The voices of Tax Policy Center's researchers and staff
As anyone can attest, the 2016 presidential election is very different from the 2012 race. One less obvious contrast is between the tax plans of Mitt Romney, the GOP’s 2012 standard-bearer, and Donald Trump, the party’s 2016 candidate. There are some key design differences, but, for the most part, both would keep the basic framework of the current income tax. The gap is in scale.
In 2012, the Tax Policy Center estimated that Romney’s plan would cut taxes by $5 trillion over ten years. That’s half the size of Trump’s plan, which TPC projects would reduce federal revenue by $9.5 trillion over the next decade. As my colleague Howard Gleckman put it, unless Trump is willing to make massive spending reductions, his tax cuts would result in an “increase [of] the federal debt to levels never-before imagined.”
In 2012, Romney proposed reducing the corporate tax rate from 35 percent to 25 percent (with unspecified plans for additional corporate rate reductions in the future). By contrast, Trump would reduce the tax rate for all businesses (corporations and pass-throughs) to 15 percent.
It is a similar story with individual income taxes. In 2012, Romney proposed a 20 percent cut in individual tax rates across all brackets, reducing the top rate to 28 percent. Trump would collapse the current seven tax brackets into just three, with rates of 10, 20, and 25 percent, and nearly quadruple the standard deduction to $25,000 for single filers and $50,000 for married couples.
Taken superficially, some of Romney’s tax rates would have been lower than Trump’s. For instance, Romney would have cut the current 10 percent bottom rate to 8 percent while Trump would leave it at 10 percent. But Trump’s large standard deduction would effectively cut the tax rate to zero for many low- and middle-income filers. Almost all the rest would claim the standard deduction and forgo itemization. Overall, his plan would increase the percentage of people not paying income tax from 44 percent to 63 percent.
As a whole, Trump’s tax plan would boost average after-tax incomes by 7.1 percent, compared to 5.8 percent under Romney’s plan. While Trump’s plan would be more generous throughout the income distribution, his largesse is especially noticeable at the very top. For example, TPC estimated that Romney would have raised the average after-tax incomes of the top 1 percent by 13.1 percent, substantially less than the 17.5 percent boost the Trump plan would provide.
The story is similar for those in the top 0.1 percent. Romney would have increased their after-tax income by an average of 16.7 percent compared with 18.9 percent under Trump’s plan. (One caveat to the comparison: It’s not completely even—TPC estimated Romney’s tax changes for the year 2015, while TPC assumed Trump’s would take effect in 2017.)
It is hardly a surprise that Trump’s tax agenda differs dramatically from that of his Democratic opponent, Hillary Clinton. His tax plan is also, as TPC has shown, more costly and regressive than those of his GOP primary opponents. On top of it all, however, it turns out the 2016 Republican Party is backing a candidate, and a tax plan, that looks incredibly different from its last standard-bearer.
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Donald Trump speaks at a news conference in Las Vegas, Thursday, Feb. 2, 2012, to endorse Republican presidential candidate, former Massachusetts Gov. Mitt Romney, center, accompanied by Romney's wife Ann. (AP Photo/Gerald Herbert)