If there’s anything positive to be said about Hillary Clinton, it’s that she’s polished and articulate when she’s up on the debate stage. Her numbers are precise — and her comments clearly scripted and repeated to robotic perfection.
But of course, appearances can be deceiving. (And they most certainly are when it comes to anything Hillary.) Articulateness in explaining policies is no indicator of how successfully they’ll work, and that’s on display in the case of Hillary Clinton. While she attacks Trump’s tax plan for increasing the deficit (which, to her credit, it would), that’s just about the only downside. She also would increase the deficit due to increased spending — and her tax plan carries with it many more adverse economic consequences than Trump’s.
According to an analysis by the Tax Foundation, Hillary’s tax plan would result in 2.1 percent lower wages, a 6.9 percent smaller capital stock, and nearly 700,000 fewer full time jobs.
Hillary Clinton would enact a number of policies that would raise taxes on individual income, increase tax credits, and reform business taxation.
According to the Tax Foundation’s Taxes and Growth Model, the plan would increase federal tax revenue by $1.4 trillion over the next decade on a static basis (meaning, not adjusting for economic effects the plan would have).
The plan would increase marginal tax rates on individuals and businesses, which would lead to a 2.6 percent lower level of GDP. The smaller long-run economy would also lead to lower levels of wages and full-time equivalent jobs.
After accounting for the smaller economy and narrower tax base, the plan would increase revenue by $663 billion (in contrast to the static estimates)
On net, the plan makes the tax code more progressive. The plan would reduce the after-tax incomes of the top 1 percent of taxpayers by 6.6 percent but increase the after-tax income of all other income groups by at least 0.1 percent. After accounting for the smaller long-run size of the economy, all after-tax incomes would fall by at least 0.1 percent in the long run.
Below is a comparison of the various effects the Clinton and Trump tax plans would have according to a Tax Foundation analysis done earlier this year. The figures for the Clinton have since been revised to the figures quoted above. Note that this doesn’t include any effects that their plans for fiscal spending would have on employment, the deficit and debt, etc.
Trump’s tax cuts certainly do blow a massive hole in the budget, but that simply means that it’ll need to be offset by cutting spending — something that’s needed to be done since forever.
[Note: This post was written by The Analytical Economist]