Opinion: Don’t be a tax-cut sucker

If you believe President Trump, tax cuts will not benefit the type of wealthy people who hang out at Mar-a-Lago. (AP)

As we watch the tax-cut debate play out over the next few months, it will be useful to keep some things in mind. Here’s the most important:

The people who are now asking you for your faith, who are now promising you that this is not some badly disguised tax cut for the rich — these are the very same people who for the past six months have reassured you over and over again, with apparent sincerity, that nobody would lose coverage under the Republican health-care plans, that in fact those plans would cover more people with better plans than Obamacare, and that they would never, ever undercut protections for Americans with pre-existing conditions.

They looked you in the eye and told you all that, and it was a massive lie, a lie that they knew to be a lie as they told it. And now they come to you once again, once again asking you to believe.

Be skeptical, my friends.

One of those people once again asking for your faith is President Trump, who now promises us that he and others like him won’t make out like bandits from this “tax-reform” proposal. As he put it this week:

(AP)

“I don’t benefit. I don’t benefit. In fact, very, very strongly, as you see, I think there’s very little benefit for people of wealth.”

That too is a lie.

For example, the Trump tax proposal calls for the elimination of the estate tax. Under current law, a couple can leave their heirs an estate of up to $10.98 million completely tax free, so the only people who would benefit from its repeal would be those with estates valued at more than that amount. I think it’s safe to say that this change would help “people of wealth,” and only people of wealth.

In fact, if we accept Trump’s valuation of his own empire at $10 billion, his heirs would save the tidy sum of $4 billion under this proposal.

As USA Today argues in an editorial:

“Where’s the logic in that? Why should inherited wealth receive a more privileged status than wealth accumulated through work or entrepreneurship? Why should the government encourage dynastic wealth at a time when income and asset concentration among an elite few is already dangerously high?”

Trump is the only president in modern times not to release his tax returns, so it’s hard to know precisely what impact these proposed changes would have on his personal finances. However, we do have a Trump tax return from 2005 that somehow made its way into the light.

According to that return, Trump paid $38.4 million in federal income taxes that year. Most of that tax — $31.3 million, or 81.5 percent of his total tax burden — was due to the alternative minimum tax, enacted to ensure that high-income individuals don’t entirely duck their obligations.

Trump’s proposal would eliminate the alternative minimum tax.

In addition, Trump’s proposal would drop the tax rate for business income to 25 percent, significantly below the 39.5 percent top rate. According to tax experts consulted by the New York Times, that change would have saved Trump another $16 million in taxes in 2005. So those two changes — abolishing the alternative minimum tax and lowering the business income rate — would produce a one-year total of $47.3 million in tax savings for Trump. In effect, they would have eliminated his tax obligation entirely.

We are also hearing incredibly sad, truly heart-rending stories about the predicament of corporate America, which is so incredibly burdened by high taxation that it can no longer compete internationally or even turn a fair profit. However, as you process these oft-told tales of woe, perhaps a little context might again be helpful.

For example, individuals this year are projected to pay $2.8 trillion in personal and payroll taxes. Corporations are expected to contribute a grand total of $310 billion.

Also, there’s this:

That’s a chart of corporate AFTER-TAX profits, compiled by the helpful folks at the Federal Reserve of St. Louis. Those profits are the highest they have been at any point in our nation’s history.  Remember the booming economy of the 1990s? Those were great years for corporate America, but AFTER-TAX corporate profits today have quadrupled from what they were back then.

What have your own after-tax profits done?

Now, there’s a broad, bipartisan consensus in Washington for reforming the corporate tax system. Democrats and Republicans pretty much agree on eliminating corporate deductions, lowering the nominal rate of 35 percent and finding a fair means to repatriate the estimated $2 trillion in profits that corporations have parked overseas to avoid U.S. taxation. In short, a deal can be made to rationalize our corporate tax system.

Unfortunately, that consensus falls apart when those goals are used by Republicans to try to smuggle through a significant tax cut for corporate America, as they do in this proposal.

Defending such a giveaway is tough, especially given the public mood. According to a new Fox News poll, just 20 percent of Americans support cutting taxes on the wealthy; just 34 percent support cutting corporate taxes. Even among Republicans, support for cutting taxes on the rich stands at just 37 percent. So how do you sell it?

If you’re Treasury Secretary Steve Mnuchin, husband to America’s own Marie Antoinette, you sell it by claiming to be doing it all for the American worker. According to Mnuchin, corporations will take more than 70 percent of their corporate tax break and pay it to their workers, leaving less than 30 percent to be shared among stockholders. That’s right: A huge reduction in the corporate income tax is actually a tax cut for the little guy, but in clever disguise!

Do you believe that? I don’t.

