Trump tax cuts would benefit the richest: study
Washington (AFP): The tax cuts promised by US Republican presidential candidate Donald Trump would benefit the most well-off Americans, according to independent research published Tuesday.
Meanwhile the tax proposals of his Democratic rival Hillary Clinton could hit the wealthy harder but possibly discourage investment, the research by the Tax Policy Center said.
In two reports analyzing the candidates’ taxation proposals, the TPC described Clinton’s plan as more broadly fair and having a positive impact on the US budget while Trump’s would push up the government deficit.
Trump has proposed during his campaign for the White House to cut income tax rates for all Americans, with the wealthiest earners seeing their top rate reduced from 39.6 percent to 33 percent.
Meanwhile taxes for businesses and partnerships would fall sharply to 15 percent, and capital gains and dividends taxes would also fall.
The study concluded that the billionaire developer’s cuts would benefit every taxpayer, but that the largest benefits, in dollar and percentage terms, would go to the highest-income households.
Those cuts, it said, “would increase the incentive for investment in the US and reduce tax distortions in the allocation of capital.”
“Increased investment could raise labor productivity and US wages by increasing capital per worker,” it added.
TPC’s report on Clinton said her proposal for a four percent tax surcharge on household incomes over $5 million and a 30 percent minimum tax on those over $1 million would reap strong income gains for the government, by far offsetting her proposed tax reductions for the bottom 60 percent of earners.
That would have a negative effect of lowering the incentive for the top 10 percent of earners to save and invest, the research said.
The two candidates’ proposals would have sharply different impacts on the government budget. Trump’s across-the-board tax cuts would mean a $6.2 trillion loss in federal revenues over 10 years, and would force the federal deficit up by $7.2 trillion.
Clinton’s would bring a $1.4 trillion increase in government revenues.
Trump though argues that the lower tax rates will stimulate spending and investment, boosting economic growth and the tax base.
“When the positive effects of growth from tax cuts, a reduced regulatory burden, the unleashing of our energy sector, and the elimination of our trade deficit are taken into account, the Trump economy generates $2.4 trillion in positive revenue offsets and is revenue neutral,” his campaign said in a statement.