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Donald Trump wrong that his tax plan is biggest cut ever
Over and over again, President Donald Trump has touted his tax proposal as the biggest ever.
On Oct. 25, he tweeted, "Working hard on the biggest tax cut in U.S. history. Great support from so many sides. Big winners will be the middle class, business & JOBS."
That same day, he told Lou Dobbs of the Fox Business Network, "We’re bringing the corporate rate down to 20 percent from 35 percent. ... This will be the biggest tax cut in history. In the history of our country."
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But is it? Tax experts say no. (The White House did not respond to our inquiry.)
The current tax proposal is still a work in progress, but the Senate budget resolution allows it to reduce federal revenues by $1.5 trillion over 10 years. An estimate by the Committee for a Responsible Federal Budget suggests that, when all is said and done, the reduction in tax revenues will increase to $2.2 trillion over 10 years.
So based on what we know now, the tax proposal will probably amount to between $150 billion and $220 billion per year.
That doesn’t stack up as the largest cut ever.
The Treasury Department has published a list of the biggest tax bills between 1940 and 2012, measured not only by contemporary dollars but also by inflation-adjusted dollars and as a percentage of gross domestic product — two metrics that experts say give a sense of scale.
Depending on what projection of the current bill you use and what yardstick you measure it by, at least one tax bill on the Treasury list, and possibly others, were larger.
Here’s the list by inflation-adjusted dollars:
At least the 2013 bill -- and possibly the 2010 and 1981 bills -- exceeded the current bill in inflation-adjusted tax cuts, depending on what figure you project for the current bill.
And here are the tax laws ordered from highest to lowest as a percentage of GDP:
By this measurement, at least six bills cut taxes by more than the current proposal. A seventh, the Revenue Act of 1978, is essentially tied with the current proposal as a percentage of GDP.
The Committee for a Responsible Federal Budget has noted that an even earlier tax cut, from 1921, accounted for 1.1 percent of GDP.
The group added in a blog post that "if President Trump wanted to pass a tax cut that exceeds the record 2.9 percent of the economy in 1981, it would cost roughly $6.8 trillion over ten years."
No formulation of the current proposal is close to that.
"Unless lawmakers scrap their current plans for tax reform and start over from scratch, it’s simply implausible to claim that this legislation will provide the largest tax cut in U.S. history," said Joseph J. Thorndike, director of the Tax History Project at the group Tax Analysts.
Trump said the GOP tax plan he is supporting is "the biggest tax cut in U.S. history."
Even the most expansive estimate for the current proposal’s tax cut is exceeded by the 1981 tax cut in inflation-adjusted dollars. And as a percentage of GDP, a half-dozen or more previous tax cuts were larger.
We rate the statement False.
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Our Sources
Donald Trump, tweet, Oct. 25, 2017
Donald Trump, interview with Lou Dobbs of Fox Business News, Oct. 25, 2017
U.S. Treasury Department, "Revenue Effects of Major Tax Bills, Updated Tables for All 2012 Bills," February 2013
Committee for a Responsible Federal Budget, "Is President Trump's Tax Cut the Largest in History Yet?" Oct. 25, 2017
Federal Reserve Bank of St. Louis, annual GDP, accessed Oct. 26, 2017
Email interview with Patrick Newton, spokesman for the Committee for a Responsible Federal Budget, Oct. 27, 2017
Email interview with Gary Burtless, senior fellow at the Brookings Institution, Oct. 26, 2017
Email interview with Joseph J. Thorndike, director of the Tax History Project at Tax Analysts, Oct. 26, 2017
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Donald Trump wrong that his tax plan is biggest cut ever
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