Donald Trump’s Tax Plans Trashed by Economists

Donald Trump’s income tax reform plans have been slammed by experts as a “political stunt” that could worsen the U.S. economy.

A CNBC estimate released this week found that as many as 93 million Americans could be exempted from paying income taxes if Trump wins the November presidential election. The former president has suggested numerous tax reform plans, including various income tax reductions.

To date, the Republican presidential nominee has formally put forward eliminating income tax on tips, Social Security benefits, and overtime pay. He has also indicated he would be open to contemplating tax exemptions for firefighters, police officers, military personnel, and veterans.

“In the old days when we were smart, when we were a smart country, in the 1890s and all, this is when the country was relatively the richest it ever was. It had all tariffs. It didn’t have an income tax,” Trump told voters in New York last week for Fox & Friends. “Now we have income taxes, and we have people that are dying.”

His plans have been met with derision from economists and policy experts, who have said the plans are “inadequate” and a “last-minute” attempt to sway voters before November 5.

Newsweek has contacted Trump’s campaign team via email for comment.

“The recent proposals for tax exemptions seem like a blatant last-minute political stunt to convince affected voters to support the former president,” Markus Schneider, associate professor and chair of the University of Denver’s economics department, told Newsweek.

“However, his track record on following through on such promises is poor and the consequence of following through would be deeply problematic. Almost certainly, these tax exemptions would balloon the deficit and lead to cuts down the line.”

Trump has proposed filling the revenue loss with higher import tariffs, specifically a 20 percent universal tariff on all imports from all countries and a 60 percent rate for imports from China.

According to CNBC, Trump’s tariffs would only raise $3.8 trillion over 10 years, while the income taxes are predicted to generate $33 trillion—presenting a near $30 trillion hole in America’s finances.

“Trump’s reliance on import tariffs to offset the cost of tax cuts comes with major downsides,” the Tax Foundation said in a report released earlier this month. “Tariffs are a particularly distortive way to raise revenue, especially as they invite foreign retaliation. We estimate Trump’s proposed tariffs and partial retaliation from all trading partners would together offset more than two-thirds of the long-run economic benefit of his proposed tax cuts.”

“Tariffs are a wholly inadequate as a source of making up lost revenue, and would invite retaliatory tariffs which would cut into our own domestic industries and their ability to make profits selling overseas,” Keith Gaddie, professor of political science at Texas Christian University, told Newsweek. “Tariffs are a historically bad idea.”

“The last time we excluded these sources of income from taxation, corporations bore a far greater share of our tax burden, and the top marginal income tax brackets were over 50 percent,” he explained. “To make up an income-tax cut in one space typically requires capturing it from an income tax elsewhere.”

A revenue boost from other income taxes is unlikely, given that Trump has proposed a continuation of several elements of the 2017 Tax Cuts and Jobs Act (TCJA), which includes lower individual income tax rates and higher standard deductions.