This paper analyzes presidential candidate Donald Trump’s revised tax proposal, which would significantly reduce marginal tax rates, increase standard deduction amounts, repeal personal exemptions, cap itemized deductions, and allow businesses to elect to expense new investment and not deduct interest expense. His proposal would cut taxes at all income levels, although the largest benefits, in dollar and percentage terms, would go to the highest-income households. Federal revenues would fall by $6.2 trillion over the first decade before accounting for added interest costs. Including interest costs, the federal debt would rise by $7.2 trillion over the first decade and by $20.9 trillion by 2036.
An earlier version of this publication was released on October 11, 2016. This revised version includes macroeconomic estimates of Donald Trump’s revised tax plan, modeled in partnership with the Penn Wharton Budget Model. We provide dynamic scoring estimates of Trump’s tax proposals using two new models: TPC’s short-term Keynesian Model and the Penn Wharton Budget Model’s Overlapping Generations Model.