WASHINGTON — The tax proposals from the Republican presidential hopefuls all have two things in common: They would balloon the deficit and shower the wealthy with lots of money.
The various candidates’ plans all have different details. Some would eliminate all taxes on stock trades and real estate investments, which would overwhelmingly benefit the wealthy, while others would repeal the estate tax, which literally only affects the heirs of millionaires. But the proposals all employ the same broad strategy: Give a small number of very wealthy people massive, hulking piles of money, while giving everyone else much tinier piles. In other words, they’re newer, bigger versions of President George W. Bush’s tax cuts.
Just how well the rich would make out, and how much the deficit would swell, depends on whether or not big tax cuts for the wealthy will significantly boost the broader economy. Recent history and traditional economic modeling suggest they will not. The Bush tax cuts dramatically boosted the take-home pay of the wealthiest Americans, but did not ultimately increase wages. The resulting inequality, meanwhile, may have exacerbated the housing bubble that consumed the economy and fueled the 2008 banking crash.
But not everyone agrees. Here’s what two prominent think tanks have projected about the effects of the tax plans that four of the Republican candidates have put forward. Citizens for Tax Justice uses more mainstream analysis, with the conservative Tax Foundation presents analysis in which big tax cuts for the rich result in major gains for the broader economy.
Sen. Marco Rubio (Fla.)
Rubio’s plan would increase the national debt by $11.8 trillion over the next decade, the think tank finds. More than one-third of the plan’s tax cuts would flow to the top 1 percent of taxpayers, who would see their incomes go up by an average of $223,783 per year. People in the bottom 20 percent of the tax bracket would take home an additional $2,168 a year on average, while taxpayers in the middle 20 percent would see their incomes rise by $2,859. As a percentage of their overall incomes, the richest 1 percent would receive a 12.5 percent boost, the poorest 20 percent would see a 13.9 percent boost and the middle 20 percent would see a 5.6 percent boost.
The incomes of the top 1 percent would grow by 27.9 percent under Rubio’s proposal, while incomes in the middle 20 percent would increase by about 15 percent and those in the bottom 10 percent would grow by 55.9 percent. The national debt would increase by over $1 trillion over the next decade.
The Tax Foundation’s analysis is based largely on the premise that Rubio’s plan would boost total economic activity by 15 percent over the next decade, and increase wages by 12.5 percent.
Former Florida Gov. Jeb Bush:
Bush’s plan would cost $7.1 trillion, with 46 percent of its benefits flowing to the top 1 percent of taxpayers. The top 1 percent would receive an average tax cut of $177,246 a year, a 10.2 percent increase in their incomes. The poorest 20 percent of Americans would see their incomes rise by an average of $316, about a 2.1 percent increase. The middle 20 percent would become 3.2 percent wealthier, taking home an additional $1,572 per year.
Bush would boost the national debt by $1.6 trillion, giving the top 1 percent a 16.4 percent increase in their incomes. The poorest 10 percent would see a 10 percent boost in their take-home pay, while those in the middle of the income spectrum would see a benefit of 12.5 percent to 12.9 percent.
The Tax Foundation’s rosier projections result from its estimate that Bush’s plan will grow the economy by 10 percent and increase wages by 7.4 percent in the next decade.
Trump’s plan would increase the national debt by $12 trillion, fueled by an average annual tax cut of $227,225 for the richest 1 percent of taxpayers, which would boost their income by 12.7 percent. A full 37 percent of the tax plans’ benefits will flow to the wealthiest 1 percent. The poorest 20 percent of taxpayers would receive an additional $250 per year, about 1.6 percent of their income, while taxpayers in the middle 20 percent would see a 5.1 percent increase in take-home pay, about $2,571.
Trump would swell the national debt by $10.14 trillion, as the richest 1 percent receive a 27 percent increase in their incomes. The bottom 10 percent would receive a 10.7 percent bump, while those in the middle would see their earnings rise by somewhere between 17.7 percent and 19.5 percent.
Once again, the main difference between the two analyses lies in the Tax Foundation’s prediction that Trump’s tax cuts will grow the economy by 11.5 percent and boost wages by 6.5 percent.
Sen. Rand Paul (Ky.)
Citizens for Tax Justice does not have a formal, detailed analysis of Paul’s tax plan, but its rough estimate places the total cost at $15 trillion.
The Tax Foundation, envisioning a 12.9 percent surge in economic growth and an 11.4 percent jump in wages under Paul’s plan, was dramatically more optimistic. The conservative think tank calculates that Paul will actually reduce the national debt by $737 billion, as taxpayers with incomes below $10,000 would see an 11 percent increase in earnings, while those with incomes over $1 million would see a 27 percent boost. Taxpayers in the middle of the income spectrum would see their take-home pay rise 14 percent.
The total federal debt held by the public is currently $13.08 trillion. (However, Republicans frequently state the national debt as over $18 trillion, a figure that includes a lot of money that the government owes to itself — either to the Federal Reserve or to programs like Social Security.) According to Citizens for Tax Justice, that means that GOP presidential candidates are flirting with increasing the deficit by anywhere from 54 percent — congratulations, Jeb Bush! — to 115 percent — sorry, Rand Paul.
The Tax Foundation’s more generous analysis would make Paul the most budget-savvy of the four, reducing the national debt by 5.6 percent over the next decade, while Trump — the most fiscally irresponsible of the pack — would increase the debt by over 75 percent.
CTJ hasn’t yet analyzed the tax plans presented by Louisiana Gov. Bobby Jindal or Texas Sen. Ted Cruz, but the Tax Foundation’s review of both platforms fits the pattern established by its other analysis. Jindal’s biggest winners are the top 1 percent, who see a 26 percent increase in their annual incomes as the debt skyrockets by $9 trillion. The poorest taxpayers would see an 8.8 percent income bump. For Cruz, the top 1 percent would effectively score a whopping 34.2 percent raise, while the bottom 10 percent of taxpayers would see a 15.3 percent increase. Cruz’s plan would add $768 billion to the national debt.
Some of the other Republican candidates, of course, haven’t bothered to introduce formal tax plans. Ben Carson has suggested moving to an across-the-board flat tax of 10 percent. When pressed on the costs of such a plan during a recent GOP debate, Carson suggested that his plan would have a tax rate “much closer to 15 percent,” but has yet to provide further detail.
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