There’s an argument increasingly being made by supporters of the Trump tax plan regarding the preliminary score of the plan by the nonpartisan Tax Policy Center. Critics of the TPC analysis maintain that the analysts should have waited until the full details of the plan had been made public before trying to determine its distributional and deficit impacts.
Kevin Brady called the TPC analysis “a work of fiction that Stephen King would’ve been proud of.” Paul Ryan chimed in that TPC, a group of analysts with bipartisan backgrounds and impeccable analytic credentials, is a “propaganda group” that’s “anti-tax reform.” Trump economic adviser Kevin Hassett accused TPC of “behav[ing] irresponsibly” and said the report used “imagined numbers.” He claimed not to “understand the purpose of the document.” (Hassett made all these claims at a TPC forum today wherein he was invited to speak.)
Here’s why these arguments make absolutely no sense: If the Trump administration and congressional supporters of the plan hadn’t said anything about its distributional or deficit impacts, then I’d agree with them. If they’d said, “we’re working on a tax plan but it’s not done so we can’t say anything about its impacts on winners, losers, or costs,” then they’d have a solid case against outside groups trying to figure out those impacts.
But that is, of course, not at all what they’ve said. They’ve shouted from the rooftops that their plan is going to help the middle class, not the wealthy. Ryan claims that “the entire purpose of [the plan] is to lower middle-class taxes.” Trump constantly lies about the plan, claiming it “will protect low-income and middle-income households, not the wealthy and well connected.” Yet we know from the bit of his 2005 tax return that dribbled out that the AMT, which this plan repeals, cost him over $30 million that year. The NYT figures that repealing the estate tax will be worth a billion to his heirs.
Treasury Secretary Mnuchin has gone beyond saying the tax cut would pay for itself. He now claims, far, far beyond any available evidence, that because of the plan’s alleged growth impacts, “not only will this tax plan pay for itself, but it will pay down debt.”
Given these outlandish claims, the TPC did what we depend on nonpartisan scorekeepers to do. It plugged in the missing parameters using recent, prior Republican tax plans (which it explains in the second paragraph of its report) and found the net cost of the plan to be $2.4 trillion over 10 years.* It found that, by 2027, 80 percent of the plan’s tax cuts go to the top 1 percent. It found significant increases in the numbers of families whose tax bill goes up under this plan.**
Advocates of the plan are correct that key parameters have yet to be specified. But they can’t both argue “we don’t know what our plan will do, because it’s still incomplete,” and “our plan is going to be great and costless!”
In fact, CBPP’s Jacob Leibenluft has identified a pattern of this sort of aberrant policy behavior. During their attempted health care repeal, Republicans also failed to reveal key details even as they made false promises about who the plan would help. Then, when the truth came out, they piled on the scorekeepers (in that case, the CBO).
So, if Hassett (full disclosure: an old pal of mine) really doesn’t understand the purpose of this document, I’m happy to explain. It’s to show, based on the best available unbiased knowledge, what the impacts of this plan will be on American households and our fiscal budget.
Thanks to the TPC for calling it like they see it, and I assume and hope they’ll shrug off these patently and transparently foolish partisan attacks.
*This version of the report does not include any supposed dynamic feedback effects of the type Mnuchin is claiming will occur. But TPC writes: “Based on TPC and the Penn Wharton Budget Model’s analyses of the macroeconomic effects of the House Republican leadership tax blueprint of 2016 (which shares many characteristics with the unified framework), we would expect the framework to have little macroeconomic feedback effect on revenues over the first decade.”
**Why? It’s because of the replacement of the inflation-indexed personal exemption with the unindexed child credit, such that the loss of the personal exemption eventually bites more than the higher standard deduction and child tax credit (as per the “Better Way” plan’s CTC expansion, which is what TPC used). Also, the plan proposes to use a revised price index that grows more slowly, so there’s more creep into higher brackets compared to the current system.