President Trump's Tax Plan: What Analysts Think It Will Do

WASHINGTON, DC — President Trump and Republican lawmakers are delivering an all-out blitz to push their tax reform plans through as they try to shake off their humiliating defeat on Obamacare repeal efforts. But as their proposals begin to materialize, they are inevitably facing blowback as critics analyze the plans.

Here are some of the smartest takes out there on the party's tax proposal released this week.

How The Plan Could Raise Taxes Many Typical Families: Josh Barro

The president and the GOP have pitched their plan as a tax cut for the middle class, but it's far from clear what the overall effect on people with middle-of-the-road earnings will be. According to a rough analysis by Josh Barro at Business insider, a family with an income not much higher than the American average could see its taxes rise by almost $600 under the plan.

Making any precise calculations is difficult because the GOP's proposal leaves many important details to be filled in. By using figures proposed in previous Republican plans and some educated guesses, however, Barro shows that the plan could leave a hypothetical family with a joint income of $120,000 worse off.

Instead of being taxed $10,663 according to current law, Barro finds that under reasonable assumptions, the family would end up paying $11,250. Read Barro's full post for an in-depth explanation>>

Watch: Trump Vows A 'Giant, Beautiful, Massive' Tax Cut

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Paul Krugman Sees "Voodoo" In GOP Tax Plan

Krugman is a Nobel Prize-winning economist and a frequent critic of Republican fiscal policy — and he sees the newest GOP tax plans as even more misguided than past versions.

Trump and House Speaker Paul Ryan like to draw comparisons to the tax cuts of President Reagan, which have special reverence in conservative lore. But Krugman argues that even if you believe that Reagan's tax cuts were an economic boon — which he doesn't — that doesn't imply that Trump's tax cuts would be a good idea.

"Reagan was cutting taxes with a starting rate of 70%," Krugman writes. "Trumpcuts would start from only a bit more than half that." This is important, because it makes a big difference which rate you're cutting from if you expect a big economic benefit. Because we're starting from a much lower rate, it would be a lot harder to generate economic growth from cuts alone.

"And suppose for the sake of argument that you do get some extra growth. How much of this feeds back into higher revenue? That depends on the marginal tax rate — which is much lower now, only a bit more than half, than it was in 1981," he writes. "So even if you believed that voodoo economics worked under Reagan — which it didn’t — it would take a lot more voodoo, in fact around 4 times as much, for it to work now."

Read Krugman's full post>>

Irwin Stelzer Says Make America Great Again: Don't Cut Taxes

Irwin Stelzer is an economist and columnist who writes for The Weekly Standard and has worked for the conservative American Enterprise Institute. Despite some of his ideological affinity with Republicans, he is skeptical about the case for tax cuts at all.

In particular, he doesn't see how tax cuts will boost economic growth, one of the GOP's main selling points for their plan. One of the first problems he sees is that unemployment is so low, there would be a labor shortage if businesses wanted to expand their operations because of the tax cuts.

"Our 4.4 percent unemployment rate meets any reasonable person’s definition of full employment," he writes. "Anyone who thinks there is a large reserve army of the unemployed sitting out there waiting for job offers that would materialize if the economy grew even faster should talk to employers in almost any industry, who are complaining of labor shortages."

Stelzer also doubts that businesses would use any tax cuts to invest in new locations or equipment.

As he explains: "U.S. corporations are rich in unused cash and can borrow at interest rates that are low and likely to remain so for a very long time. Given this already-large pot of unused capital it is difficult to see how a cut in the tax rate on these companies will induce them to invest more than they already plan to."

Read Stelzer's full column at The Weekly Standard>>

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