Clinton proposes closing real estate loophole, not Trump

Mr. Trump looks at the American economy, and he accurately sees wage stagnation.

But consider a thought experiment: Imagine Donald Trump as a blameless mensch, pure of all transgression. Her plan (like Trump’s) also proposes to close the notorious carried-interest loophole, which lets some rich taxpayers classify income as capital gains, taxed at lower rates. The analysis found that some of the cuts in the plan – including a doubling of the child tax credit the Clinton campaign announced Tuesday morning – could lead to a 1 percent increase in income for the poorest 20 percent of US households. A typical family would save a little less than $1,100 a year in taxes – an increase of 1.5 percent in their income.

Clinton also has proposed an expansion of the credit for other families with children up to 17 years old that would primarily benefit poor families. When it comes to reducing deficits on the revenue side, there is little comparison: Clinton’s proposal would slightly raise revenue, while Trump’s proposal would require massive (and mostly unspecified) cuts to government spending to avoid a record run-up of debt.

On Tuesday, Clinton released a plan to fight poverty by giving very poor parents money to pay off debts, feed their kids, and generally hold their families’ lives together. It’s the same argument President Obama had with Mitt Romney, though of course it dates to well before then, back at least to when Reagan Republicans realized they could tell people, “Don’t worry, tax cuts will pay for themselves”, and folks believed them! Yet apparently, that’s Trump’s strategy.

Clinton’s plan would increase tax revenues by $1.4 trillion with almost all the increase coming from people with incomes in the highest 1 percent. But the Child Tax Credit is only available to families with income. This year is no outlier.

The 3.8% Obamacare tax on investment income would be repealed, as would the Alternative Minimum Tax (AMT) and the death tax.

“This is really highly dependent on the outcome of the congressional elections”, explains Eric Toder, a fellow at the Urban Institute and co-director of the Urban-Brookings Tax Policy Center.

Because many investment firms are organized as pass-throughs, independent policy analysts have said they might qualify for the 15 percent rate that Trump proposes. About 75 percent of the lost revenue would come from the steep cuts in the taxation of businesses and of the wealthiest Americans. The New York Times has apparently obtained evidence that Donald Trump claimed a tax loss of over $900 million in 1995, in relation to his real estate assets. As per the present law, majority of income is subjected capital gains tax. But because that credit begins to phase out for married joint filers starting at $110,000 in adjustable gross income, higher earners are often unable to take full advantage of the credit. And when the rich and corporations have more income, they historically expand their businesses and hire. And guess which sort of businesses would most benefit from this tax adjustment?

Trump has yet to release his taxes, although he said he will when his audit is complete.

What you find is that these are not just candidates with different personal histories, religious beliefs, or predispositions. But most of his policies wilt under the punishing light of numerate analysis. “Women who wish to work outside the home will have the supports to do so, as well as greater tax relief”. “For instance, our plan has explicit safeguards to keep hedge funds from abusing the business rate – it’s Hillary who plans secret benefits for Wall Street, not us”.

Without providing a direct explanation of the economic situation if the tax cuts go into effect without contingencies, both experts simply emphasized the importance of trade policy changes as an offset. But I suppose that when you’re a star, you can do anything.