The Washington PostDemocracy Dies in Darkness

Donald Trump is cutting down his tax breaks for the rich

U.S. Republican Presidential Nominee Donald Trump is shown on a video monitor as he speaks live to the crowd from New York at the Republican National Convention in Cleveland, Ohio on Tuesday. REUTERS/Mike Segar

A team of advisers to Republican presidential nominee Donald Trump are nearing completion on a rewrite of his tax-cutting proposal, with the new plan likely to be released next week or in early August, and likely to blow a much smaller hole in the federal budget than Trump's original proposal.

Stephen Moore, a leading advocate of supply-side economic policies and one of the authors of the revamped Trump tax plan, said in an interview Wednesday that the advisers -- and Trump himself -- are still wrestling with key details that could alter the plan's budgetary cost and its potential effects on the economy. Depending on those decisions, Moore said, the cost of the plan could fall by two-thirds, to an estimated $200 billion a year, which would need to be offset by spending cuts.

That cost assumes the cuts spur faster economic growth than would have occurred otherwise.

“It’s not that heavy a lift to pay for that, with spending cuts,” Moore said. That is almost certainly an optimistic assessment: It is more than double the size of the "sequester" cuts agreed to by Congress and President Obama in 2011, which lawmakers have repeatedly watered down in subsequent budgets.

The bizarre optimism in Donald Trump's theory of the economy

The still-unfinished details for the plan include whether to propose a tax credit for families with children, a policy championed by former GOP hopeful Marco Rubio and many so-called "Reformicon" economists; whether to allow families to deduct additional child care costs from their income taxes and at what rate to tax income for certain corporations that are currently taxed at the individual, not corporate, rate.

The two biggest debates both revolve around tax liability for the highest-earning Americans. Advisers are discussing where to peg the top marginal income tax rate for individuals, which Trump's current proposal would reduce from nearly 40 percent to 25 percent. The new top rate will fall somewhere between 28 and 33 percent, Moore said, a smaller cut for the rich but still a substantial one.

“We’ve got a few details we’ve got to work out," Moore said. "They’re important details. They’ll have a big impact on how much the plan costs.”

The rich could see their tax liabilities rise further, compared to Trump's current proposal, depending on how the group decides to change tax deductions. Such deductions could be capped in absolute dollar figures, akin to what 2012 GOP nominee Mitt Romney proposed, or some deductions could be eliminated or reduced, such as the mortgage interest deduction.

Moore had hoped the new plan would be ready by now, but promised it would end up closely resembling a tax-cutting plan recently proposed by House Republicans. He is working on the new draft with Trump campaign officials and with Larry Kudlow, a conservative commentator who is one of the co-founders of the Committee to Unleash Prosperity, along with Moore, Steve Forbes and the economist Arthur Laffer.

More from Wonkblog:

Donald Trump has discovered one weird trick for getting people to agree with him

There is math, there is fantasy math, and then there's Donald Trump's economic plan

Donald Trump won't soak the rich, after all