Donald Trump has spent the days since he became the sole Republican presidential candidate distancing himself from the detailed tax plan he released earlier in the primary season. Now he’s looking at rewriting it altogether.
And while Trump’s original plan included massive giveaways to the rich and not a whole lot for everyone else, the rewrite looks like it will keep most relief for the wealthy while reducing it for the poor.
Last month, Trump enlisted CNBC host Larry Kudlow and Heritage Foundation fellow Stephen Moore to give him recommendations on how to revamp his tax plan, according to Politico, which he spent the weekend saying was a “concept” and a starting place for negotiations. Trump at first insisted that under his administration the wealthy will pay more in taxes, but he revised that stance to say that while the rich will get a tax cut no matter what, their tax cut could be shrunk during negotiations.
The rewrite process might do that for him. The goal of the recommendations is to reduce the overall cost of the package, which was estimated to be about $10 trillion over a decade. One suggestion they’re giving Trump is to reduce the top tax bracket paid by the wealthiest to 28 percent from its current level of 39.6 percent — still a substantial bonus for the rich, although not quite as much as Trump’s original position of dropping it to 25 percent. At the same time, Kudlow and Moore will propose that Trump reduce the capital gains tax paid on investment income rather than salaries, which overwhelmingly benefits the better off, to 15 percent from its current level of 23.8, a bigger reduction than Trump’s plan of 20 percent.
While the rich would keep the bulk of their tax cuts, the poor wouldn’t fare so well. Trump had originally promised to increase the number of low-income Americans who don’t owe any income taxes to 33 million by requiring no payments from individuals who make less than $25,000 or married couples who make less than $50,000. Kudlow and Moore will instead suggest lowering the thresholds to $10,000 and $20,000, respectively, so that more poor people would end up owing taxes.
Trump has also insisted that he’d like to see an increase in tax relief for the middle class. Yet the Kudlow and Moore outline would raise rates on them as well. Trump had originally proposed three brackets, with the two lower ones at 10 and 20 percent. The changes would raise those brackets to 15 and 25 percent instead.
In all, the revisions should bring the $10 trillion price tag down, although how much depends on what calculations are used. On a static basis, the new plan would cost $6.7 trillion, according to a preliminary estimate from the Tax Foundation, although they put the actual number at $3.8 trillion using a dubious method called dynamic scoring.
The poor could also be hit by further steps that would be taken to cover that cost. Kudlow said that they will also suggest spending cuts, which “would probably slice another $2 trillion” off the federal deficit. Given that Trump has said he won’t make changes to Social Security and Medicare and that he also wants to protect and increase the military’s budget, that leaves little else to cut except programs that tend to help lower-income Americans and the country as a whole.
Kudlow and Moore stress that their rewrite will only be “suggestions” and that Trump hasn’t signed off on anything yet.
This post has been updated with more details on the plan to rewrite Trump’s tax proposal.