Election Fiscal Policy Issues

$19 T, $158,000 per taxpayer, $100-$200 T, $7.4 B, 2-3 T!

Inequality and Productivity Growth (Source: Greg Ip, WSJ February 10, 2016)

Clinton Tax Plan

Clinton Spending Plan Sources: ( (  $350 billion “Jobs” plan – includes infrastructure projects, green energy subsidies, manufacturing incentives, government research and development, etc…  $75 billion for clean energy program  $200 billion government supported child care  $20 billion - $10 billion grants to States for paid family leave and home care for elderly  $350 billion – reduced college tuition  $30 billion - $10 billion each on drug treatment, “new market” incentives, encourage profit sharing  Overall, an additional $1.1 trillion or more in new spending, $600 billion deficit over 10 years without accounting for < growth  Opposed to reforming Social Security, Medicare, and Medicaid – seems to support expansion of these programs

Sanders Tax Plan

Proposed Tax Rates under Sanders

Sanders Spending Plans Thorpe (2016) estimates the cost at $24.7 trillion ( Roy (2016) argues it would cost an additional $28.7 trillion (

Sanders Plan

Who will pay for a much larger government?  Former Obama Advisor Austan Goolsbee acknowledges: ( and-fate-of.html) “The thing is, however, every advanced country that has this kind of expansive role of government in the economy pays for it with substantially higher tax burdens on middle income people. Every one of the big welfare states in Europe, for example, has a VAT/Sales tax in the 20-25% range and has high income tax rates that apply to large segments of the population, not just the top. Ordinary workers in those countries bear a larger share of the government bill than we do in the US, not a smaller share. Could you turn the US into a Sweden-style social democracy without having the broadly based, high taxes they have in Sweden? Not really, no.”

Tax Revenues Static and Dynamic (Source: Tax Foundation except for Rubio used Tax Policy Center static estimate, no dynamic estimate for Rubio) )

Cruz and Rubio Tax Plans  Cruz Plan:  10% flat tax – 36,000 deduction, charitable contr. and mortgage interest on 500,000 of principal  16% Business flat tax (i.e., a subtraction-method value added tax) – gross revenues minus purchases from other businesses and capital costs  Rubio Plan (a modified subtraction method VAT):  A wage tax with a graduated rate structure (Bradford’s X-tax) on individuals (move to a single unified credit plus MI and Charitable deductions)  Businesses would be subject to cash-flow business tax (new investment would be expensed). Business interest expense no longer deductible  It is unclear whether some individual investment income may be taxed under the Rubio plan, normally this would not be the case under an X-tax

Republican Spending Plans  Cruz argues in an op-ed ( that the US should:  Abolish IRS (simplify tax code), Department of Education (return control to state and local govt.), Energy (stop picking the winners and losers in DC), Commerce (corporate welfare), and Housing and Urban Development (provide other solutions)  Move critical task of these agencies if deemed important  Reduce agencies, bureaus and commissions  Hiring freeze for federal civilian employees  2/3 majority to pass earmarks and BBA  Recognizes need to reform SS and Medicare (increase Retirement age and reduce growth to rate of inflation)

Republican Spending Plans  Rubio advocates cutting federal spending:  Supports spending freeze on non-defense programs at 2008 levels  Reduce federal work force by 10 % through attrition  Eliminate earmarks  Supports a BBA  Recognizes need to reform SS and Medicare (increase Retirement age and reduce growth to rate of inflation)

Other Republican Plans  Bush proposes a BBRR tax reform (28% top rate) with a few wrinkles, lower CIT to 20%. Short on revenue according to TPC  Increased spending while he was Governor of Florida (45 % overall but population increased by 16% and inflation by 24%), but also cut taxes  Kasich tax reform – standard BBRR approach (28 % top rate, 15 % cg Rate, and 25 CIT rate)  Kasich has a record of cutting spending or promoting cuts  1993 bill which failed by 6 votes, chaired committees overseeing welfare reform under Clinton  Balance Budget Act of 1997  Recognizes need to reform SS and Medicare

Trump Plans  Proposes a BBRR tax reform (25% top rate), lower CIT to 15%  In 1999, he proposed implementing a one-time “net worth tax” of percent on individuals and trusts worth more than $10 million  Talks about reducing spending but few specifics – recently mentioned cutting Dept of Education and EPA budgets  Suggested he would have refused to raise debt ceiling  Wants to expand welfare to work requirements  Seems to oppose cutting SS or Medicare, but open to reform