The Urban-Brookings Tax Policy Center (TPC) on Tuesday released analyses of Donald TrumpDonald TrumpMcAuliffe takes tougher stance on Democrats in Washington Democrats troll Trump over Virginia governor's race Tom Glavine, Ric Flair, Doug Flutie to join Trump for Herschel Walker event MORE’s and Hillary ClintonHillary Diane Rodham ClintonTrump criticizes Justice for restoring McCabe's benefits Biden sends 'best wishes' to Clinton following hospitalization The Hill's Morning Report - Presented by Altria - Jan. 6 panel flexes its muscle MORE’s tax plans that take into account their macroeconomic effects.
The release comes after the Trump campaign complained that reports TPC released last week did not include “dynamic” scoring. TPC officials said that they had always planned to release dynamic analyses of the plans but that the release of macroeconomic analyses was delayed because of technical issues. The nonpartisan group came up with a long-term dynamic estimate in collaboration with the Penn Wharton Budget Model.
The Trump and Clinton campaigns have been sparring over their tax plans, which take opposite approaches. Trump’s tax plan would cut the top individual and corporate tax rates, while Clinton’s plan would raise taxes for high earners.
TPC Senior Fellow Ben Page said that “both of these plans have opposing effects” on incentives and deficits. Trump’s plan would initially increase incentives to save and invest but would increase deficits, while Clinton’s plan would decrease incentives to save and invest but would reduce deficits.
Because of these competing effects, the net effects “aren’t that large,” said Bob Williams, another TPC fellow.
Using the Wharton dynamic model, Trump’s plan would cost about $6 trillion in its first decade and about $10.3 trillion in its second decade. Trump’s plan would cost $6.2 trillion in its first 10 years and $8.9 trillion in its second decade under TPC’s “static” estimate that doesn’t consider economic effects.
Clinton’s plan under the Wharton dynamic model would raise $1.3 trillion in its first decade and $2.8 trillion in its second decade. That’s compared to raising $1.4 trillion in its first decade and $2.7 trillion in its second decade without considering economic effects.
TPC’s analyses only looked at the candidates’ tax plans and did not look at any spending changes the candidates have proposed.
The group noted in its reports that Trump has said he would make unspecified spending cuts and that the Trump campaign has said that other aspects of the candidate’s economic plan would increase revenues, which could offset some of the negative effects of rising deficits under the tax plan. On the other hand, Clinton’s spending proposals would cancel out the budget savings produced by her tax plan, so the macroeconomic effects of Clinton’s overall economic plan would be negative, TPC said.
At an event last week, Trump adviser Peter Navarro criticized TPC for not including analyses of the other parts of Trump’s economic plan. He also accused TPC of liberal bias.
But TPC and Wharton analysts refuted the allegations of bias and said that they are focused on getting the economics correct.