After nine months of promising to unveil their long-sought tax “reform” plan, Donald Trump and the Republican leadership in Congress are finally, sort of, revealing what they propose to do. Actually, they only released nine pages of talking points, which is an expansion of the one page of talking points that they presented last summer. There is no actual bill language or fiscal analysis attached to the latest talking points.
The general approach to the tax plan seems to mimic the Republican view of “reforming” health care – I’ve got mine, good luck getting yours. It’s once again Robin Hood in reverse. The Graham-Cassidy repeal and replace ploy that was shot down last week calls to mind the observation that “the definition of insanity is doing the same thing over and over again and expecting different results.”
The Republican tax plan includes:
- A large income tax rate cut for the superrich, reducing the top bracket from 39.6 percent to 35 percent
- A large income tax increase for the those at the bottom of the income scale, raising the lowest tax rate from 10 to 12 percent
- A gigantic cut in the corporate tax rate
- The end of the estate tax, which only benefits people with estates of more than $5.49 million
- The elimination of the alternative minimum tax, which is designed to guarantee that upper income people pay some income tax
- The end of the deductibility of state and local taxes, which is aimed particularly at people living in “blue” (Democratic) states like New York and California
The plan proposes eliminating or changing certain deductions contained in the tax code. So what makes eliminating one deduction more important than eliminating another deduction? It depends on who has the most influence over Trump and congressional Republicans. Democrats have been excluded from the conversation by Majority Leader Mitch McConnell and Speaker Paul Ryan.
The White House has published a paper that includes a table listing 167 different special interest deductions (known as “tax expenditures”) that presently exist in the tax code. The expenditures are mostly exclusive to select businesses and professions. Nearly every one of them is not included in the Republican tax “reform” plan.
The plan sponsors claim that it will not help rich people, just mostly middle class folks. Paul Ryan told CBS “the purpose of this is to get a middle-class tax cut.” Ryan was pressed on whether that was a guarantee that every middle-class person would get a tax cut under the president’s plan. “Well, I don’t know every single person’s little, small problem or issue,” he said.
Here’s an analysis prepared by the Tax Policy Center (TPC), based on what is known thus far of the Trump plan:
Every income group, on average, would see a reduction in their tax bill in the first year under the plan, according to the TPC, but the nation’s wealthiest would get the lion’s share of savings. The bottom 95 percent of earners would see on average an increase in their after-tax income of 1.2 percent or less. The top 1 percent, meanwhile, would see an 8.5 percent increase, TPC said.
In the plan’s first year … [a]bout 12 percent of taxpayers would see their taxes go up … including more than one-third of people making between about $150,000 to $300,000, largely due to the repeal of many itemized deductions …
About 80 percent of the total benefit would accrue to taxpayers in the top 1 percent, whose after-tax income would increase 8.7 percent by 2027, the report said. By that point, about 25 percent of taxpayers would see their taxes go up, particularly among the middle and upper-middle class. Almost 30 percent of earners with incomes between $50,000 and $150,000 would see their tax bill go up, as would 60 percent of those making between $150,000 and $300,000 …
So maybe you might get a tax cut or maybe not. It depends on whether or not your “little, small problem or issue” prevents that from happening. It also depends on which lobbyists carry the most influence at the White House and on Capitol Hill. The tax swamp is not being drained, just re-arranged.
And then, of course, there is the matter of how one special taxpayer, Donald J. Trump, stands to benefit from the plan he and his Republican congressional leadership are pushing. Trump says he won’t benefit, telling us “believe me.” Never trust anyone who repeatedly tells you “believe me.”
A New York Times analysis, based on the little that is known about Trump tax returns, indicates that he and his heirs stand to gain more than one billion dollars from the plan. Since he refuses to release his tax returns, we can safely assume his hidden returns would show that the potential savings are much higher. This is all consistent with the efforts of Trump and his family to gain financially from his presidency.
The joke about draining the swamp
If there is one thing that Trumpkins like yelling at his rallies, other than “build the wall” and “lock her up,” it is “drain the swamp.” The drainage in question concerns changing the culture in Washington to end the coddling of certain segments of the population. It is also supposed to concern the end of laws and regulations that allow residents of the Washington Beltway to live the good life at the expense of the rest of us.
The manner in which the Republicans are operating in the Trump administration shows their contempt for the taxpaying public. As that famous Watergate criminal and former Nixon Attorney General John Mitchell once said, “watch what we do, not what we say.”
Despite the rhetoric, it has come to pass that many luminaries in the Trump administration have already, in just a short period of time, come to enjoy the perks of their offices very much. The list includes:
- Recently departed Health and Human Services Secretary Tom Price, a deficit hawk when he served in Congress, who had more recently been busily trying to cut various Obama-era health programs. But when it came to taking care of himself he was not much concerned about saving money. How nice of him to offer to reimburse the government $51,000 for the one million dollars in charter and military-provided private transportation that he used this year.
- The multi-millionaire Treasury Secretary Steve Mnuchin apparently likes government air service so much that he wanted to take a military jet on his honeymoon to Europe. And there was also the government provided trip that he and his bride took to Fort Knox, Kentucky to see the government’s gold and to watch the total eclipse of the sun.
- Interior Secretary Ryan Zinke took a $12,000 charter flight from Nevada to his home in Montana.
- Environmental Protection Agency (rapidly becoming a misnomer) Director Scott Pruitt has frequently taken government paid travel back to his home in Oklahoma, where he is reportedly considering a run for governor next year. Maybe he needs that $25,000 sound-proof telephone booth constructed in his office for political calls.
- And then there was the Secretary of Veterans Affairs, David Shulkin, who managed to travel to Europe with his wife on the government’s dime, interspersing work sessions with touristy visits in London and elsewhere.
And finally, most of these travel stories also note that the Cabinet members travel with an entourage of security and departmental staff.
Don’t listen to what they say. Watch what they do.
Guns kill people
Given the latest mass tragedy related to gun violence, I have reposted an article that Steve Banko and I wrote last year. You can find it here.