Paul Ryan is finding a lot to like in Donald Trump’s plan to give millionaires and billionaires massive tax breaks, but the rest of us should be nervous. Trump’s tax plan “would make the national debt skyrocket by $10 trillion or more,” because it would slash income taxes on the wealthy and eliminate inheritance taxes entirely — all to ensure that Trump and his billionaire friends and donors get massive, disproportionate tax breaks. According to the Tax Policy Center, Trump’s plan would:

In sum: Trump’s plan “would produce extremely large and unprecedented tax-cut windfalls for people with incomes exceeding $1 million a year, almost certainly at the expense of low- and middle-income households,” according to the Center on Budget and Policy Priorities.
All of that’s great news for Speaker Paul Ryan, who, like Trump, seeks to boost the wealthiest Americans at the expense of America’s working families. Ryan unveiled his new “Better Way” tax plan last month, and — surprise! — it’s great news for Trump and Ryan’s billionaire donors. Ryan’s plan would:

“[S]lash corporate rates from the current 35 percent to 20 percent and lower the top individual rate from 39.6 to 33 percent”;

Now that Donald Trump is relying on the generosity of his big Wall Street donors to keep his struggling campaign afloat, he and Speaker Ryan have plenty of common ground when it comes to tax policy and developing policy solutions that boost their billionaire mega-donors on the backs of middle class Americans.

Background:

Trump Plan For Massive Tax Breaks For Wealthiest Americans Like Himself

Trump’s proposed tax plan was widely determined to be a giveaway for the rich:

✓ Trump claimed he would pay more under his plan, but fact checks revealed he would receive millions in benefits – the full extent of which cannot be calculated without the release of his tax returns.

✓ Center for Budget and Policy Priorities Director Chuck Marr claimed Donald Trump’s Tax Plan “hemorrhages revenue and tilts heavily toward the wealthiest Americans.”

✓ The Tax Policy Center’s analysis of Trump’s tax plan concluded that it overwhelmingly benefitted the wealthiest Americans over others while adding $11.2 trillion to the national debt by 2026 and $34.1 trillion by 2036.

✓ In order to avoid adding to the deficit, Trump’s tax plan would need to be offset by unprecedented spending cuts greater than the entire defense budget. Congress would need to cut discretionary spending by 82 percent or both Social Security and Medicare by 41 percent to prevent a deficit increase.

✓ The Tax Policy Center determined the richest 0.1 percent would receive an average tax cut of $1.3 million while lowest-income households would receive an average tax cut of $128. When spending cuts and tax increases were accounted for, the middle and lowest 20 percent would see net losses of more than $2,000.

✓ The Washington Post’s Fact Checker concluded that, despite Trump’s protests to the contrary, his tax plan would save him and his family millions of dollars in taxes.

✓ Trump’s tax plan would provide more than $3 trillion in corporate tax breaks over the next decade.

✓ Trump’s tax plan would introduce a new “pass-through” income tax loophole, allowing business owners of any size to pay only 15 percent in taxes on personal income from their businesses while avoiding business taxes on that income altogether.

Trump’s Tax Plan Would Dramatically Reduce Taxes On Corporations And the Wealthiest

New York Times, 2015: Trump’s Tax Proposal “Would Cut The Top Tax Rate To 25 Percent From 39.6 Percent.” According to the New York Times, “The proposal would cut the top tax rate to 25 percent from 39.6 percent, and bring down the corporate tax rate to 15 percent from 35 percent.” [New York Times, 12/22/15]

New York Times, 2015: Trump’s Tax Proposal Would “Bring Down The Corporate Tax Rate To 15 Percent From 35 Percent.” According to the New York Times, “The proposal would cut the top tax rate to 25 percent from 39.6 percent, and bring down the corporate tax rate to 15 percent from 35 percent.” [New York Times, 12/22/15]

WSJ, 2015: “Mr. Trump Also Would Cut The Top Capital Gains Rate To 20%, From The Current 23.8%.” According to the Wall Street Journal, “The 10% bracket would apply to incomes from $50,000 to $100,000 for a married couple; the current 10% bracket has a ceiling of $18,450. The new 25% top bracket would apply to married couples’ incomes in excess of $300,000, which currently are subject to rates as high as 39.6%. Mr. Trump also would cut the top capital gains rate to 20%, from the current 23.8%. And he would eliminate the alternative minimum tax.” [Wall Street Journal, 9/29/15]

Center For Budget And Policy Priorities: Cuts In Tax Plan For Middle Class Are “Window Dressing”

