(Bloomberg) Hillary Clinton’s Democratic presidential campaign said Monday that Republican Donald Trump’s proposals to overhaul the federal tax system would benefit “high-debt investors like himself,” opening a new line of attack.

Earlier this month, Trump said he supports letting big businesses immediately write off their investments in equipment and buildings. Soon after, a Trump adviser suggested that the billionaire wants to maintain existing tax rules that let businesses deduct their interest payments.

Combining the two tax breaks would mean a major benefit for businesses that borrow to invest in buildings—giving them an immediate write-off followed by years of deductions on the interest they pay. While Trump announced a package of tax overhauls last year, he subjected it to review and revisions this summer, and his full plan has yet to emerge in final form. Trump’s campaign didn’t immediately respond to a request for comment.

With both immediate expensing and interest deductibility, large corporations could achieve “sharply negative” effective tax rates on their income from debt-financed investments, according to a 2014 report from the Congressional Budget Office: as low as -61 percent. Partnerships and other types of real-estate companies could see an effective rate of -34 percent, the report said.

Trump’s Debt
“Trump’s plan means taxpayers pay him to run up debt, not the other way around,” said a memo from Clinton’s policy team that the campaign released Monday.

Bloomberg News reported in July that Trump’s companies have an estimated $630 million in debt. The New York Times this month reported an estimate of $650 million. The real-estate mogul and reality television star has called himself “the King of Debt.”

Negative effective tax rates would amount to government subsidies for going into debt, Clinton’s campaign memo said.

Trump could reduce the tax benefit of adopting immediate expensing by limiting businesses’ ability to deduct their interest payments. But Lawrence Kudlow, an economist who is advising Trump’s campaign, told the Washington Post this month that Trump opposes ending that particular benefit. Economist Stephen Moore, another Trump adviser, told The Wall Street Journal last week that the candidate was wary of eliminating interest deductions, but he said the plan is still negotiable.

House Republicans
In embracing immediate expensing, Trump moved closer to House Republicans, who published their own plan for overhauling the tax system in June. But that plan, authored by Representative Kevin Brady, the chairman of the tax-writing Ways and Means Committee, would change the rules for deducting interest.

“Under this blueprint, job creators would be allowed to deduct interest expense against any interest income, but no current deduction will be allowed for net interest expense,” according to the House plan.
Allowing both immediate expensing and the interest deductions in current law “would be distortive as it would result in a tax subsidy for debt-financed investment,” the House plan says.

Estate Tax
Trump’s advisers have said his tax plan will ultimately cost about $2 trillion in revenue over 10 years. But it’s unclear whether that includes the cost of maintaining interest deductibility, which was estimated at about $1.2 trillion earlier this year by the conservative-leaning Tax Foundation.

Clinton previously criticized Trump over his proposal to abolish the estate tax, which currently applies a 40 percent rate to any estate worth more than $5.45 million, or $10.9 million for couples. Clinton wants to raise the tax rate to 45 percent and apply it to estates worth more than $3.5 million, or $7 million for couples.

In general, Trump’s tax plan would offer tax rate cuts for individuals across-the-board—though high-income individuals, corporations and people who make money via partnerships would see the largest tax cuts. Clinton proposes to raise taxes on high earners, by implementing an effective tax rate of at least 30 percent for people who make more than $1 million a year and adding a 4 percent surtax for those who make more than $5 million.

—With assistance from Lynnley Browning

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