Tag: Tax Plan

David Spady on LA, Stupid People, DACA, and the NFL

 

David SpadyDavid Spady returns to Whiskey Politics where we discuss if Los Angeles and California can afford the Olympics, the national debt just hit $20 trillion and all we got was this lousy t-shirt (what the heck are Republicans doing to reduce the debt?), Annenberg’s study showing just how stupid people really are, Trump, Pelosi, and Schumer, DACA, and tax reform. Will Trump get a bad deal, and is the Kaepernick effect causing lower ratings and empty stadiums?

Member Post

 

I freely admit that when I start trying to get into the weeds of the Tax Code, I get lost immediately. I’m pretty good at math; I can even do long division in my head. But this stuff isn’t math, heck, you need a Rosetta Stone just to get through the first paragraph of it, […]

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Scoring the New Trump Tax Plan

 

RTSO7VY-e1474298025325There’s new modeling of Donald Trump’s new tax plan. This is never an easy exercise, but the Tax Foundation’s efforts were made that much more difficult by the inability of Team Trump to clearly specify the individual income tax rate on pass-through business income. And that makes a big difference, according the group:

Assuming that the individual income tax rate on pass-through business income is the same as the rates on other individual income, the Trump tax plan would reduce federal tax revenue by $4.4 trillion over the next decade. But if the tax rate on this income is instead intended to be the same as the tax rate on corporate business income, the plan would then reduce federal revenue by $5.9 trillion. In addition to these possibilities, which we see as upper and lower bounds for total revenue generation, the policy may reduce federal revenue somewhere in between.

With dynamic scoring, the TF puts those total revenue losses at between $2.6 trillion and $3.9 trillion. Those are still big, big numbers. Now why am I focusing on the red ink from the plan rather than the economic growth it supposedly generates? Well, maybe because the 74% US debt-GDP ratio is at an historically high level, more twice what it was pre-Great Recession and three times the level when Ronald Reagan took office.

What We Know So Far about the GOP Presidential Tax Plans

 

Bobby JindalThe Tax Foundation analysis of Bobby Jindal’s tax plan:

  • Governor Jindal’s tax plan would substantially lower individual income taxes, eliminate the corporate income tax, and repeal a number of complex features in the current tax code.
  • Governor Jindal’s plan would cut taxes by $11.3 trillion over the next decade on a static basis. However, the plan would end up reducing tax revenues by $9 trillion over the next decade when accounting for economic growth from increases in the supply of labor and capital.

So let’s summarize the four plans examined by the Tax Foundation model:

  • The Jeb Bush plan would lose $1.6 trillion over a decade (with economic feedback),  lead to a 10% higher GDP over the long-term, and boost income in the bottom fifth by 10%, the middle fifth by 13%,the top fifth by 10%, and the top one percent by 16%.
  • The Marco Rubio plan tax plan would lose $1.7 trillion over a decade (with economic feedback), lead to a 15% higher GDP over the long run, and boost income in the the bottom fifth by 40%, the middle fifth by 16%,the top fifth by 18%, and the top one percent by 28%.
  • The Donald Trump plan would lose $10 trillion over a decade (with economic feedback), lead to an 11% higher GDP over the long term, and boost income in the the bottom fifth by 11%, the middle fifth by 19%,the top fifth by 21%, and the top one percent by 27%.
  • The Rand Paul plan would lose $1 trillion over a decade (with economic feedback, lead to a 9% higher GDP over the long term, and boost average incomes by 16%.
  • The Jindal plan would lose $10 trillion over a decade with economic feedback, lead to a 14% higher GDP over the long run, would boost income in the the bottom fifth by 8%, the middle fifth by 15%,the top fifth by 22%, and the top one percent by 26%.

One important caveat (other than the vagaries of dynamic scoring) is that the TF model does not factor the “fiscal costs of higher interest payments, as well as the macroeconomic effects of the spending reductions needed to bring the budget into balance.” Let me also add that one other thing the TF model shows is that personal income tax cuts tend to have the biggest revenue loss and the least GDP bang for the trillion bucks.