Trump: Millions Who Pay No Taxes Will Keep Paying No Taxes
Lowering rates for everybody while cutting deductions for the rich.
Donald Trump offered his tax plan Monday, and it has quite the populist appeal. His plan says, “If you are single and earn less than $25,000, or married and jointly earn less than $50,000, you will not owe any income tax. That removes nearly 75 million households — over 50% — from the income tax rolls. They get a new one page form to send the IRS saying, ‘I win,’ those who would otherwise owe income taxes will save an average of nearly $1,000 each.” On top of that, he’d lower the top rate from 39.6% to 25%, and reduce corporate taxes from the current highest-in-the-world rate of 35% to 15%. On the other hand, he wants to eliminate deductions that help people like hedge fund managers pay a lower rate than many Americans. We suppose their tax forms will say, “I lose.” Indeed, “eliminating most deductions and loopholes available to the very rich” is how he proposes to keep the plan “revenue neutral.” Fat chance of that. His proposed four brackets of 0%, 10%, 20% and 25% will “simplify the tax code,” he said. “It’ll grow the American economy at a level that it hasn’t seen for decades.” It’s worth noting, as Trump does, that there are already millions of Americans who pay no income tax, though they do have to fill out complex tax forms to reach that conclusion. Thus, they have no “skin in the game,” and everyone should bear some of the burden, even if it’s just 1%. But Trump would expand the numbers paying nothing — smart politics. On the other hand, these same workers pay a disproportionate share of the payroll tax, which supposedly funds the biggest drivers of our debt: Major entitlements.
Here’s Trump’s Wall Street Journal op-ed outlining his plan.