Well, Donald Trump has a new tax plan out that he claims “is going to cost me a fortune.” And apparently, a lot of news outlets are buying that, because hey, it’s easier to just listen to him than it is look at the tax plan. But even looking at the bullet points shows what a sham it is. He’s lowering everyone’s tax rate. Well, that won’t work. And then he says individuals making less than $25,000 per year will pay no taxes — but most of them already don’t. But the crowning achievement in the plan is that it eliminates the estate tax.
Think about that for a moment. No one even argues that the estate estate tax limits investment. So why is it even part of this plan? And under current law, there is no estate tax when money is transferred between spouses. And there is no estate tax on amounts given to individuals up to $5 million. So this change is not meant to help the rich; it is meant to help the super rich; it is meant to help people like him. His line that it “is going to cost me a fortune” is so much nonsense, and it is outrageous that we have such an incompetent press that it reports this stuff seriously.
Luckily, there are people who actually look at the policy. CNN did a pretty good job of summing up what some of those people had to say, Donald Trump Unveils Plan to Slash Taxes for the Poor — and the Wealthy. For example, according to the Tax Policy Center, this year, 45% of Americans will own no Federal income taxes. All Trump’s plan does is push that number up to about 50%. Alan Cole of the Tax Foundation said, “Some of what Mr Trump has done in his press conference is just sell us on one of the better features of what our income tax already does.”
But the biggest news is that the top tax rate would go down from just shy of 40% to 25%. As Donald Trump might say: that’s huge. What’s more, he wants to get rid of the alternative minimum tax. And he wants to cut the capital gains tax rate. That’s always presented as a way to spur investment, but it’s done to decrease the taxes on the very richest people. There are better ways to encourage actual investment, but people like Trump aren’t interested in that.
Dylan Matthews put together, Donald Trump’s Massive Tax Cut for the Top 1 Percent, in One Chart. You may remember recently I wrote, The Narrative of Jeb Bush’s Tax Cut Plan. It was one of a couple of articles I wrote about how Bush’s tax plan is a huge tax cut for the rich. Well, as you will see, Trump’s “populist” tax cut, is far worse:
Yes, Trump’s tax cut does provide more to benefit to those at the lowest levels of the economy — but not much more. And it totally explodes at the top — exactly where tax cuts are unnecessary. The people are the top have been doing great since 2008. It’s not the upper class — much the less the top 1% — that needs help. Here’s how the numbers break down. Those in the lower class (lowest quintile), would get less than 2% of their yearly income in tax breaks. The middle class would get 5%. And the top 1% would get a bit more than 10%. Progressive tax cuts!
One of the better moments at the last debate was when Trump told Carson that we have always had progressive income taxes and that it isn’t socialism. But when it comes down to it, Trump’s tax plan is regressive — making the tax system less progressive. Almost 70% of the tax cuts go to the upper class (top quintile). Republicans just can’t help it. They can’t seem to think any other way about these kinds of things. But that doesn’t mean we have to believe their rhetoric.