The Hillary Clinton tax plan is being slowly released in increments, like a serialized novel designed to capture and hold the public's attention.
In June, the Democratic presidential front-runner proposed an expensive "targeted tax benefit" - a universal preschool for American households with children four years of age and older. Then in July, Clinton pushed a profit-sharing plan that would provide a new, two-year tax credit for employers. And most recently on Nov. 22, she announced a credit worth up to $1,200 to help families bearing the cost of care for their elderly members at home.
OK, Hillary, you've got our attention. Now tell us how you intend for pay for these promises...
Especially since your campaign relies heavily upon one grand principle: none of the 97% of U.S. households that earn $250,000 or less per year will be asked to contribute higher taxes for these proposals.
"How is that possible?" you ask.
Here's the answer, folks: It's not.
"There is simply no way that the federal government can meet its current fiscal commitments, plus the increased demands of an aging population, and provide the new forms of middle-class relief and business tax relief Ms. Clinton promises, while tapping only the top 3% of earners," reported The Washington Post on Nov. 28.
The proof that Hillary Clinton's tax plan will ultimately fail lies in its lack of counter-solutions to America's looming budget deficit crisis.
She wants to spend more without consequence. And promise more without delivering. Which means that the former first lady is really just doing one thing: she's pandering.
Here's a look at why Clinton won't be able to follow through on her latest tax promises...
Debunked Hillary Clinton Tax Plan Promise No. 1: In July, the Democratic presidential front-runner called for a new, two-year tax credit for employers. It would be, reported CNN on July 17, a profit-sharing plan in which an employer would make contributions on behalf of his or her worker. These contributions would link directly to the profitability of the company, growing tax-deferred over time, like a 401(k). The tax credit - which would be a dollar-for-dollar reduction of a company's tax liability - would be worth 15% of the profits a company shares each year for two years. A higher credit would be available for small businesses.
The problem with this part of Clinton's plan is how much it will cost the government over time -as much as $20 billion over 10 years, reported CNN. While Clinton promised to make up for this lost tax revenue by closing tax loopholes, she failed to elaborate the specifics of how that would ameliorate the heavy monetary burden. Right now, this tax policy simply looks expensive and counterproductive.
Because how does the government typically shoulder heavy cost burdens?
It taxes the people.
Debunked Hillary Clinton Tax Plan Promise No. 2: This "targeted benefit" is a continuance of President Obama's pressure on states to expand early childhood education for their neediest families. According to Clinton's website, the former first lady believes that "we" should double our investment in Early Head Start programs. Which essentially means the government should allocate more of our tax money their way.
Interestingly enough, a new study by the Peabody Research Institute released in September found that children enrolled in such programs gained little, if anything, over the long run. Researchers found that young children not enrolled in preschool scored significantly lower on math, literacy, and language assessments at the beginning of their first school year (kindergarten). However, they also found that by the end of kindergarten, these children caught up to those who had been enrolled in preschool.
The same results, reported U.S. News on Oct. 7, were found when children completed first grade. And by the end of second grade, the two groups actually began to diverge, with the children who went through the preschool program actually scoring lower on various achievement measures than those not enrolled in the program.
What's most disturbing about this new data is that Tennessee currently spends $90 million a year on its "universal preschool" program.
Just look at all the good it's doing.
Debunked Hillary Clinton Tax Plan Promise No. 3: And then there's the most recent of all promises - changes to Social Security to benefit workers who take time off to care for the elderly.
In a speech on Sunday, Nov. 22, Hillary Clinton stated that about 40 million family caregivers in the United States tend to elderly adults today. She said she'd like to defray these caregivers' costs by providing them a credit toward a wage earner's monthly benefit at retirement when that wage earner takes time off to care for an elderly relative.
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The entire plan would cost $10 billion over a decade, the campaign estimated. Clinton promised that it would not add to the national debt because it would be financed with "payfors." (A "payfor" is a budgeting tactic used in "pay-as-you-go" budgeting. It's typically utilized as a spending cut or a tax increase that covers the budget for a piece of legislation.)
But this cannot be done, reported The Washington Post on Nov. 28, while maintaining a zero-tax increase on households that earn $250,000 or less each year.
And while there are some payfors "floating around Washington," reported Reason on Nov. 23, "the fact that they haven't been used yet (the Affordable Care Act, for one, used up a lot of them) suggests that we're beginning to scrape the bottom of the barrel."
The site goes on to mention that there simply aren't many untapped revenue alternatives left to cover a proposal like this. And Hillary Clinton should know that.
The Hillary Clinton tax plan isn't the only tax proposal from the 2016 presidential candidates that's left us scratching our heads. Read about the others we've dissected and discussed on Twitter @moneymorning and on Facebook.
At first blush, it seems almost absurd to compare Hillary Clinton and Richard Nixon... But the former secretary of state has much more in common with the disgraced Republican president than you might think. Here's why Hillary Clinton is Nixon in a pantsuit...
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