Donald Trump is making 2 big changes to his economic platform

There are two main policy headlines out of Donald Trump’s economic speech in Detroit on Monday:

  1. Trump is no longer proposing to cut tax rates as sharply as he said he would last September. Back then, he said there would be three tax brackets of 10%, 20%, and 25%. Now, he’s proposing higher rates: 12%, 25%, and 33%, in line with proposals from House Republicans. (Currently, there are seven federal income tax rates, ranging from 10% to 39.6%.)
  2. Trump says he will propose to let parents “fully deduct the average cost of childcare spending from their taxes.”

Much of the coverage in advance of the speech said Trump would propose to make childcare tax deductible. But if I take the speech literally, he’s proposing something somewhat different: a deduction for the average amount of childcare spending, which would be the same for all parents, regardless of actual expenditure on childcare.

This would be roughly equivalent to an increase in the personal exemption for child dependents, which already allows parents to exclude $4,080 in income from tax for each child they have.

On the other hand, maybe Trump meant parents would be able to deduct actual childcare expenses, but only up to the average cost.

This highlights a key problem with analysing Trump’s policy proposals: They don’t really exist. We don’t know what Trump would do on childcare and neither, probably, does Trump himself. This is no more an implementable plan than Trump’s promise at recent rallies to “cut your taxes in half.”

Beyond childcare, Trump has offered few details on his new plan. (“In the coming weeks, we will be offering more detail,” Trump promised Monday.) We don’t know what income levels at which his various tax rates would apply. We don’t know how much the plan would cost, and whether it would be as comically expensive as last September’s plan, which would have reduced federal revenues by about one-quarter over a decade.

And of course, at the same time Trump has been promising large tax cuts, he has been saying he would protect Social Security, Medicare, and Medicaid from cuts and expand the military — meaning he has been making more promises than he can keep.

Even when Trump does specify details, they are subject to change and even erasure. After all, Trump said just last September that he intended to cut the top tax rate to 25%. Now, the plan that promised such a large tax cut has been deleted from his website.

There is a real conversation to be had about childcare expenses and the tax burden on families more broadly. A key problem with a deduction-based approach to subsidizing child care is its benefits would be poorly targeted.

The value of a tax deduction is tied to the rate at which you pay tax, so a childcare deduction would be most valuable to high-income families — and would provide no benefit to low-income families who don’t pay income tax but tend to struggle most with the cost of childcare.

The Associated Press reported that Trump’s childcare deduction would be subject to an income limit, citing an anonymous Trump adviser who won’t say what the limit would be.

But who cares? Even if Trump has thought about the issue, he might well change his mind in the future. When he was seeking the Republican nomination, Trump sought to outbid his rivals with plans for extremely low top tax rates. Now that he’s campaigning in the general election, he’s pulling back on that promise from the primary and talking about childcare costs. Who knows what his prerogatives would be if he became president, and which promises he would decide are no longer convenient?

Trump built his business career by making big, shifting, vague promises and not worrying about what would happen if he couldn’t deliver.

This childcare plan is no different. It doesn’t mean anything.

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