Billionaire Donald Trump is offering an unusual economic plan. He would impose a one-time 14.5% tax on the rich, to get rid of the national debt and save Social Security for the middle classes. Seeking attention and credibility for his potential Reform party presidential campaign, the real estate tycoon proposed the tax plan Tuesday.
He said the one-time tax package would raise $5.7 trillion to erase the nation's debt and save $200 billion in annual interest payments. The $5.7 trillion is about two-thirds of the nation's gross domestic product, a figure sure to raise alarm bells on Wall Street.
Trump said he'd use the windfall to save Social Security and slash taxes for the middle class. He also said his own tax bill would be raised by at least $725 million
"It's a big hit for me, but I think it's worth it," Trump said in a telephone interview from his New York offices.
People and trusts valued at more than $10 million would be subject to the new tax. Trump, a longshot for the presidency, estimates his net worth at $5 billion.
The original plan called for collection in a single year but, in a last-minute change, Trump said he would allow more time for people having trouble liquifying their assets. "Let's say 10 years," he said.
Financial experts said such a dramatic tax increase could be an economic disaster, even if Trump were somehow able to surmount a slew of technical and political hurdles that would make it virtually impossible to impose.
"If you think this is a bubble in the stock market, this is a sure way to prick it," said Mark Zandi, chief economist of RFA Dismal Sciences, an economic consulting company in West Chester, Pa.
"Even talking about it would risk capital flight out of the country," said Andrew Hodge, senior vice president of the WEFA group in Eddystone, Pa. "It is pretty confiscatory in terms of property rights."
Trump dismissed the doom-and-gloom scenarios. "It would not be a shock to the system," he said, predicting a 35 percent boost in economic activity after he eliminates the debt, cuts income taxes and erases the inheritance tax.
Economics aside, Trump hoped to build political stature with his first major policy proposal of the presidential campaign. Known mostly for his money, playboy lifestyle and monogramed buildings, Trump wants to be taken seriously as a potential candidate.
"I think I'm taken seriously. A lot of people are saying so and I can tell," Trump said, though he is still a blip on national polls.
Trump said one sign of his popularity is the high ratings he generates by appearing on television news shows. "Geraldo Rivera says I'm a hot guest,"he said. Avoiding the traditional scene-setting speech, Trump unveiled the package in a series of telephone interviews with reporters.
The package underscores his strategy to appeal to low- and middle-class Amricans. Even amid an economic boon, Trump believes his class-conscious message has resonance because millions of voters are leery of America's economic and political elite.
He says the rich would benefit, too. He wants to eliminate the tax on inheritance, giving the wealthy a break on the assets they plan to leave for the next generation. Trump said the economy would grow enough to pay for the inheritance tax cut.
Among his rivals, Reform Party contender Pat Buchanan proposed a 16 percent flat tax on earnings over $35,000 before he left the Republican Party, as well as deep cuts in inheritance and small-business taxes -- to be paid for in part with higher tariffs.
Flat-tax pioneer Steve Forbes and Gary Bauer offer plans similar to Buchanan's on income taxes. At the top of the GOP field, Texas Gov. George W. Bush and Arizona Sen. John McCain have spoken of targeted tax relief.