Supply-side economics is back this year, in the form of Donald Trump’s tax plan. The Republican presidential nominee insists that a huge tax cut, putting more money in most Americans’ pockets, will boost spending, job creation, growth and prosperity.
This isn’t a new argument, of course. Ronald Reagan pushed supply-side economics in the 1980s, with some success. But the last time it was actually attempted was in 2001 and 2003, when George W. Bush cut taxes. It didn’t really stimulate the economy, and the national debt got bigger. A few years later, the worst recession since the 1930s broke out.
Trump’s plan might not be that controversial, if the tax cuts were limited to middle and upper-middle earners. But the wealthy would enjoy the biggest savings under Trump’s plan, as the table above shows. That has allowed Democratic presidential candidate Hillary Clinton to bash the plan as tax breaks for millionaires, which, in reality, it is.
Clinton has the opposite idea in mind, with a tax plan that would hike taxes on most people earning more than $1 million. The money raised by the new taxes would be spent on infrastructure programs, enhanced college aid and a lot of other social programs Clinton favors.
Clinton is surprisingly mum on corporate tax reform, one issue where action in Congress might be possible following the election. A top Clinton adviser, Roger Altman, recently told Yahoo Finance that Clinton will make a proposal once the election is over (assuming she wins). “The campaign isn’t the place to negotiate the [corporate tax] rate,” he said. That might be news to a lot of voters, but at least Clinton is thinking it over.
Rick Newman is the author of four books, including Rebounders: How Winners Pivot from Setback to Success. Follow him on Twitter: @rickjnewman.
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