By the Associated Press
Greenville, S.C. -- Seeking credibility for a potential presidential bid, Donald Trump said on Tuesday that he would soak the rich -- including himself -- with an enormous new tax to erase the national debt, save Social Security and cut taxes for the middle class.
Trump, a New York real estate tycoon with a net worth of about $5 billion, would increase his own tax bill by at least $725 million.
"It's a big hit for me, but again I think it's worth it," the potential Reform Party candidate said Tuesday in a telephone interview from his New York office.
In a brief outline of his plan obtained by The Associated Press, Trump pledged to "make this country entirely debt free as we enter the next millennium."
Trump would impose a one-time 14.25 percent tax on the net worth of people and trusts worth more than $10 million. Facing questions about the feasibility of the plan, he said he would allow wealthy Americans who have trouble liquidating their assets to pay the tax off over 10 years.
The $5.7 trillion he expects to raise is about two-thirds of the nation's gross domestic product -- a statistic sure to set off alarm bells in the financial community.
"If you think there 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," added Andrew Hodge, senior vice president of the WEFA group in Eddystone, Pa. "It is pretty confiscatory in terms of property rights."
Trump, a long shot for the presidency, dismissed the doom-and-gloom scenarios. "It would not be a shock to the system," he said. "I've never seen paying off debt as being bad for the system."
He predicted a 35 percent boost in economic activity after elimination of the debt and the inheritance tax, and cuts in income taxes. "The wealthy would not suffer," he said.
Economics aside, Trump was seeking stature and attention with his first major policy proposal. Known mostly for his wealth, lifestyle and monogramed buildings, Trump wants to be taken seriously as a potential presidential candidate.
Avoiding the traditional scene-setting speech, he planned to unveil the package in a series of telephone interviews today.
The plan underscores his strategy of appealing to low- and middle-class Americans. Even amid an economic boom, Trump believes his class-conscious message will resonate with the millions of voters who are leery of America's economic and political elite.
He also believes he has a rags-to-riches story that appeals to Americans who dream of following him into the gilded life.
"Trump is determined to put forward provocative ideas while he has the spotlight," said longtime Republican operative Roger Stone, who is heading Trump's exploratory committee.
Trump said the $5.7 trillion would pay off the national debt, saving the government $200 billion in interest payments. Half of that money, $100 billion, would go to middle-class tax cuts and the rest to Social Security.
He wants to eliminate the inheritance tax, giving the wealthy a break on the assets they plan to leave behind as a tradeoff for the one-time tax. Stone said the economy would grow enough to pay for cutting the inheritance tax.
There would be no tax increase for corporations, as Trump believes they would be passed on to consumers.
Experts raised several questions about the plan, including:
-- His numbers. Using Federal Reserve Board tables, Zandi said the total net worth of all American households is $38.4 trillion. If Trump taxed every American at 14.25 percent, he still would not raise $5.7 trillion, Zandi said. Stone said his reading of the Fed figures suggests that total wealth in America is $50 trillion.
--The technicalities. Assets fluctuate wildly in America, making it difficult to determine a person's tax bill. Huge amounts of assets also would have to be liquidated to pay the bills. Stone said the details would be worked out once Trump took office.
Trump even conceded that the measure has no support on Capitol Hill. But he predicted voters would force lawmakers to act if he were elected.
Trump is not assured the Reform Party nomination -- Pat Buchanan also is seeking it -- and he ranks low in national polls as a general election candidate.
"It's not at all surprising to me that pointy heads and editorial writers are not going to like this," said Stone, who said he consulted several economists in fashioning the plan.
Unlike 1992, when the sagging economy was the centerpiece of the presidential campaign, the issue is being downplayed by candidates this cycle.
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