An Update for Trump Democrats – Taxes & Deficits

These short posts are part of a series to take stock of changes that may be coming during a Trump Administration.

Taxes & Deficits

  1. The President’s proposed individual income tax cut would give an average tax break of about $122,400 to the top 1% and those who make $1 million and more would average a $317,000 tax cut. A middle-class family would see about a $500 reduction in federal income taxes while single-parent households would pay higher taxes due to the elimination of the Head of Household filing option.
  2. Many tax experts believe the deficit will balloon under such a plan, but supporters say increased growth will generate enough income to offset the lost tax revenue from the reduced rates. One way to look at this is to compare budget deficits as a percent of gross domestic product after removing Social Security and the Postal Service (called “On Budget”).
    1. Big tax cuts: beginning of the Reagan and G.W. Bush terms.
    2. Big tax increases: beginning of Clinton’s term and halfway through Obama’s term, but only on the wealthy for the latter.
    3. On Budget Deficit as % of GDP:
      1. 87% higher during Reagan’s term vs. Carter’s term.
      2. 64% lower during Clinton’s term than G.H.W. Bush’s term.
      3. 94% higher during G.W. Bush’s term vs. Clinton’s term.
      4. 47% lower during 2nd half of Obama term vs. 1st half (Great Recession makes this hard to evaluate – it occurred during a time with low taxes). Last 4 years under Obama matched G.W. Bush’s 8 years.
    1. How about federal revenue and spending growth?
      1. Carter (4 years): Revenue +74%, Spending +59%,
      2. Reagan (8 years): Revenue +76%, Spending +80%,
      3. G.H.W. Bush’s (4 years): Revenue +20%, Spending +30%,
      4. Clinton (8 years): Revenue +86%, Spending +30%,
      5. G.W. Bush’s (8 years): Revenue +25%, Spending +67%,
      6. Obama (8 years): Revenue +29.4%, Spending +29.2%, and
      7. Obama’s last 4 years: Revenue +33%, Spending +9%.
  1. At least since the Carter presidency:
    1. The deficit grew worse following tax cuts and improved following tax increases.
    2. Every Democratic president oversaw a period when federal revenue grew faster than federal spending.
    3. Every Republican president saw the opposite – federal spending growth outpaced federal revenue growth.
  2. Conclusion
    1. Based on the historic data, the deficit as a percent of GDP is likely to increase as a result of President Trump’s individual income tax cut plan.

About tonyj126

I'm a 50+ married man who always seems to have a large backlog of work to do, but also a lot of flexibility in my schedule. Much of the work I do is volunteer or taking care of extended family members. I suffer from, as my priest calls it, "the sin of self-sufficiency," which means I can figure out how to do most things myself, and consequently, reduce the need for community to solve problems. As a logical extention (at least to me), I find myself called to comtemplate the country's and the world's woes and offer my observations. I hope someone out there will find them useful.
This entry was posted in Economics, Trump Democrats Update, U.S. Politics, Uncategorized. Bookmark the permalink.

2 Responses to An Update for Trump Democrats – Taxes & Deficits

  1. Rob Kinsey says:

    Not to mention that we will not get a kiss when the screwing starts…

    Like

  2. tonyj126 says:

    It baffles me how we Americans think the Republicans are the more fiscally responsible ones. Data shows otherwise.

    Like

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