In a Normal Campaign Season, Candidates Could Have a Tax Debate
Imagine what could happen if Donald Trump hadn't turned the presidential campaign into an argument over who founded Islamic State or whether there should be ideological entrance tests for foreign visitors and immigrants. Then he and Hillary Clinton could have a rational debate over taxes, a serious topic on which they have clear differences.
Trump wants to cut taxes massively, especially for the wealthy, which he claims will stimulate unprecedented growth. Clinton wants to boost taxes on corporations and the rich and use the revenue to create jobs and help the middle class.
Both evade some specifics but there's enough for a substantive debate.
That's not possible on many issues because the candidates have made it so hard to take their claims seriously. Trump, for example, has abandoned Republican orthodoxy and said he'd make no cutbacks on entitlements; could a President Trump continue to buck his party? Clinton has abandoned her original support for the Trans-Pacific Partnership trade pact. But she's said so much on both sides of the issue that it's easy to imagine a flop to that flip. On national security, it's difficult to delineate any Trump doctrine; he says he opposed the Iraq war and Libyan intervention, though he didn't until they soured.
On taxes, the Republican nominee proposes lowering the top rate for individuals to 33 percent from 39.6 percent and setting only two rates below that. The corporate rate would be slashed to 15 percent from 35 percent. And the estate tax, paid only by the wealthiest estates, would be eliminated.
Clinton would require anyone making over $1 million to pay at least 30 percent in federal taxes, and would slap a 4 percent surcharge on those making over $5 million. She'd also limit deductions for upper-income taxpayers and would slightly increase estate taxes for the few who pay them. She would use the added revenue for a host of domestic initiatives, including a $275 billion, five-year infrastructure plan, tax breaks to help with child care and college tuition, and a bigger earned-income tax credit for the working poor.
Neither plan pleases deficit hawks like Maya MacGuineas, president of the Committee for a Responsible Federal Budget. "Both leave something to be desired," she declared. She called Trump's tax plan "a huge budget buster" and and indeed independent analysts I spoke to put the cost to the government at around $5 trillion over 10 years.
The Democratic candidate, MacGuineas notes, "uses all the new revenue she raises to pay for new spending initiatives," and by vowing not to raise taxes for anyone making less than $250,000 "perpetuates the notion that we can solve all our budgetary problems just by taxing the rich."
On the stump, Trump says he would end the tax loophole that lets some private equity and hedge fund executives pay a lower capital gains rate on earned income. But his plan would allow many of these executives to pay personal taxes at the 15-percent rate, which would mean a tax cut for carried interest.
Clinton has ducked specifics on corporate taxes and probably understates the cost of her proposal to eliminate tuition at public colleges. She hasn't decided on whether to offer a tax cut to the middle class, which might conflict with her commitment to restrain budget deficits.
One irony: Bloomberg Politics calculates that the Clintons would have paid about $1.7 million less tax last year under the Trump plan and at least $224,000 more under hers. Trump, who refuses to release his tax returns, would also probably pay more under Clinton's proposal and less under his. His heirs would surely pay less.
This is all stuff that would make for a better debate this autumn than what we are seeing and are likely to see for the next 11 weeks.
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