Donald Trump’s tax plan would give the economy a major boost, adding about 2 million more jobs than the economy would produce without it — but at a major cost to government finances, which would see a massive drop in revenue, a new analysis said Monday.
Overall the economy would be about 7 to 8 percent bigger, wages would be some 5 percent higher, and between 1.8 and 2.2 million additional jobs would be created, the Tax Foundation said in a report on Mr. Trump’s tax plan, released last week.
About half of that economic surge would come from reforming the corporate income tax, including a drop from a 35 percent tax rate to just 15 percent.
Americans at every income level would see their personal income taxes drop, with the poorest seeing a static cut of about 1 percent of their earnings, and the top 1 percent seeing an extra 10 to 16 percent on their after-tax income. When knock-on economic effects are included, the poor would see their after-tax incomes rise by 7 to 8 percent, the middle class would get an 8 or 9 percent boost, and the wealthiest would see up to a 20 percent boost.
While Americans might have more money in their pockets, the government would struggle, seeing a drop of about $6 trillion in revenue — or $4.4 trillion if economic effects are included, the Tax Foundation said. Either way, that would be a devastating addition to the national debt.
Mr. Trump has promised unspecified spending cuts to non-defense programs he says would help balance the books.