Center For Budget And Policy Priorities Policy Director Chuck Marr: Trump’s Tax Cuts For Middle Class “Window Dressing Compared To Real Cost Of Plan.” According to NJ.com, “On the other hand, Chuck Marr, director of federal tax policy for the left-leaning Center for Budget and Policy Priorities, argued that the benefit to the middle class is minimal in the long run. ‘It’s something, but it’s sort of window dressing compared to real cost of plan,’ Marr said.” [NJ.com, 9/29/15]

Wealthiest Americans Would Save Nearly 19 Percent Under Trump’s Plan, While Middle-Income Households Would Save Five Percent

Trump’s Tax Plan Gave The Top 0.1 Percent An Average Tax Cut Of $1.3 Million

Tax Policy Center: Trump’s Tax Plan Would Cut Taxes By Average Of Seven Percent.According to Tax Policy Center, “This paper analyzes presidential candidate Donald Trump’s tax proposal. […] The proposal would reduce taxes throughout the income distribution. It would cut taxes by an average of about $5,100, or about 7 percent of after-tax income (table 5).” [Tax Policy Center, 12/22/15]

Tax Policy Center On Trump’s Tax Plan: “The Top 0.1 Percent Would Get An Average Tax Cut Worth Over $1.3 Million, Nearly 19 Percent Of After-Tax Income.” According to Tax Policy Center, “This paper analyzes presidential candidate Donald Trump’s tax proposal. […] On average, households at all income levels would receive tax cuts, but the highest-income households would receive the largest cuts, both in dollars and as a percentage of income. The highest-income 1.0 percent would get an average tax cut of over $275,000 (17.5 percent of after-tax income), and the top 0.1 percent would get an average tax cut worth over $1.3 million, nearly 19 percent of after-tax income.” [Tax Policy Center, 12/22/15]

CBPP: Trump’s Tax Plan Would Amount To $3 Trillion In Lost Revenue To Tax Cuts For Millionaires Over The Next Decade. According to Center On Budget And Policy Priorities, “At a time of exceptionally wide levels of income inequality, the tax-cut proposals from Republican presidential candidates Donald Trump and Ted Cruz would produce extremely large and unprecedented tax-cut windfalls for people with incomes exceeding $1 million a year, almost certainly at the expense of low- and middle-income households once budget cuts to pay for the tax cuts are taken into account. Both tax plans would ultimately increase the already substantial incomes of people who make over $1 million a year by about 20 percent, with the revenues lost due to the tax cuts for millionaires exceeding $3 trillion over the coming decade.” [Center On Budget And Policy Priorities, 4/28/16]

Middle-Income Households Would Receive An Average Tax Cut Of $2,700

Tax Policy Center On Trump’s Tax Plan: “Middle-Income Households Would Receive An Average Tax Cut Of About $2,700, Or About 5 Percent Of After-Tax Income.” According to Tax Policy Center, “This paper analyzes presidential candidate Donald Trump’s tax proposal. […] Middle-income households would receive an average tax cut of about $2,700, or about 5 percent of after-tax income.” [Tax Policy Center, 12/22/15]

Low Income Households Would Receive An Average Tax Cut Of $128

Tax Policy Center On Trump’s Tax Plan: “The Lowest-Income Households Would Receive An Average Tax Cut Of $128, Or 1 Percent Of After-Tax Income.” According to Tax Policy Center, “This paper analyzes presidential candidate Donald Trump’s tax proposal. […] By contrast, the lowest-income households would receive an average tax cut of $128, or 1 percent of after-tax income.” [Tax Policy Center, 12/22/15]

When Future Spending Cuts And Tax Increases Were Taken Into Account, The Middle 20 Percent Would See A Net Loss Of $2,076

Citizens For Tax Justice, When The Impact Of Future Spending Cuts And Tax Increases Under Trump’s Plan Was Tallied, Only The Top 5 Percent Of Taxpayers Would See A Benefit; The Middle 20 Percent Would See A Net Loss Of $2,076. According to Citizens For Tax Justice, “Donald Trump’s tax plan would cut taxes by $12 trillion over the next decade by significantly reducing marginal tax rates and substantially increasing the standard deduction. Trump’s tax cut proposal reduces taxes for all income groups on average but is highly skewed to the rich, with the bottom 20 percent receiving an average tax cut of $250, the middle 20 percent an average tax cut of $2,571 and the top 1 percent an average tax cut of $227,225. As the table below shows, when the impact of future spending cuts and tax increases is tallied, the picture looks very different. In this more complete analysis, only the top 5 percent of taxpayers would see a net benefit from implementing, and paying for, the Trump tax plan. For the lowest 20 percent, the average implicit cost of the tax cuts would be $2,790, leading to a net loss of $2,541. For the middle 20 percent, the average implicit cost of the tax cuts would be $4,647, leading to a net loss of $2,076. In contrast, the top 1 percent would see an average implicit cost of $65,485, much less than the $227,255 they would receive in tax cuts on average, leading to a net gain of $161,740.” [Citizens For Tax Justice, 3/9/16]

