Clinton Rips Trump’s Tax Plan as Boon to Wealthy Like Him

The Democratic presidential nominee says her proposals would have broad benefits for most Americans.

Clinton: I Oppose TPP Now, I’ll Oppose It as President

Hillary Clinton ripped Donald Trump's economic plan as a boon to the wealthiest Americans, including himself and his family, that will only increase the burden on middle-income taxpayers already pressured by stagnant wages.

In a speech at a Michigan manufacturing plant on Thursday, the Democratic presidential nominee sought to draw a stark contrast between her plans for the economy, which she argued would benefit a broad range of Americans, and the Republican's proposals, which she said are aimed only at helping people like him.

Trump "hasn’t offered any credible solutions for the very real economic challenges we face,'' Clinton said at Futuramic Tool & Engineering in Warren. Instead he's proposed a tax plan that "would allow him to pay less than half the current tax rate on income from many of his companies.  He’d pay a lower rate than millions of middle class families.''

Clinton didn't lay out any new policies in her address. With the economy most frequently cited by voters as the top issue in the election, her main aim was to undercut Trump's claim that his business experience gives him the expertise needed to spur job and income growth, while portraying him as acting out of self-interest rather than in the national interest.

The first component of that is attacking the economic plan Trump laid out Monday in Detroit as a retread of Republican ideas that benefit the wealthy at the expense of the middle class.

Trump Loophole

Specifically, Clinton cited what she called ``the Trump Loophole'' -- his proposal to create a new 15 percent tax rate for business income from partnerships, limited liability companies and other so-called ``pass-through'' entities.

While Trump pitched the provision as a boon for small businesses, it would also result in a tax-rate cut for many high-earning individuals -- from 39.6 percent to 15 percent. More than two-thirds of pass-through income flows to the top 1 percent of tax filers, according to a study by the Center for Budget and Policy Priorities.

Trump's advisers are considering tweaks to his proposal aimed at ensuring that the 15 percent rate ``is for legitimate businesses,'' said Stephen Moore, an economist who is advising Trump on tax policy.

Clinton charged in her speech that the new rate would be a ``nice deal'' for Trump himself, who owns hundreds of businesses that are organized as pass-throughs.  ``Of course, it’s hard to say how nice, because he refuses to do what every other presidential candidate in decades has done and release his tax returns,'' she said, adding another layer of criticism of her opponent.

Departing from 40 years of tradition, Trump has not released any tax return. He says he is under audit and won't release his tax information until the audit is concluded. Tax experts have said there's no rule or law against taxpayers releasing their own returns, even if they're under audit. Clinton's campaign plans to release her 2015 filing – adding to more than three decades of Clinton returns already in the public domain—and 10 years of vice-presidential nominee Tim Kaine's returns in the coming days.

Clinton's own plan would raise taxes on the wealthiest taxpayers in various ways. She'd create a ``millionaire's tax,'' which would establish a minimum tax rate of 30 percent for taxpayers with adjusted gross income over $1 million. She'd also set up a 4 percent surtax on incomes higher than $5 million, which would result in a new top individual tax rate of 43.6 percent on wage and salary income. And she'd cap itemized deductions at a tax value of 28 percent -- meaning those in higher income brackets could shield less of their income from taxation.

Trump, meanwhile, would call for individual tax cuts across the board -- for consolidating the existing seven individual income tax brackets to just three, and setting a top rate of 33 percent, down from 39.6 percent. He'd also cut the statutory tax rate on corporate income to 15 percent from 35 percent.

Trump Response

In a pre-emptive response issued via e-mail before Clinton's speech, Trump's campaign cited one analysis that found her tax plan would shrink the gross domestic product, costing jobs.

That analysis, which was performed by the conservative Tax Foundation in Washington, concluded Clinton's plan would reduce GDP by 1 percent over the long-term because it would create "slightly higher marginal tax rates on capital and labor.'' That finding is based on a model that attempts to account for changes in taxpayers' behavior that result from changes in tax law. Other economists criticize aspects of that model.

Applying its model to Clinton's tax plan, the Tax Foundation found that her proposals would raise $191 billion over a decade. In contrast, the Tax Policy Center, a joint effort of the Urban Institute and the Brookings Institution, found that her plan would raise $1.1 trillion over the same time frame.

The second part of Clinton's strategy is challenging his business record. Clinton in recent weeks has made a point of stopping at small businesses in swing states where she's recounted his history of manufacturing products overseas, hiring foreign workers over U.S. citizens and refusing to pay  some contractors.

"He’s made a career of stiffing small businesses from Atlantic City to Las Vegas,'' Clinton said. "There are companies that were left hanging but paid their workers anyway -- putting businesses they’d worked a lifetime to build at risk.''

There's evidence that Clinton's attack on Trump's record and media reports about his background have had some effect. In a Bloomberg Politics national poll conducted Aug. 5-8, 61 percent of likely voters said they’re less impressed with the Republican nominee’s business acumen than when the campaign started. Still, 51 percent of those polled said Trump "knows what it takes to create jobs'' compared with 42 percent who said that of Clinton.

 

Shifting Target

But Trump has proved to be a shifting target for Clinton on economic policy. Beyond promising rate cuts for individuals and businesses Trump has strayed from Republican orthodoxy on entitlements and government spending.

He said Thursday morning on CNBC, for example, that he'd more than double the $275 billion Clinton proposes to spend on infrastructure projects over five years and do so by increasing government debt.  “This is the time to borrow,”  he said.

Clinton has signaled her opposition to the U.S. taking on more debt by pledging to “fully pay for these investments through business tax reform,” according to a fact sheet on her website.

Clinton reiterated her call for an infrastructure bank, a proposal President Barack Obama advanced only to see it stall for lack of Republican support. U.S. spending is projected to fall about $1.4 trillion short of the $3.3 trillion needed through 2025 for airports, highways and other infrastructure, according to the American Society of Civil Engineers.

 

One issue where the nation's political mood has pushed the positions of Clinton and Trump closer is trade. Trump is proposing tariffs to penalize what he characterizes as unfair practices by some U.S. trade partners and taking actions to force U.S. companies to keep their operations within the country's borders. While Clinton hasn't gone as far with an anti-globalization tilt, she's switched to criticism of the Obama administration's centerpiece trade initiative, the Trans-Pacific Partnership.

Trump has suggested that Clinton would soften her position on the accord if she's elected. But she said bluntly Thursday that she will not waver on the current version of the deal. “I will stop any trade deal that kills jobs or holds down wages—including the Trans-Pacific Partnership,” she said. “I oppose it now, I’ll oppose it after the election and I’ll oppose it as president.”

—With assistance from Rich Miller, Michelle Jamrisko and Ben Brody.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE