new tax deduction and credit for child care would provide relatively little benefit to low- and middle-income caretakers, so it would not make up for these tax increases.”
Trump’s team, however, has said that this analysis is bunk. The campaign called it “pure fiction,” and said that Batchelder’s work ignores some key elements of the plan.
But there are other analyses out there, too. One, from the Tax Policy Center, says, “The proposal would cut taxes at every income level, but high-income taxpayers would receive the biggest cuts, both in dollar terms and as a percentage of income.” Also, “Unless it is accompanied by very large spending cuts, it could increase the national debt by nearly 80 percent of gross domestic product by 2036, offsetting some or all of the incentive effects of the tax cuts.”
In this case, we’d either see government debt swell to even bigger levels (which Republicans have expressed serious concern about), or see big cuts to government services, mostly impacting lower and middle-class Americans.
How does Clinton’s plan compare?
These are, of course, just analyses — they’re educated guesses as to what would actually happen if Trump’s plan was enacted. A lot of dominoes would have to fall to see that through. Not only would Trump have to be elected, but he would also have to work with lawmakers — many of whom despise him — to get it done.
Even so, there’s no guarantee this plan would bear the results these analyses are predicting. But if this plan was to go into effect, it seems as though middle-class Americans wouldn’t benefit much. On the Democratic side, Hillary Clinton has all but promised to raise taxes on high earners to help address inequality issues. Depending on where you land on the earnings spectrum, that may or may not sound appetizing.
Clinton’s tax plan doesn’t yet flesh out middle-class earners, and instead mostly focuses on increasing the burden for wealthier Americans. In that way, it’s pretty much the opposite of Trump’s, which would lower taxes for the rich. In terms of middle-class earners, though, we still aren’t sure what the exact effects would be.
But she has said that she hopes not to raise the tax burden on anyone earning less than $250,000. Take from that what you will.