The “phenomenal” tax plan that President Donald Trump promised 11 weeks ago appeared at a White House briefing Wednesday: It was a one-page list of bullet points that amounted to fewer than 250 words.
The document was largely devoid of detail, including on whether the proposed cuts for businesses and individuals would increase the federal deficit. The answer to that question may determine whether Trump’s recommended 15 percent corporate tax rate—a huge cut from the current 35 percent—would be permanent or temporary.
The points that the tax outline did include—calls for slashing business taxes, eliminating the alternative minimum tax and the estate tax, cutting individual income-tax rates and repealing an investment-income tax for high earners—amount to a conservative wish-list from the past several years. Separately, any one of them could provoke a titanic fight.
But the most immediate controversy is likely to focus on cost. The Committee for a Responsible Federal Budget released a rough analysis saying the plan could cost $3 trillion to $7 trillion over the next decade—potentially “harming economic growth instead of boosting it.”
The non-partisan research group determined that Trump’s corporate tax cut would cost $2.2 trillion, while his other cuts for other businesses would amount to $1.5 trillion. Doubling the standard deduction, which would help lower- and middle-class taxpayers, would cost roughly $1.5 trillion, the CRFB said, while repealing the estate tax, which would benefit wealthy families, would cost $200 billion.
White House Budget Director Mick Mulvaney dismissed cost estimates of the plan on CNBC Thursday saying: “There’s no way to score what we put out yesterday.” He added: “This was general principles, what’s important to us” and a package designed to get the U.S. economy to 3 percent growth.
Rapid Growth
Treasury Secretary Steven Mnuchin said during a White House briefing to roll out the plan Wednesday that it would lead to rapid economic growth, helping to cover the cost of the cuts—but many tax experts disagree. “No tax cut has ever been self-financing,” wrote Howard Gleckman, a senior fellow at the Urban-Brookings Tax Policy Center, in an online post Wednesday.
Other tax experts who would normally jump to analyze the plan were foiled by the scant specifics. “Sorry, friends. We cannot model this. Definitely not enough detail,” Kyle Pomerleau, director of federal projects for the Tax Foundation, said in a Twitter message. Len Burman, a fellow at the Urban Institute, was more pointed: “First draft of Reagan tax reform: three-volume 500+ page treatise. First draft of Trump: bullet points.”
If the one-page outline seemed hastily assembled, it was. Some Treasury officials found out that a plan would be made public Wednesday only after Trump announced his intentions last Friday, promising “massive” tax cuts. The Treasury staffers and counterparts from the White House then rushed to prepare a presentation with enough viable talking points to satisfy Trump’s expectations, while keeping it open-ended enough to leave room for further consideration, said a person familiar with the matter who asked not to be named because the discussions were private.