Plan Would Saddle The Economy With Trillions In New Debt

Trump Bragged About Being The “King Of Debt”

Trump: “I Am The King Of Debt. I Do Love Debt.” According to CNBC, “Trump, in the interview, did note the hazards of debt and the issues that would emerge for U.S. debt if rates rise. ‘I am the king of debt. I do love debt. I love debt and I love playing with it, but of course now you’re talking about something that’s very, very fragile, and it has to be handled very, very carefully,’ he said.” [CNBC, 5/5/16]

Trump’s Tax Plan Would Add $34.1 Trillion To The National Debt By 2036

Center On Budget And Policy Priorities’ Chuck Marr: Donald Trump’s Tax Plan “Hemorrhages Revenue And Tilts Heavily Toward The Wealthiest Americans.” In a Center On Budget And Policy Priorities op-ed Chuck Marr wrote, “Donald Trump’s tax plan conflicts with his claim that it’s fully paid for and focused on average Americans. In reality, the plan hemorrhages revenue and tilts heavily toward the wealthiest Americans.” [Center On Budget And Policy Priorities, 9/29/15]

New York Times On Tax Policy Center Analysis: “Donald J. Trump’s Tax Plan Would Benefit The Wealthiest Americans The Most While Saddling The Economy With Trillions Of Dollars In New Debt.” According to the New York Times, “Donald J. Trump’s tax plan would benefit the wealthiest Americans the most while saddling the economy with trillions of dollars in new debt, according to an analysis released on Tuesday by the Tax Policy Center. Mr. Trump, the Republican presidential candidate who is leading most polls, released his plan in September after vowing to crack down on loopholes that benefit rich hedge fund and private equity managers, while eliminating provisions that encourage companies to park their cash in overseas tax havens.” [New York Times, 12/22/15]

Tax Policy Center: Trump’s Tax Plan “Would Add $11.2 Trillion To The National Debt By 2026 And $34.1 Trillion By 2036.” According to Tax Policy Center, “The revenue losses [from Trump’s tax plan] understate the total effect on the national debt because they do not include the additional interest that would accrue as a result. Including interest costs, the proposal would add $11.2 trillion to the national debt by 2026 and $34.1 trillion by 2036 (table 4 and figure 1). Assuming the tax cuts are not offset by spending cuts, the national debt would rise by an estimated 39 percent of GDP in 2026 and by nearly 80 percent of GDP by 2036.” [Tax Policy Center, 12/22/15]

The Conservative Tax Foundation Estimated A $10 Trillion Deficit From Trump’s Tax Plan In The Next Decade

Tax Foundation Estimated That Trump’s Tax Plan Would Reduce Revenues By $10.14 Trillion In The Next Decade, With Dynamic Scoring Factored In. According to Tax Foundation, “Our analysis finds that the plan would reduce federal revenues by $11.98 trillion over the next decade. However, it also would improve incentives to work and invest, which could increase gross domestic product (GDP) by 11 percent over the long term. This increase in GDP would translate into 6.5 percent higher wages and 5.3 million new full-time equivalent jobs. After accounting for increased incomes due to these factors, the plan would only reduce tax revenues by $10.14 trillion.” [Tax Foundation, 9/29/15]

Trump Advisor Sam Clovis Falsely Claimed That The Tax Foundation’s $10 Trillion Deficit Estimate Of The Trump Tax Plan Was Not Based On Dynamic Scoring. According to Politico, “Clovis disputed an estimate by the conservative-leaning Tax Foundation that the tax plan would cost $10 trillion, even after considering the economic benefits, saying the group does not use ‘dynamic scoring.’ In fact, the Tax Foundation is a major advocate of dynamic scoring, and incorporated it into its budget estimate. ‘That’s not what they’ve told me, and I’ve sat across the table from them,’ said Clovis, when asked about the discrepancy.” [Politico,5/11/16]

Trump’s Economic Advisor Made Implausible Claim That Trump’s Policies Would Generate A $7 Trillion Surplus In A Decade

