Finance

Analysis: Clinton tax plan would raise $1.4 trillion

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The latest version of Hillary Clinton’s tax plan would raise revenue and slightly reduce the size of the U.S. economy, the conservative-leaning Tax Foundation said Wednesday.

The Democratic presidential nominee’s plan would raise $1.4 trillion over 10 years using “static” scoring that does not take economic effects into account. However, it would only raise $663 billion after factoring in economic effects, the group said in its report.

{mosads}Clinton’s tax plan focuses on increasing taxes for the wealthy. Her proposals include a minimum 30 percent tax for those with income over $1 million, a surtax for taxpayers with income over $5 million and a cap on the value of certain tax preferences.

She has recently fleshed out her plan more with new tax proposals, including an expansion of the child tax credit and increased estate tax rates.

The Tax Foundation estimated that Clinton’s proposal would reduce gross domestic product (GDP) in the long run by 2.6 percent, since marginal tax rates on capital and labor income would increase. Clinton’s plan would result in 2.1 percent lower wages and almost 700,000 fewer full-time jobs, the group added.

Clinton’s estate-tax plan has the largest economic impact of her policies, because the higher rates would “greatly reduce the incentive to save and invest,” the Tax Foundation said.

On a static basis, taxpayers in the top fifth of income would receive tax increases and everyone else would receive tax cuts. However, once economic effects are accounted for, all income groups would see tax increases, the group said.

Julie Wood, a Clinton campaign spokesperson, pushed back on the group’s findings.

“We respectfully disagree with this report, which independent experts have said ‘relies on assumptions that are inconsistent with the economic evidence or well outside mainstream economic thinking.’ As a Moody’s Analytics comprehensive analysis of our proposals makes clear, the Clinton economic plan would result in stronger growth and more jobs, not the opposite,” Wood said.

“Clinton has a serious plan to build an economy that works for everyone, not just those at the top, while Donald Trump’s proposals would plunge us into recession and explode the national debt by more than $20 trillion over 20 years.”

The Tax Foundation last month estimated that Republican presidential nominee Donald Trump’s tax plan would lower revenue by between $4.4 trillion and $5.9 trillion on a static basis and would lower revenue by between $2.6 trillion and $3.9 trillion after accounting for economic effects.

The group’s estimates are in line with analyses of Clinton and Trump’s tax plans from the non-partisan Tax Policy Center. TPC estimated that on a static basis, Clinton’s plan would raise $1.4 trillion over 10 years while Trump’s plan would cost $6.2 trillion.

Trump and Clinton have been sparring over their tax plans in recent debates and speeches. 

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