Here’s How the Trump Tax Plan Will Affect Your Income

The White House claims that its tax plan will result in a $4,000 wage increase for the average family. This is obviously preposterous, but there might be some wage gain. The question is how big it could be. Luckily, the highly respected Penn-Wharton Budget Model just released a simulator that allows you to choose different tax options and see what effect they have on things like GDP, wages, etc. I went ahead and chose all the options from the proposed Trump tax plan and got the results. Current policy is shown in gray. The changes due to Trump’s tax plan are shown in red:

Don’t worry: you haven’t gone color blind. There are no differences. The model predicts that if you implement the whole plan, total labor income won’t change by a penny.¹

But what about deficits? Here’s what the model says:

That’s a cumulative increase of $7 trillion in the federal deficit. So the bottom line is that the tax plan doesn’t increase either wages or GDP, but does increase the national debt by about $7 trillion. Why are we doing this again?²

¹This is total labor income and says nothing about how it’s distributed. It’s possible that median wages will go down while the wages of CEOs will go up. Or vice versa. All we know is that the model predicts a total macro effect of zippo.

²Because it does reduce taxes on capital income for the rich. This might not have any effect on economic growth, but it does put more money in the pockets of the already wealthy. That’s what wealthy Republican donors paid for in the past election cycle, and that’s what they’re going to get.

HERE ARE THE FACTS:

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ONE MORE QUICK THING:

Our fall fundraising drive is off to a rough start, and we very much need to raise $250,000 in the next couple of weeks. If you value the journalism you get from Mother Jones, please help us do it with a donation today.

As we wrote over the summer, traffic has been down at Mother Jones and a lot of sites with many people thinking news is less important now that Donald Trump is no longer president. But if you're reading this, you're not one of those people, and we're hoping we can rally support from folks like you who really get why our reporting matters right now. And that's how it's always worked: For 45 years now, a relatively small group of readers (compared to everyone we reach) who pitch in from time to time has allowed Mother Jones to do the type of journalism the moment demands and keep it free for everyone else.

Please pitch in with a donation during our fall fundraising drive if you can. We can't afford to come up short, and there's still a long way to go by November 5.

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