Politico: Trump’s Top Economic Advisor Made An “Implausible” Estimate That Trump’s Policies Would Generate A Surplus Of $7 Trillion In A Decade. According to Politico, “A top economic adviser to Republican presidential candidate Donald Trump said his policies would generate a surplus of as much as $7 trillion in a decade, a wildly optimistic estimate that’s unlikely to pan out. In a sometimes bewildering explanation of Trump’s agenda, Sam Clovis said Wednesday that increased economic growth would cover the vast majority of the cost of his plans, including a tax reform plan projected to cost $10 trillion over 10 years. ‘Our proposals, what we think will happen, will lead us in fact to about a $4.5 [trillion] to $7 trillion surplus at the end of 10 years, if all of our initiatives are put in place,’ Clovis told a conference sponsored by the Peter G. Peterson Foundation. ‘Growth helps us a tremendous amount.’ Clovis’ estimates are implausible, and are likely to raise questions about the advice the presumptive Republican presidential nominee is getting on the economy.” [Politico, 5/11/16]

Politico: Under His Original Proposal, Trump would Need To Increase Projected Tax Receipts By 50 Percent In Order To Meet The Goal Of A $7 Trillion Surplus. According to Politico, “Trump’s current tax reform plan is projected to add $10 trillion to the debt over the next decade, on top of the $9 trillion in deficits the government is already projected to run. So Trump would need to come up with more than $20 trillion in additional revenue — which would amount to increasing projected tax receipts by 50 percent — to realize his surplus. Trump’s tax plan is now being rewritten to reduce its cost, with one revision having a 10-year deficit score of $3.8 trillion.” [Politico, 5/11/16]

Trump’s Tax Plan Would Necessitate Unprecedented Cuts In Government Spending, Services

Tax Policy Center: “The Trump Plan Would Require Unprecedented Spending Cuts To Avoid Adding To The Federal Debt.” According to Tax Policy Center, “The Trump plan would require unprecedented spending cuts to avoid adding to the federal debt. We estimate that the plan would reduce revenues by $1.1 trillion in 2025 (before considering macroeconomic effects). The Congressional Budget Office (2015a) projects total noninterest outlays in 2025 of about $5.3 trillion.” [Tax Policy Center, 12/22/15]

Tax Policy Center: Trump’s Tax Plan Would Need Projected Spending Cuts By 21 Percent To Avoid Adding To Deficit In 2025. According to Tax Policy Center, “The Trump plan would require unprecedented spending cuts to avoid adding to the federal debt. We estimate that the plan would reduce revenues by $1.1 trillion in 2025 (before considering macroeconomic effects). The Congressional Budget Office (2015a) projects total noninterest outlays in 2025 of about $5.3 trillion. As a result, Congress would need to cut projected program spending by 21 percent to prevent the plan from adding to the deficit in 2025.” [Tax Policy Center, 12/22/15]

Eliminating All Defense Spending Would Not Be Enough To Prevent Trump’s Tax Plan From Adding To Deficit According to Tax Policy Center, “As a result, Congress would need to cut projected program spending by 21 percent to prevent the plan from adding to the deficit in 2025. If Congress eliminated all defense spending (about $0.7 billion), it could not meet this goal.” [Tax Policy Center, 12/22/15]
Congress Would Need To Cut Discretionary Spending By 82 Percent Or Social Security And Medicare By 41 Percent To Prevent Trump’s Tax Plan From Adding To Deficit. According to Tax Policy Center, “As a result, Congress would need to cut projected program spending by 21 percent to prevent the plan from adding to the deficit in 2025. If Congress eliminated all defense spending (about $0.7 billion), it could not meet this goal. It would need to cut discretionary spending by 82 percent or Medicare and Social Security spending by 41 percent to offset the direct revenue loss.” [Tax Policy Center, 12/22/15]

Trump Falsely Claimed He Would Lose Under His Tax Plan – He’d Save Millions

Trump On His Tax Plan, 2015: “It’s Going To Cost Me A Fortune — Which Is Actually True.” According to the Washington Post’s Fact Checker, “Trump pitched the plan as being tough on the wealthy, highlighting a proposal to eliminate a tax preference that has allowed hedge-fund managers to claim relatively low tax rates. ‘It reduces or eliminates most of the deductions and loopholes available to special interests and to the very rich,’ Trump declared. ‘In other words, it’s going to cost me a fortune — which is actually true — while preserving charitable giving and mortgage interest deductions, very importantly.’” [Washington Post,9/29/15]

Washington Post Fact Checker Rated Trump’s Claim That His Tax Plan Would Cost Him “A Fortune” At Four Pinnochios. According to the Washington Post’s Fact Checker, “No matter how we slice it, we do not see how Trump can justify his claim that his tax plan would cost him ‘a fortune.’ On the contrary, it appears it would significantly reduce his taxes — and the taxes of his heirs. If more information becomes available — such as the release of Trump’s tax returns or more details on his tax plan — we will of course update, and if necessary adjust this ruling. But for now it’s a Four Pinocchio statement.” [Washington Post, 9/29/15]

