Trump’s second-rate plan
The whole economy, said candidate Donald Trump, is “rigged” to favor the vested interests. In large numbers, voters who showed up at the polls and made him President agreed. The preliminary sketch of a blueprint of a tax plan that his Treasury Secretary, Steve Mnuchin, outlined Wednesday would essentially codify the very rigging Trump decried.
The President would consolidate seven progressive brackets into three, slashing the top income tax rate from 39.6% to 35%, a single change that will deliver a windfall of billions upon billions to the wealthiest Americans.
He would cut the tax rate on the business income reported on individual returns from 35% to 15%, which will benefit some small businesses but also pad the pockets of the very rich, who pay minimal tax on “pass-through” income from companies they own and operate.
He would repeal the alternative minimum tax — designed to ensure that the richest Americans don’t get away with a tiny tax bill. We know Trump paid the AMT, at least back in 2005, the one tax year for which a page of his returns has been leaked.
He would eliminate the ability of Americans to deduct their local and state taxes against their federal taxes, hammering high-tax places like New York and California that already send far more to Washington than they get back.
He would bring back down the top capitalgains rate to just 20%, enabling Americans who make millions in trades to pay far less than those who earn income through wages.
He would entirely eliminate the estate tax, by which the very wealthiest Americans — the heirs of two out of every 1,000 estates, those worth more than five-and-a-half million dollars — pay an average of 17% of their value in tax, raising some $20 billion annually in the process.
That’s the tax Mike Bloomberg, whose children will never want for anything, correctly calls “a check on dynastic wealth, promoting the value of meritocracy in the process.”
Almost to a provision, those measures will benefit Trump, his family and others fortunate enough to be fantastically wealthy.
And the President, who hails from a political party that not long ago wrung its hands about rising deficits and debt, and whose budget director just six weeks ago called the $20 trillion debt a “crisis,” insists all these revenue reducers will pay for themselves through magic, er, magically rising economic growth.
Tax reform — cutting America’s too-high corporate tax rate, increasing the standard deduction and streamlining the tax-filing process to encourage innovation while maintaining progressivity — makes a lot of sense.
The U.S. economy, especially the beleaguered middle class, can use a shot in the arm. At least in this frustratingly vague rendition, the Trump tax plan looks more like a punch in the gut.