Donald Trump’s Amazingly Conventional Tax Plan

28 Sep 2015 | Author: | No comments yet »

Donald Trump Outlines Tax Plan That Would Eliminate Federal Income Taxes for Millions: ‘It’s Going to Cost Me a Fortune’.

Donald Trump’s long-awaited tax plan would end income taxes for Americans at the bottom of the earnings ladder, hit Wall Street in the wallet and scrap some popular tax breaks. Presidential hopeful Donald Trump unveiled his new tax plan on Monday at the Trump Tower in New York, promising to “shift the burden” to wealthy earners and reduce rates for lower and middle-income families.Not long ago, Donald Trump claimed that his rivals would allow “Wall Street” and the “hedge fund guys” to continue to “rip off the people by paying no or very little in taxes.” The implication was that Trump would raise the tax burden on top earners, which he seemed to underscore at the most recent GOP debate, when he ridiculed an opponent’s suggestion that raising taxes on the wealthy would constitute “socialism,” adding: “I know people that are making a tremendous amount of money and paying virtually no tax, and I think it’s unfair.” As I had argued, if Trump’s plan really did raise the overall tax burden on top taxpayers — which very much remained to be seen — it would have made him a real outlier in the GOP field. Trump spoke to a small room of supporters and media as he detailed his plan to bring relief to Americans in search of work and help middle class families “make ends meet” in the tax plan he holds “will make America strong and great again.” “If you’re single and earn less than $25,000 per year, or married and jointly earn less than $50,000, you’ll not pay any income tax.

Donald Trump has enjoyed his substance-free campaign for president (as have a third of the Republican Party), but now he’s ready to get down to business. The billionaire businessman said he will partially pay for the plan by reducing or eliminating corporate loopholes and deductions that are often utilized by Wall Street and the nation’s rich.

According to a leading tax expert I spoke to today, it would probably result in a tax cut, possibly a very large one, for many of the highest earners. In a wide-ranging interview with “60 Minutes” last night, Trump was peppered with questions from Scott Pelley about the specifics of his America-enhancing plans. Trump wants to eliminate the so-called “carried interest loophole” that allows managers of hedge funds and private equity firms to pay a lower tax rate than most individuals. His statements at the press conference echoed those he made on CBS’s 60 Minutes on Sunday where he said he would set a “zero rate” for low-income Americans. “No business of any size, from a fortune 500 company to a mom-and-pop shop to a freelancer living from gig to gig, will pay more than 15 percent of their business income in taxes,” Trump said. Some 75 million households, according to his published plan, would be removed from tax rolls and would get a one-page tax form to send the IRS. “It will provide major tax relief for middle-income, and for most other Americans,” insisted Trump. “There will be a major tax reduction.

For all other Americans, the tax code would be simplified down to three tax brackets — 10 percent, 20 percent, and 25 percent (down from the current top rate of 39.6 percent). All of his changes, he said, will “not add to our debt or our deficit.” Trump said his plan is the result of his collaboration with some of the nation’s top economists, tax experts and scholars who all “love it.” Proud of the plan, the 69-year-old said dealing with money is his wheelhouse – “The economy is what I do well.” Although his statements about the plan were brief, a lengthier outline of the proposal is available on his website, alongside his other major policy proposals including immigration and second amendment rights. He went on to talk about how it would create economic growth and more jobs, saying the jobless rate in American is much higher than the unemployment rate reflects. “I read 5.3 percent unemployment. It would also forbid U.S. corporations from deferring taxes on income earned abroad, providing them a one-time tax holiday rate of 10 percent – instead of the current 35 percent – on the more than $2 trillion parked overseas now. “Corporations are going to have an incentive to start creating jobs” in the United States, Trump said, adding that he too has money overseas and his plan would make it less attractive to move operations to low-cost nations.

It also comes in the wake of a new NBC News/Wall Street journal poll that shows retired neurosurgeon Ben Carson within one percentage point of Trump’s lead. “Trump’s plan is certainly consistent with the Taxpayer Protection Pledge,” Norquist said of the pledge his group asks Republican candidates to sign. “Trump has said he opposes net tax hikes and has made clear that the real problem is spending. Trump would follow a one-time 10 percent holiday tax rate with a broader 15 percent corporate tax rate that had far fewer, albeit not specified, tax breaks and loopholes. They’re incredibly stupid, but together they offer a glimpse of Trump’s big (and very specific) plan to make America great again: On singlehandedly reversing the process of globalization: “We’re gonna grow the economy so much…If the economy grows the way it should grow, if I bring jobs back from China, from Japan, from Mexico, from so many countries, everybody’s taking our jobs.” On immigration and deporting over 10 million Mexicans: “We’re rounding them up in a very humane way, a very nice way.

I don’t see anything in the plan that indicates there would be a large reduction enough in those preferences.” The plan “doesn’t appear to make the rich pay any more, and what detail we have suggests they would probably pay less,” Williams said. “From the looks of it, they would do very well. Rand Paul, R-Ky., last year proposed a 6.5 percent tax rate on repatriated foreign earnings, with the proceeds going to pay for needed infrastructure improvements. But without the details, we can’t say for sure.” To be sure, Williams noted, at his presser today, Trump (just like some of his rivals have done) vowed that his tax cuts would unleash spectacular economic growth, which he presumably believes would bring in enough revenues to ensure revenue-neutrality. I know it doesn’t sound nice, but not everything is nice.” On fixing health care without paying for it: “Obamacare’s going to be repealed and replaced.

Businesses would still be saddled with the complex, distorting, and growth-inhibiting “depreciation” regime where an asset is deducted over several or even many years. Trump also claimed today that “my tax plan is going to cost me a fortune.” Whether or not that proves to be true — and I’m sure some hearty fact-checkers will have at it soon enough — the question that is compelled by Trump’s own previous claims is: How many other very wealthy people would really see a tax hike? Far better would be to move to a full-expensing business cash flow model, where all business inputs including investments are deducted in the year spent.

Jeb Bush’s tax plan contained middle class tax relief and an elimination of certain loopholes in an apparent effort to get the plan described as “populist.” But closer examination revealed that Bush’s plan would deliver a big windfall to the top earners and add anywhere from $1 trillion to over $3 trillion to the deficit. The plan would eliminate deductions and exemptions for the rich, but lowers their top tax rate to 25 percent, giving them a much greater savings in relative terms than lower earners.

Trump’s plan borrows heavily from the GOP embrace of supply-side economics, which holds that lower tax rates generate more economic activity and eventually more tax revenue from that greater activity. Because, you know, every agreement has an end.” On letting ISIS take over another country before allowing Russia to deal with it: “I would end ISIS forcefully…Now let me just say this, ISIS in Syria, Assad in Syria, Assad and ISIS are mortal enemies…Why aren’t we letting ISIS go and fight Assad and then we pick up the remnants?…We’re fighting ISIS and Assad has to be saying to himself, ‘They have the nicest and dumbest people that I’ve ever imagined’…Russia wants to get rid of ISIS. And I’ve no doubt that his supporters will love every insanely idiotic thing he said, not because of what it means (or doesn’t mean) but because of how cocksuredly he said it.

Years ago Stephen Colbert created a character to lampoon the most hysterical pathologies of the right: the braggadocio, the blinkered thinking, the nativism, the love of truth without the facts. The Republicans who love him love him precisely because he says what they think, only he says it in a better suit and on a bigger stage – and that, it seems, is enough.

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