Analysis of Donald Trump's Tax Plan
CONCLUSIONS
Mr. Trump’s tax reform plan would boost incentives to work, save, and invest, and has the potential to simplify the tax code. By lowering marginal tax rates and further limiting or repealing many tax expenditures, it would reduce the incentives and opportunities to engage in some forms of wasteful tax avoidance. However, the plan could increase incentives for workers to characterize themselves as independent contractors, to take advantage of the lower tax rate on business income, unless new rules were introduced to prevent this. The proposal would cut taxes on households at every income level, but much more as a share of income at the top.The fundamental concern the plan poses is that, barring extraordinarily large cuts in government spending or future tax increases, it would yield persistently large, and likely unsustainable, budget deficits.