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Love Trump, Hate Romney, But Their Tax Plans Are One And The Same

This article is more than 8 years old.

In the above episode of The Simpsons, SuperNintendo Chalmers learns the hard lesson that oftentimes, life is one big popularity contest.

I've got a strong feeling that somewhere, sitting alone in his Massachusetts mansion, Mitt Romney feels the same way today.

Yesterday Donald Trump released his tax "plan." And while the legion of Trump devotees are well within their rights to laud the proposal -- as they've lauded most everything he's said and done since announcing his candidacy -- they'll need to accept and acknowledge that it's the same, uninspired plan Romney set forth and was widely panned for during the previous election. And just because Trump is more bombastic and beloved than his Republican predecessor Romney doesn't mean his tax plan is any more realistic or worthy of applause.

Each plan loudly sells tax cuts and revenue neutrality -- meaning the lost tax revenue resulting from the cuts will be made up in the form of additional tax revenue elsewhere in the plan -- while obfuscating nearly all of the details necessary to verify the validity of the claim.

Don't believe me? Here's a quick comparison of the key components of the plan:

 Tax Cuts  Romney  Trump
 Individual Tax Rates  8%, 12%, 20%, 22.4%, 26.4%, 28%  10%, 20%, 25%
 Corporate Income Rate  25%  15%
Alternative Minimum Tax  repealed  repealed
 Estate Tax  repealed  repealed
 Revenue Raisers
 Itemized deductions  would have placed an undescribed cap on itemized deductions  Would place an undescribed cap on itemized deductions
International Plan move to a territorial system (no tax on foreign income earned by foreign subsidiaries) a one-time tax of 10% on the $2.5 trillion of U.S. earnings stashed overseas; then a move to a worldwide system (U.S. tax assessed immediately on foreign income of foreign subsidiaries)

Nobody has formally crunched the numbers on the Trump plan as of yet, but there's really no need to; the prior analysis of the Romney plan revealed that it's impossible for a proposal of this nature to meet its stated goal of being revenue neutral. Consider this: the Romney tax cuts would have reduced federal tax revenues by $5 trillion over a ten-year window, and Romney planned for a higher top individual and corporate tax rate than the Trump plan. In addition, Trump is proposing to tax all business income -- meaning the S corporation, partnership, or sole proprietorship income that winds up on an individual's tax return -- at a top rate of 15%, a break above and beyond what Romney had pitched. Thus, Trump's cuts -- taken alone-- could well represent in excess of $5 trillion in lost tax revenue over the next decade.

And just like Romney, Trump has offered no details explaining where he would find that (at least) $5 trillion of offsetting tax revenue through his additional changes. His one-time tax on international earnings represents a $2.5 billion windfall, but that is a tiny piece of the promised additional tax revenue. Four years ago, it was clear that Romney's vaguely proposed cap on itemized deductions would fall overwhelmingly short of filling that gap, and nothing contained in the Trump proposal would indicate a different result is possible here, particularly when you consider that Trump would impose no cap on mortgage interest and charitable contributions. (And before you start shouting that Trump would put an end to the "carried interest" loophole that Romney benefitted from, please remember that this move would generate $15 billion over ten years, making it much more of a political chess piece than a meaningful revenue raiser).

On the issue of progressivity, Romney was ripped for bestowing the largest breaks on the rich, but the Trump plan would be even more egregious in this regard, dropping the top rate even lower (25% to 28%) while also getting rid of the death tax, a move that could save Trump nearly $4 billion in death taxes.

Perhaps Trump, like so many before him, is counting on "dynamic scoring," where a proposal is measured not by its static effect on tax revenue, but by also considering the change in behavior resulting from lower rates that may actually generate additional revenue. But even then, Trump acknowledged that his plan focused on achieving 3% growth, which is exactly what we have today, though he did suggest that he was optimistic his tax cuts could achieve almost 6% growth, which is implausible if not impossible.

People didn't care for Mitt Romney. People love Donald Trump, at least in the way people love a professional wrestler. That's fine. But while the two men surely offer different personalities, they've presented nearly identical tax plans to the voting public. Huge tax breaks for the rich, and an even bigger increase to the federal deficit.

follow along on twitter @nittigrittytax