Trump’s tax plan will be ‘failing to achieve our goals,’ analysts say
President Donald Trump’s plan to cut taxes for corporations and the wealthy has already failed to achieve its goal of reducing the federal deficit, according to a new study.
The nonpartisan Congressional Budget Office said in a report released Monday that the plan would result in a $4 trillion loss of revenue by 2027, with more than $2 trillion coming from the corporate side of the tax code.
The nonpartisan Tax Policy Center also found that repealing the estate tax, a tax levied on estates worth more than more than half a million dollars, would save the government $1.5 trillion over the next decade.
Trump has promised to cut the deficit by as much as $1 trillion over a decade, but the CBO estimates that the federal government will end up with $4.5 billion less in 2019 than it would have if the plan were implemented in full.
The Trump administration is still working to craft its tax reform plan and its plan to repeal the estate, which has been the most popular tax break for families.
Trump is expected to unveil his tax reform bill in coming weeks, but in the meantime, the Tax Policy Council, a nonpartisan think tank, released a report Monday estimating that the estate would lose $2.5 million to $3 million annually in 2019.
The report, “Tax Reform: What It Really Means,” estimated that Trump’s proposal would lead to an additional $2,600 in tax revenue in 2019 for every $1,000 of revenue lost from the estate.
The analysis did not account for any revenue from other types of tax breaks, such as credits for child care, the cost of college, or the deduction for state and local taxes.
The Joint Committee on Taxation, which produces the Joint Tax Report, estimates that repealing both the estate and the alternative minimum tax, also known as the Alternative Minimum Tax, would raise an additional 3.9 percent to 5.2 percent of economic output and an additional 1.3 million jobs over a 10-year period.
Trump’s plan would also allow individuals to deduct state and federal income taxes from their federal tax bills.
That would add $1 billion to the deficit.
But it would also make other tax breaks less attractive, including a reduction in the corporate tax rate to 15 percent and the child tax credit, which Trump has promised would boost economic growth.
“A Trump tax plan would not only benefit the rich, it would be more effective in cutting the deficit than the president’s proposed tax cut for the wealthy,” the Tax Center’s Jason Furman said in the report.
The CBO’s analysis also noted that the proposed elimination of the Alternative Federal Tax, a one-time tax that only applies to corporations, would generate an additional 0.6 percent to 1.0 percent of gross domestic product.
Trump has said that the tax cut will be paid for by reducing taxes for individual taxpayers.
The Tax Policy Committee, a non-partisan think tank in Washington, D.C., has been working on a similar analysis of Trump’s corporate tax plan.
The committee has been drafting its report since early September and said last week that it would release its final version by the end of the year.
“This is the first comprehensive review of the President’s tax proposals that includes a comprehensive examination of the economic impact of tax reform,” the committee said in its report.
“In addition, we have provided comprehensive analysis of the impact of both the President and congressional leaders’ proposed tax reform measures on business activity, labor, health care, and education.
We are confident in our analysis.”