Neither does the non-partisan Joint Committee on Taxation, which estimates that high-income shareholders would reap 75 percent of a corporate tax cut. The non-partisan Congressional Budget Office doesn’t believe it either, also estimating that shareholders would take 75 percent of the tax cuts. An analysis by the Treasury Department estimates that shareholders would get 82 percent of the savings, leaving 18 percent for workers.

I would like to provide you a link to that Treasury analysis, as I did for the CBO and JCT studies. Unfortunately, as the Wall Street Journal reports, Mnuchin has ordered that it be removed from publicly accessible websites.

Finally, let’s address the tax proposal’s impact on the deficit and debt. According to the CBO, the national debt is already projected to grow by another $12 trillion over the next 10 years, to $27 trillion. The tax cuts now being proposed would increase that debt load by an additional $2.2 trillion.¹ To Republicans who have treated the debt as an enormous monster about to consume our future, that ought to be frightening.

You know what’s coming, right?

Right. It’s trickle-down time again. The Trump administration and congressional Republicans claim that these tax cuts wouldn’t increase the deficit at all. To the contrary, they would produce so much new economic growth that government revenue would soar, not fall.

It would be nice if that were true. It also would be nice if you could lose weight by eating all the chocolate cake you want. It would be even nicer if you could sit at home and make $125 an hour on the Internet, or collect a $1 million reward just for helping out some nice Nigerian prince. But the world doesn’t work like that.

It certainly didn’t work like in Kansas, for example, where supply-siders claimed that huge tax cuts would produce an economic boom, but instead they produced disaster. It didn’t work that way during the George W. Bush administration, which inherited an annual deficit of $32.4 billion, passed two major tax cuts that were supposed to jump-start the economy, and finally left office with an annual deficit of $1.55 trillion.

And the overall economy when Bush left office? Not so good, as I recall.

Earlier this year, the conservative-leaning Booth School of Business at the University of Chicago surveyed 42 of the nation’s most respected economists, asking them whether it was plausible for large tax cuts to pay for themselves, as Trump claims.

Five did not answer. Of the remaining 37, 37 said they disagreed with that claim. Thirty disagreed strongly.

“It would be a fiscal disaster,” wrote one.

“It would put us in the running for a national Darwin award,” wrote another.

——————

¹During the 2016 campaign Donald Trump claimed that if elected, he could entirely eliminate the national debt in just eight years, and could do so “pretty easily.”

Clearly, the CBO assumes that claim to be false.

Reader Comments 0

1604 comments
Summer Smith
Summer Smith

Baahaaha! Listening to the AJC and Bookman is like going to your local car dealer for advice on life. Baahaaha! Obamacare...."If you like your doctor, you can keep your doctor"......HUGE LIE BY OBAMA AND THE DEMOCRATS....."Costs for Health Ins. will significantly decrease for Americans".....HUGE LIE BY OBAMA AND THE DEMOCRATS..... Opinion...The AJC and their Communist platform, might have ties to Russia.....

Kathy
Kathy

I'd rather vote for Mayor Carmen Cruz than our self-centered billionaire who tried to sell the tax plan like a snake oil salesman. Insults the intelligence of our citizens. And, where is all the work to lower prescription costs? I guess that was just more campaign bull.

Peachs
Peachs

Trump killing Puerto Ricans and blaming it on the mayor!

Rick Jones
Rick Jones

I thought my Social Fixer filter was set to eliminate anything by jaybookman.

Peachs
Peachs

Typical skill level of a rural Trump follower!

Peachs
Peachs

What does Trump do outside play golf and entertain Russians?

BuckeyeGa
BuckeyeGa

He was warned but used emails anyway"Donald Trump’s son in law Jared Kushner and a number of other senior White House officials who used their personal emails for work purposes were expressly warned by the National Security Agency not to do so, Politico reported on Friday.Per Politico, Kushner and other staffers (including former Chief of Staff Reince Priebus) all continued to use their private emails despite the NSA warning that “cyberspies could be using sophisticated malware to turn the personal cellphones of White House aides into clandestine listening devices, to take photos and video without the user’s knowledge and to transfer vast amounts of data via Wi-Fi networks and Bluetooth.” "https://twitter.com/Gizmodo/status/914158645985857538

Visual_Cortex
Visual_Cortex

Did I miss any good flag-fappery last night? Worth a scroll?

rimsky
rimsky

 Mr Tillerson said Washington was "probing" the possibility of talks with Pyongyang, "so stay tuned".

"We have lines of communications to Pyongyang," he said during a trip to China. "We're not in a dark situation."

http://www.bbc.com/news/world-us-canada-41454007

Whatever you do keep Trump in the dark.

rimsky
rimsky

Trouble is brewing in Catalon folks.  Hope Spain does not do something drastic in tomorrow's referendum.  But the events leading to tomorrow seems trouble is in the future.

rimsky
rimsky

 How wind can power the world's mass transit

This year, Dutch commuters ditched fossil fuels to power their country's trains on 100% wind energy - and it's a grand idea that's catching on the world over.

http://www.bbc.com/future/story/20170929-how-wind-can-power-the-worlds-mass-transit

All Dutch trains run  by electricity, generated by wind mills.

