In one of Trump’s riffs Monday night about Hillary Clinton’s policy plans, he said she’s “going to approve one of the biggest tax increases in history.” This is a case where Trump’s penchant for superlatives actually turns out to be quite apt: Hillary is indeed proposing one of the largest tax increases in modern U.S. history, though not quite the largest, period.
I examined a related question in 2012, when it was a popular claim that Obamacare amounted to the largest tax increase in history. It turned out that President Obama had proposed even bigger tax increases in his budget, and the budget proposals, at $1.6 trillion in new revenues over ten years, are quite comparable to Hillary’s, which add up to $1.5 trillion in new revenues over the same period of time.
The Tax Foundation’s Scott Greenberg notes that this would make Hillary’s proposal one of the largest increases in history – the conclusion I reached about Obama’s proposals, too. Hillary’s plan would range from about 0.5 percent of GDP of higher taxes per year in the next few years to about 0.85 percent of GDP more in taxes ten years from now. (These numbers are less reliable than the numbers about President Obama’s budget because less is known about Hillary’s plan.) That’s an approximately 5 percent increase in revenues versus what they were expected to be ten years from now.
How does that compare historically?
It’s one of the largest tax increases, but not the largest, since the 1940s and 50s, which saw huge war-related tax increases. (Pre-World War II tax increases are both really hard to measure and not that meaningful, because federal revenues were a much smaller chunk of GDP.)
Noticeably larger are the 1968 and 1982 tax increases, both of which increased revenues by more than 1 percentage point of GDP, or about 6 or 7 percent of federal revenues.
President Obama and Secretary Clinton’s proposals, therefore, are very large tax increases, but not unprecedented. They’re also similar in that their new revenues will be pretty much entirely gobbled up by projected new spending.
Raising federal revenues in the coming years by some method is probably going to be necessary. We’re already at high levels of debt and deficits, and it will be hard for either Republicans or Democrats to cut spending significantly from current projections. (Republicans want to spend more on the military, Democrats want to spend more on everything else, and it’s highly unlikely either of them stops growth in entitlement spending soon.)
Unfortunately, because of her lavish spending plans, maintaining our steady path toward higher and higher debt is roughly what Hillary proposes to do, after her $1.5 trillion in new taxes.