Repeal of estate tax reveals president’s phony populism
Donald Trump campaigned as an economic populist. But with each passing week, Trump’s so-called populism is being exposed for the fraud it is.
Take, for instance, health care. President Donald Trump promised that his health care plan would provide “insurance for everybody” and that it “will be every bit as good on pre-existing conditions as Obamacare.”
But Trump has backed the House Republican health care plan, which would take away health insurance from 23 million Americans while undermining protections for people with pre-existing conditions.
Trump has also claimed that he wouldn’t cut Social Security or Medicaid.
But that, too, was a lie: Trump’s budget proposes cuts to both programs.
And despite Trump’s campaign pledge to turn the GOP into the “workers’ party,” the Trump administration’s only economic policy accomplishment to date is the rollback of Obama administration protections for workers and consumers.
But it is perhaps
Trump’s support for repealing the estate tax that most clearly demonstrates how insincere his claims of populism actually were.
The estate tax is a tax on America’s wealthiest heirs and heiresses that is critical for fighting income inequality. It also helps fund programs Americans rely on, such as Social Security and Medicare. Eliminating the estate tax will do nothing to help the middle class. Why? Because the middle class doesn’t pay it.
In fact, only estates above $5.49 million per person — or two out of every 1,000 estates — pay any estate tax at all. And the small number of estates that do owe estate tax only have to pay taxes on the amount that exceeds $5.49 million. An estate worth $5.50 million, for example, would owe taxes on only $10,000 — not the entire $5.5 million.
Moreover, the estate tax hardly represents a large burden on the few estates that do pay it.
The generous exemption amount combined with several loopholes used by the wealthy results in an extremely low estate tax rate. The small sliver of estates that pay any estate taxes at all gets taxed at just a 17 percent effective rate.
Opponents of the estate tax often claim that the tax is unfair to small farms and businesses, but just 50 small farms and small businesses are estimated to pay any estate tax at all in 2017, according to the nonpartisan Tax Policy Center.
Estate tax opponents also like to argue frequently that its repeal would turbocharge economic growth. But this claim is rebutted by both academic studies and past experience. President George W. Bush enacted a massive reduction in the estate tax in 2001, which was followed by six years of anemic wage growth and then the Great Recession.
But the most disturbing aspect of the Trump administration’s support for repealing the estate tax is that it would cost the U.S. Treasury $174 billion at a time when the Trump administration is championing draconian cuts to several programs that families rely on, including Medicaid and Social Security. Claims that we cannot afford to pay for children’s health care and Meals on Wheels ring hollow when they come from an administration that is also simultaneously pushing a tax cut for the wealthiest Americans.
Of course, Trump prioritizing tax cuts for the wealthy at the expense of everyone else should come as no surprise: it’s the very essence of the rest of Trump’s entire tax plan, which is loaded with other provisions that would cut taxes for the wealthy, such as cutting the corporate income tax and slashing taxes on financial industry partnerships. In fact, an analysis by the Tax Policy Center revealed that about half of his campaign tax plan’s benefits plan would flow to the top 1 percent alone. At the same time, it raised taxes on millions of middle-class and low-income families.