Washington Post Fact Checker: Trump’s Tax Plan “Would Significantly Reduce His Taxes — And The Taxes Of His Heirs.” According to the Washington Post’s Fact Checker, “No matter how we slice it, we do not see how Trump can justify his claim that his tax plan would cost him ‘a fortune.’ On the contrary, it appears it would significantly reduce his taxes — and the taxes of his heirs. If more information becomes available — such as the release of Trump’s tax returns or more details on his tax plan — we will of course update, and if necessary adjust this ruling. But for now it’s a Four Pinocchio statement.” [Washington Post,9/29/15]

Washington Post Fact Checker: Trump’s Tax Proposal Could Save Him At Least $5 Million In Taxes, But Possibly More Than $37 Million. According to the Washington Post’s Fact Checker, “Still, just on the face of it, Trump’s proposal to slash the top tax rate from 39.6 percent to 25 percent would result in a huge tax cut. On $250 million, that’s a savings of more than $37 million. But it’s not quite so simple. […] Only about 15 percent of the income among the top 400 is taxed at regular income tax rates, which is a key reason why the average tax rate for the top 400 tax filers was just 16.72 percent in 2012. But if that percentage were applied to Trump’s presumed income of $250 million, for income of $38 million taxed at regular rates, that’s still a savings of at least $5 million in taxes.” [Washington Post, 9/29/15]

Trump’s Tax Plan Provided More Than $3 Trillion In Tax Breaks For Corporations

Trump’s Tax Plan Would Provide More Than $3 Trillion In Corporate Tax Breaks Over The Next Decade. According to Tax Policy Center, “This paper analyzes presidential candidate Donald Trump’s tax proposal. […] The business income tax cuts, such as the lowering of corporate and pass-through business rates and repealing of the corporate AMT, would reduce revenues by about $3.5 trillion over the decade. Repealing business tax expenditures would recoup about one-quarter of that loss.” [Tax Policy Center, 12/22/15]

Trump’s Tax Plan Included New Tax Loophole For “Pass-Through” Income From Businesses That Would Benefit Wealthy, Hedge Funds

Trump Proposed Taxing Pass-Through Income At 15 Percent Instead Of As Ordinary Wage Income. According to New York Times, “Another large, though less-noticed, tax cut in Mr. Trump’s plan is a reduction in the maximum tax rate on ‘pass-through income’ to 15 percent; currently, this income is taxed at the same rates as wage income, up to 39.6 percent.” [New York Times, 9/29/15]

New York Times: Pass-Through Income Comes From Ownership Structure For Businesses Of Any Size That Allow Personal Income From Businesses To Avoid Business Taxes. According to New York Times, “Pass-through income is often described as ‘small-business income,’ but that term can be misleading. Small-business owners can use corporate structures, like limited liability companies, that are not taxed. Instead, the income from these companies is passed through to their individual owners, who then pay tax on their individual income tax returns. Those small-business owners would enjoy this tax reduction from Mr. Trump, but so would the owners of large businesses that may also choose to use these same ownership structures. The tax break would also go to independent contractors like me: The New York Times pays me a salary, but when I do work for other organizations, I treat the payments as small-business income, and I’d get to use the 15 percent rate proposed by Mr. Trump.” [New York Times, 9/29/15]

Tax Policy Center’s Roberton Williams: Biggest Loophole In Trump’s Tax Plan Is Pass-Through Provision. According to New York Times, “The biggest loophole in the Trump tax plan, according to Roberton Williams of the Tax Policy Center, is the ‘pass through’ provision that would allow contract workers to have their income taxed at the lower 15 percent rate. When Kansas made such an allowance recently, thousands of workers shifted their work status to cut their tax bills, leading to a revenue shortfall.” [New York Times, 12/22/15]

CNN Money, 2015: “Hedge Funds Can Be Organized As Small Business Partnerships. So They Could Benefit From A Separate Proposal In Trump’s Tax Plan To Lower The Tax Rate On Small Business Partners To 15%.” According to CNN Money, “Hedge funds can be organized as small business partnerships. So they could benefit from a separate proposal in Trump’s tax plan to lower the tax rate on small business partners to 15%. Conceivably a hedge fund could raise the management-fee portion of fund managers’ compensation, and lower or eliminate the carried interest, so more of their income would be taxed at 15%, Rosenthal said.” [CNN Money, 9/28/15]

Published: Jul 12, 2016

Ryan And Trump Agree On Taxes: Massive Cuts For The Wealthy