Frank Clemente – U.S. News & World Report – Thursday, September 28, 2017
“It’s not good for me, believe me.” That’s what President Donald Trump said Wednesday in Indiana about the new Republican tax plan, and you shouldn’t believe him. It’s a huge tax giveaway to the wealthy and corporations, and few people will benefit more than Donald Trump.
Since Trump refuses to release his tax returns, in defiance of 40 years of precedent, we can’t know exactly how much he’ll gain from the proposed GOP tax plan. But we know enough to highlight the biggest examples of self-dealing by the president.
The richest gift he hopes to give himself comes from cutting what he pays in taxes by more than one-third on income from the 500 separate business entities that together make up the Trump Organization. These partnerships and other so-called “pass-through” entities don’t pay corporate taxes, but instead pass through any profits and losses to the owners (principally or exclusively Trump). Trump pays any tax due at individual rates on his personal return. He would reduce the top tax rate on this kind of income from 39.6 percent to just 25 percent.
This is the so-called “small business” tax cut Trump is trumpeting. But that’s a sham. It’s really just a tax handout to hedge fund managers, Wall Street lawyers, real estate magnates like Trump and other high-earners. Because 96 percent of real small business owners already pay taxes at 25 percent or less, they get no benefit from the rate cut. To emphasize, only 4 percent of business owners will see any benefit from this so-called “small business” tax cut. The big winners are high-rollers like Trump who now pay the top rate. Far from a “small business” tax cut, this “pass-through” tax cut has been rightly dubbed “The Trump Loophole.”
All that Main Street businesses will get from this handout to millionaires are the crippling reductions in public services – such as street repairs and small business loans – that would come from losing between $390-$660 billion in federal tax revenue over 10 years.
Another change Trump is trying to slip into the tax code greatly to his benefit is elimination of the alternative minimum tax – a safeguard against the wealthy using excessive deductions, credits and other subtractions to whittle their tax bill down to little or nothing.
The one tax return of Trump’s that’s been leaked to the public shows the alternative minimum tax doing its job. If the tax had not been in place, Trump would have paid federal taxes on his $150 million in income at a measly 4 percent rate – less than most low-income workers pay. Thanks to the tax, that rate was raised to a more reasonable 25 percent.
Axing the alternative minimum tax will undoubtedly save Trump hundreds of millions of dollars over the years – but it will cost the American people nearly $450 billion in lost revenue over the next decade. That’s money that could be used to shore up Medicare and Medicaid, and improve our schools, among many other vital public investments.
A third huge gift to Trump and his family is repeal of the estate tax. The estate tax only affects the richest 1 in 500 families, since it only kicks in when an estate is valued at $5.5 million or more ($11 million for a couple). It’s one of the few antidotes to our nation’s dangerously widening wealth gap.
If Trump is anywhere near as rich as he claims to be, his family members would see their inheritances balloon by billions of dollars if he succeeds in eliminating the estate tax. Meanwhile, the rest of America would lose $240 billion over 10 years, making it tougher to pay for health care, education, retirement security and all the other services needed by those of us who don’t inherit a fortune.
Trump and his fellow Republicans have quite a sales job in front of them if they plan to convince the American public that a giant tax handout to the rich and corporations is supposed to help working families. But in trying to make the sale, Trump will be in a position he’s quite familiar with: working for his own enrichment.
Copyright 2017 U.S. News & World Report
Editors Note: LIAR…