Deficits as far as the eye can see: An overview of the Republican presidential candidates’ tax plans

November 11, 2015

By Matthew E. Milliken
Nov. 11, 2015

Last month, I examined a common theme in the tax reform plans of seemingly every Republican presidential candidate: The notion that, as Donald Trump’s tax plan states, massive tax cuts for the rich can be “fully paid for by…[r]educing or eliminating most deductions and loopholes available to the very rich.”

I criticized this idea on the grounds that removing a wide swath of deductions and loopholes (part of a budget category that policy wonks call “tax expenditures”) is extremely difficult to do. Some of these expenditures, such as the mortgage-interest deduction for home purchasers, are widely popular, even though they do little to promote their intended policy goals. And some of these expenditures have the backing of interest groups that routinely spend hundreds of millions of dollars annually on lobbying, political contributions and the like.

My fear is that our next Republican president might (read: would) prioritize implementing their program of tax-rate reductions over enacting the reduction and reform of tax expenditures. That, of course, would produce a fundamentally untenable budget situation, one where the revenue loss from tax cuts would not be zeroed out by voiding tax expenditures. In this scenario, the United States would face a significant built-in annual deficit.

The ultimate result, of course, would almost certainly be radical cutbacks in government services — unless Congress and the president agreed to hike tax rates substantially. But that’s hard to do even when the two major political parties don’t have ideological differences as deep as they’ve become in the early 21st century.

I stand by what I wrote. However, I must confess that my earlier post ignored the real issue.

The real issue is that, with one possible exception, experts say that all of the Republican presidential candidates’ tax proposals that have been examined in detail would likely cause the deficit to balloon to unheard-of proportions. Here’s what Slate’s Jordan Weissman had to say on the matter recently:

The conservative Tax Foundation has so far released scores for six Republican tax plans (though not [Ohio Gov. John] Kasich’s). The most responsible, you could argue, belongs to Rand Paul, and would add $1.7 trillion to the deficit over 10 years before factoring in the effects of economic growth. The most delusional? Donald Trump’s, which would add to $11.9 trillion over a decade. That said, Ted Cruz just debuted a plan for a 10 percent flat tax that would probably leave the budget looking like a burnt husk. His Wall Street Journal op-ed notes that the Tax Foundation thinks it would boost growth but makes no mention of what the organization projects his plan would do to the deficit.

Weissman’s article, which was published on Oct. 28, both featured and was based on a graphic purportedly made by the Tax Foundation. The only trouble was that Weissman never linked to any Tax Foundation analysis, and the table featured in his article was hosted by Slate, not the foundation. Every time I searched for the analysis or the table contained in the Slate post, I ran across either this interactive Tax Foundation analysis of presidential candidates’ tax-reform plans or this post introducing the group’s interactive analysis of presidential candidates’ tax-reform plans.

In other words, I didn’t want to relay the information Weissman reported for fear that he was somehow wrong. But I always wanted to do a post to the effect that all of the Republican tax plans would create major structural deficits.

The other day, I realized that I needed to look for the graphic on the organization’s Twitter feed. Shortly afterward, this post popped up with almost comical ease. It contains an updated version of the graphic Weissman showed in his post. (Now the table displays the plans of seven different Republican hopefuls — Kasich still hasn’t made the cut, but information about U.S. Sen. Ted Cruz of Texas has been added.)

All of which is to circle back to the main point:

All of these plans would increase the deficit by more than a trillion dollars over a 10-year period.

I’ll explore this point in more depth in a forthcoming post.

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