Another election, more phony promises on taxes

Two certainties, as Benjamin Franklin wrote, are death and taxes. Add a third: On taxes, U.S. presidential candidates will promise more than they can deliver. And, if elected, they pay a price.

The overpromising may be more egregious than ever in the 2016 presidential race.

Donald Trump says that his tax plan, which has huge reductions in rates and on the amount paid on investment income, focuses on working folks and sticking it to billionaires such as himself. A recent analysis by the Tax Policy Center showed just the opposite. The Trump plan would cost the Treasury $9.5 trillion over the first decade, and almost $25 trillion over 20 years. The tax cuts would principally benefit the wealthy, almost 40 percent would be for the top 1 percent. The superrich -- the top one-tenth of 1 percent -- would get an average annual tax cut of $1.3 million.

By comparison, the lowest, or poorest quintile, would get an average tax cut of $130, or 1/1000th of what the wealthiest receive. In percentage terms, the top 1 percent gets a 7 percent cut, the poorest taxpayers a 1 percent reduction.)

The center also analyzed Jeb Bush's proposal, which would cost less: $6.8 trillion in a decade. The distributional effects would be almost the same, the center found, with upper-income taxpayers receiving much of the benefit. The wealthiest 1 percent would get an average annual tax deduction of $167,325.

The center plans to examine the plans of Senators Marco Rubio and Ted Cruz next week. Although some of the specific proposals are different, the bottom lines are expected to be similar.

Both the Bush and Trump tax plans would "improve incentives to work, save, and invest," the center stated, while noting that these gains could be partly offset by increases in the national debt.

Also, while both these Republican plans would remove any limits on exemptions for charitable contributions, the Tax Policy Center projected that the steep reduction in rates would reduce the incentive to give to charities.

Conservatives complain that the center is associated with the left-leaning Brookings Institution and the Urban Institute. But the analysts include Republicans, and the team reached out to the campaigns and Republican economists for input. The conservative Tax Foundation, while projecting smaller revenue losses, concurs that the distribution of the cuts heavily tilts to the wealthy.

The center has also said that the liberal Democrat Bernie Sanders significantly exaggerates the revenue that would be brought in by his financial transaction tax. The Vermont senator hasn't produced a comprehensive tax plan that would pay for the enormous expansions of social programs he proposes: universal health care coverage, free tuition at public institutions and huge infrastructure projects. He advocates further tax increases on the wealthy, but some hikes for the middle class seem inevitable under his plan.

Hillary Clinton, seeking to stem a surge by Sanders in the Democratic nomination race, rushed out a proposal last week that would impose a levy on annual income of more than $5 million. Her spending proposals are more modest than those of Sanders, as is her tax plan. But she has vowed not to increase taxes on anyone making $250,000 or less, a promise that some Democratic economists say is unrealistic.

She might remember that her husband made a similar pledge in 1992 -- the level was $200,000 -- but his 1993 budget plan included a small gasoline tax hike that Republicans seized on for political gain. Likewise, President George H.W. Bush's reversal of his "no new taxes" commitment in 1990 set the stage for the fiscal stability and economic boom of the 1990s, according to many economists. It also may have cost Bush his re- election.

Both Ronald Reagan and George W. Bush insisted that their big tax plans, which were largely enacted, would generate lots of new revenue. They didn't, and Reagan went along with a number of smaller tax increases to offset the loss. Bush didn't and deficits soared.

On taxes, there are three realities: the U.S. burden is not especially high compared with other industrial nations; tax cuts alone don't generate enough economic activity to avoid deficits; and there's not enough money in taxing the rich to pay for big new social programs.

Previously:
• 01/19/15: How Cruz supporters differ from Trump fans
• 12/23/15: Why Trump and Cruz aren't Forbes or Cain
• 12/21/15: Speaker Ryan sails through the easy part
• 11/25/15: As the GOP candidates emerge Hillary's weaknesses will be revealed
• 11/05/15: OK, candidates: Ask the questions yourselves. Seriously
• 10/28/15: Imagine an endgame of Cruz vs. Rubio
• 10/26/15:Ted Cruz has a Ben Carson problem in Iowa
• 10/20/15: Will Paul Ryan follow James Polk's playbook?
• 10/20/15: If only Trey Gowdy could meet with Sam Ervin
• 10/13/15: Voters don't like revisiting the trials and tribulations of Clintonland --- but that doesn't mean Hillary can't win
• 09/23/15: Why Jimmy Carter couldn't win the South today
• 09/17/15: Gov. John Kasich's standout record in Ohio
• 09/03/15: Republicans chart 4 paths to stopping Trump
• 08/31/15: Here's how Biden-Warren sort of makes sense
• 08/28/15:Trump upends New Hampshire's substantive tradition
• 08/26/15:Jeb Bush is hugging the wrong president George
• 08/24/15: Underestimating Ted Cruz? That's a mistake
• 08/19/15: US holds steady in a world of economic trouble
• 08/12/15: Who will capture Iowa conservatives after Trump?
• 08/10/15: Debate fireworks that won’t make much impact
• 07/29/15: A plea for conservatives to speak from the heart
• 07/09/15: Ex-Im Bank's undeserved rap for crony capitalism
• 06/24/15: All presidential candidates should be in debates
• 06/03/15: Foreign policy traps await Republicans and Hillary
• 06/01/15: It's small stuff that wrecks presidential runs
• 02/04/15: Can Walker be president without a college degree?

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Albert R. Hunt is a Bloomberg View columnist. He was formerly the executive editor of Bloomberg News, directing coverage of the Washington bureau. Hunt hosts the weekly television show "Political Capital with Al Hunt." In his four decades at the Wall Street Journal, he was a reporter, bureau chief and executive Washington editor, and wrote the weekly column "Politics & People." Hunt also directed the Journal's polls, was president of the Dow Jones Newspaper Fund and a board member of the Ottaway community newspapers. He was a panelist on the CNN programs "The Capital Gang" and "Novak, Hunt & Shields." He is co-author of books on U.S. elections by the American Enterprise Institute and the Brookings Institution.