Republican front-runners Donald Trump and Ted Cruz each have their own dramatic plan for reducing federal taxes, and new analysis from the Center on Budget and Policy Priorities (CBPP) shows just how dramatic those plans are: Both would reduce federal revenues to the levels of the Truman administration, and require deep cuts across a huge variety of government programs.
Both candidates want to simplify the tax code for individuals and for businesses. Trump’s plan would reduce the number of income tax brackets to three, quadruple the standard deduction, and reduce the corporate tax rate. Cruz’s plan repeals the corporate tax, payroll taxes, and estate taxes. It would also replace all income tax brackets with a single 10% flat tax and impose a new 16% consumption tax on businesses. Under either plan, the net effect is a huge reduction in federal tax revenue.
CBPP fellow Isaac Shapiro analyzed tax revenue projections made by the independent Tax Policy Center (TPC). The numbers show that over the next decade, Trump’s plan would reduce federal revenues by $9.5 trillion and Cruz’s plan by $8.7 trillion. As a percentage of GDP, this would result in the federal government collecting the least revenue it has since the early 1950’s.
Neither Trump nor Cruz have specified what programs they would cut to offset their proposed tax reductions, but under any plan, the impact on government services would be vast. Shapiro uses a current budget reduction proposal from the House GOP as a starting point to look at how deep the cuts might go. On the chopping block could be the Affordable Care Act, funding for the Supplemental Nutrition Assistance Program (formerly known as food stamps), and a variety of other programs aimed at low and moderate-income Americans.
To achieve either Trump’s or Cruz’s stated goals would require even deeper cuts than those proposed by the House GOP. According to Shapiro, if the cuts were distributed evenly across all federal programs, each program would be cut by 20% under Trump’s plan or 17% under Cruz’s. If Social Security, Medicare and defense spending were exempted, those cuts would be 53% and 45% for the remaining programs, respectively.
The cuts get even more dramatic if the candidates also seek to balance the budget, which both are in favor of. Shapiro projects the rising costs of entitlements to 2026 and finds that “if Social Security, Medicare, and defense spending were unchanged, all other programs would essentially need to be eliminated entirely to achieve budget balance.”
Quartz has reached out to both campaigns for their comments on the report.