NEW YORK — Donald Trump unveiled a scaled back tax plan on Thursday, which is projected to add less to the federal debt but also to deliver fewer benefits to taxpayers than his original proposal.
The plan dramatically reduces the size of tax cuts for high earners and the middle class, compared with earlier Trump proposals, though it includes even more benefits for the lowest earners in the country, according to independent analysts at the Tax Foundation. It also scraps a business tax provision that could have delivered large windfalls to the companies in the Republican presidential nominee’s business empire, which opponent Hillary Clinton had derided as “the Trump Loophole.”
Trump bundled the revisions with a proposal to cut $1 trillion in federal spending over a decade without touching safety-net programs or national defense; rollbacks to some federal regulations, including those governing air pollution and food safety, and new initiatives to open up more public and private lands for oil and gas drilling.
The Tax Foundation said the updated tax plan, after accounting for increased economic growth, would cost the government $2.6 trillion in lost tax revenue over a decade, down from $10 trillion for his initial plan.
Trump’s campaign predicted the package would deliver 3.5 percent growth per year for the next decade and produce 25 million new jobs, a number disputed by the Clinton campaign and some outside analysts.
Trump pitched his economic blueprint in a speech he delivered in a hotel ballroom a few blocks away from Trump Tower in New York. He took sharp aim at Democratic rival Hillary Clinton in his remarks, singling out her recent comment labeling half of his supporters a “basket of deplorables.”
“My plan will embrace the truth that people flourish under a minimum government burden and will tap into the incredible unrealized potential of workers and their dreams,” he said.
In a moderated discussion after his speech, Trump once again accused the Federal Reserve of being “ very political.” The Fed operates independently of the executive branch. Trump also said he would not allow the United States to default on its debt.
“The debt of this country is absolutely, one hundred percent sacred,” Trump said.
The speech came amid the Trump campaign’s recently intensifying focus on policy, as it seeks to get past a damaging summer defined by the deeply personal fights Trump engaged in with various people.
In the past week Trump has added new tax breaks for parents with children to his plans. On Thursday, he unveiled several tweaks to his broader plan that appeared largely aimed at reducing its impact on the budget. That apparently included scrapping a provision to allow “pass through” entities, a corporate structure popular with small business owners and with companies in the Trump empire, to pay a far lower rate on their income than they do at present.
Tax Foundation economists said they were instructed by the campaign to change the treatment of pass-through income, a move that reduced the plan’s cost by somewhere between $1 trillion and $2 trillion over a decade. The plan still would reduce federal revenue by $4.4 trillion over 10 years, or by $2.6 trillion after accounting for the additional growth, they estimated.
To offset those losses, Trump said he would generate even further economic growth via increased energy production and reductions in trade deficits — without touching Social Security, Medicare, Medicaid or defense. That implies large cuts to a relatively small group of programs including education spending and scientific research.
A Clinton senior policy adviser, Jacob Leibenluft, ripped the proposals. “The bottom line after this do-over is the same: Trump has run on tax plans that will give himself and his family billions of dollars in tax cuts,” he said in a statement. “He would give these tax cuts to wealthy families while offering new cuts in crucial supports that help working families, kids going to college, medical research, and more.”
In his speech Trump emphasized the need to do away with regulations he says are needlessly burdensome to businesses. Among the regulations Trump wants to end, according to a fact sheet from his campaign: FDA rules governing “the soil farmers use, farm and food production hygiene, food packaging, food temperatures, and even what animals may roam which fields and when.”
He announced caps on the total amount of federal tax deductions that Americans may claim on their individual income taxes, a move targeted at limiting tax breaks for the highest income earners. The caps would be $100,000 a year in deductions for individuals and $200,000 for married couples filing jointly.
His tax plan would also more than double the size of the standard deduction on individual income taxes for most workers, a move that would effectively shield millions more Americans from having to pay federal taxes. The deduction would increase to $15,000 for individuals and $30,000 for married filers.
The expanded standard deduction could dramatically shift how Americans calculate their taxes. Matt Jensen, who directs the Open Source Policy Center at the American Enterprise Institute, estimated Thursday that the changes would reduce the number of filers who itemize their deductions from 45 million to 13 million.
In another new detail, Trump said U.S.-based manufacturers would be allowed to fully write off the costs of new plants and equipment from their taxes, to encourage investment, though if they chose to do so they would give up their ability to deduct interest expenses.
Many other components of the plan appear unchanged from Trump’s most recent iteration of the proposal. It would reduce the number of federal tax brackets from seven to three, with rates of 12 percent, 25 percent and 33 percent, accordingly.
Tankersley reported from Washington.