One windmill spinning for an hour can power train that can go 120 miles.  Fantastic innovation.  Seattle is going to try it too.

rimsky
rimsky

 “Maybe from where she’s standing it’s a good news story,” Cruz said on CNN’s “New Day” Friday. “When you are drinking from a creek, it’s not a good news story.”

“I’m sorry, but that really upsets me and frustrates me,” she continued, holding back tears. “Frankly, it’s an irresponsible statement. ... Damn it, this is not a good news story. This is a people are dying story. This is a life or death story. ... This is a story of a devastation that continues to worsen because people are not getting food and water.”

WH do something good.  Then you will get the praise.  Words don't count action do..

Quit effing up like you have for last 8 and a half months

rimsky
rimsky

 Cruz slammed Elaine Duke, acting secretary of Homeland Security, over her Thursday comments, which lauded the “amazing” federal response to the disaster.

Duke file that amazing story under fiction.

Eye wonder
Eye wonder

Wassup IReport. How’s it hanging today?

Visual_Cortex
Visual_Cortex

@Eye wonder

Philo's not iReport/Andy. He hasn't threatened to murder anyone this week, nor does he do that weird "mmm mmm mmm" Tourette's thing.

rimsky
rimsky

 But, clearly could see his argument about dems/libs attack mode. Heck, I see it here every day. One dog barks and the rest start yelping. Just like a dog kennel.

You were such a moderate when you started here.

Seems like Fan boy and TD are rubbing off on you.  And the Christianity thing is becoming more and more apparent.  Hate to see you turn into a vindictive RWNJ.

Wish you could go back to your old ways.

Mary
Mary

Well, I do try to stay in "the middle", but I do lean right. So, sometimes, I let stuff get to me and react/overreact to it. Though, I will never shy away or deny my faith and beliefs. I do not have a "left, middle or right" on that matter.

rimsky
rimsky

 What has the mayor done to be designated as "stupid"? Plea for her people?

If you do not kneel at the foot of Republican Gods you will be deemed "stupid" and the screwball media will go along with it.

Eye wonder
Eye wonder

Yo Doomary —

Little early for you to be out trolling, no?

Mary
Mary

Nah, early riser. Been about for a few hours already.

rimsky
rimsky

The CHIP program which serve 8 million kids from poor families is running out of money.  Next week, if Congress does not act fast, will not have HC coverage.  Boy this Congress is clue less.

LordHelpUs
LordHelpUs

Heck, the only fiscal conservatives that have been in the White House over the last 40 years are Jimmy Carter and Bill Clinton!!

straker
straker

Cherokee - "has been told by the Democrats that you must be nasty to Trump"  I wonder how many of you tool cons actually believe that?

Mary
Mary

"Stand up guy" is not exactly how I would describe him. But, clearly could see his argument about dems/libs attack mode. Heck, I see it here every day. One dog barks and the rest start yelping. Just like a dog kennel.

justaniceguy
justaniceguy

@Mary Hmmmm... never saw that before... anywhere over the last 8 years?

Cherokee51
Cherokee51

@Mary

While Jay's conned are sterling examples of independent thinking and analysis?


That's just silly...

Mary
Mary

Agree. Point made and accepted.

LordHelpUs
LordHelpUs

"The Tax Policy Center estimates the plan will cost $2.4 trillion over a decade."  

LordHelpUs
LordHelpUs

@rimsky @LordHelpUs  "conservative?"  LOL! Was Reagan a fiscal conservative?  LOL!  Was GWB a fiscal conservative? LOL! Trump and his supporters are effing morons...

justaniceguy
justaniceguy

@Cherokee51 Cons cheer.

They're just a lottery ticket away from some huge tax breaks and weekends at mar a lago...

LordHelpUs
LordHelpUs

"The report, which is the first detailed assessment of the plan’s financial impact, found that the average tax bill for all income groups would decline by $1,600, or 2.1 percent, in 2018. The biggest decrease would go to those with incomes above $730,000, who would see their after-tax incomes rise by an average of 8.5 percent, or about $129,000.

Those in the middle quintile — with incomes averaging $66,960 — would see their after-tax income rise by 1.2 percent or about $660."

LordHelpUs
LordHelpUs

Who is a bigger moron?  Trump or people that support him?  Tough question...

Mary
Mary

Where are options C & D? C: NFL Players, D: NFL Players

LordHelpUs
LordHelpUs

@Mary  Thanks.  You inadvertently answered the question...

Mary
Mary

Intentional, not inadvertently.