During his acceptance speech at the Republican National Convention, Donald Trump emphasized that he is "with you" — with "you" being the American people. While Mr. Trump has been criticized for providing very few specifics on how he would accomplish certain key items of his "I'm with you" agenda, in one area — tax reform — plenty of specifics are available. But an examination of Mr. Trump's tax plan, which was announced nearly a year ago, suggests he is most "with you" if you are at the top of the income scale.
As determined by the Tax Policy Center, an independent think tank, while taxpayers at all income levels would receive a tax reduction under Mr. Trump's tax reform plan, "the largest benefits, in dollar and percentage terms, would go to the highest-income households." More specifically, according to the Tax Policy Center the top 0.1 percent of earners would receive an average tax cut of more than $1.3 million (18.9 percent of after-tax income) in 2017, whereas the average tax cut for middle-income taxpayers would be $2,700 (4.9 percent of after-tax income). The more conservative Tax Foundation, also a nonpartisan tax research group, similarly concludes that the largest increases in after-tax income under Mr. Trump's plan would go to taxpayers at the highest income levels.
And both tax research organizations determine that Mr. Trump's tax plan would dramatically reduce federal revenues — by roughly $10 trillion over the next 10 years. In the absence of unprecedented spending cuts, this would substantially increase the national debt, a burden that would need to be shouldered by all current and future taxpayers. While these organizations find that Mr. Trump's plan would improve incentives to save, invest and work, the Tax Policy Center determines that a substantial increase in the national debt would offset some or all of these incentive effects.
Mr. Trump's tax plan also calls for the repeal of the federal estate and gift taxes, which affect only the very wealthiest of taxpayers. Indeed, Third Way, a centrist think tank, estimates that repealing these taxes would save the Trump family alone over $7 billion in federal estate taxes (this estimate apparently disregards any estate tax planning on the part of Mr. Trump). This is, of course, in addition to the billions in estate and gift tax savings that would be reaped by the families of other super-rich individuals.
In contrast to Mr. Trump's tax plan, Hillary Clinton's plan — which Mr. Trump calls a "massive tax increase" — does raise taxes, but, according to the Tax Policy Center, "nearly all of the tax increases would fall on the top 1 percent." And unlike Mr. Trump's tax plan, Ms. Clinton's tax plan would reduce the national debt projected under current law, in the absence of new spending initiatives and disregarding macroeconomic effects. The Tax Foundation makes similar findings with respect to Ms. Clinton's plan.
Last month, Mr. Trump's advisers announced the Republican candidate has a new tax plan in the works that would substantially reduce the hit to federal revenues over the next 10 years — from $10 trillion to $3 trillion — and that contains large reductions in the amount of deductions available to high-income taxpayers along with a higher top tax rate as compared to the current plan. But a Trump adviser cautioned that the details of the revised plan have yet to be finalized. Thus, it remains to be seen who the "you" is when Mr. Trump says, "I'm with you" — at least when it comes to taxes.
Fred Brown is a professor at the University of Baltimore School of Law, where he directs the Graduate Tax Program. He can be reached at email@example.com.