Trump wants to give new tax breaks to churches, corporations, and himself, but not so much you. (Unless you’re super rich.) And then I think he’d probably resign.
He just wants to say he was president and the best at something — he promised the tax cuts for both individuals and businesses would be “bigger, I believe, than any tax cut ever” — and then walk out with more money than he lost campaigning.
Consider the evidence. There aren’t a lot of details to this tax policy: He put out a one-page proposal. Yes, after two years of campaigning and three months into his presidency, that’s all he has.
It just regurgitates, in 19 bullet points, all the empty promises he’s made before. Details will be ready by June, supposedly, but he still hasn’t hired for the positions that would be most involved in negotiating a tax plan with Congress.
Meanwhile, he failed on immigration, with his travel ban being stomped on twice and Congress refusing to throw money at his wall. He failed big league on repealing Obamacare. He has complained that being president is harder than his old life, and still hasn’t completely severed ties to his businesses.
He now says we’re never getting his tax returns, after repeatedly saying we would once they weren’t under audit. He spends every other weekend at home or golfing, after criticizing Obama for every hole he played.
So it’s not hard to believe he just wants a big win before he goes home.
How Trump’s tax plan would benefit… Trump
A majority of Trump supporters were in favor of raising taxes on the wealthy just before the election. And a recent poll from Quinnipiac University shows a majority of Americans overall, including a slim majority of Republicans, don’t want Trump to lower taxes on the wealthy.
His plan disregards all that fake news — about half of the total tax cuts his plan offers go to the top 1 percent. Admittedly, that’s better than Paul Ryan’s tax plan, which gives 99 percent of the cuts to the 1 percent — but it’s no consolation to most of us. Especially the ones who might get a tax increase because of his lousy ideas.
But first, Trump. He wants to eliminate something called the Alternative Minimum Tax. That’s an additional tax designed to make sure wealthy people, who can afford to pay really smart accountants to spend all year finding lots of crazy tax breaks that will lower their taxes to a far lower rate than everybody else pays, don’t get away without paying their fair share. For the one kind-of-recent year we know something about Trump’s taxes, 2005, Trump got hit with an AMT of $31 million.
Trump also wants to eliminate the estate tax (which he cutely calls “the death tax”), something only the wealthiest pay. Basically, when rich people die and leave money or property behind for their families, Uncle Sam gets a cut first. Trump doesn’t think they should be able to prevent him from handing his entire fortune off to Ivanka.
He also wants to lower the top personal income tax rate from 39.6 percent to 35 percent. The top 0.1 percent could save more than $1 million a year from that move.
He also wants to cut the corporate tax rate from 35 to 25 percent. This is higher than the 15 percent he proposed on the campaign trail, but would enormously benefit his businesses.
I love the name Penny Hoarder founder Kyle Taylor came up with for Trump’s plan: the Mar-a-Lago Supplemental Assistance Act. That really does encapsulate it.
What about the rest of us?
Trump’s proposal says he wants to “eliminate tax breaks for special interests,” but that obviously excludes himself. And churches.
Trump is signing an executive order to give the IRS “maximum enforcement discretion” on a prohibition against religious nonprofits campaigning or supporting political candidates, potentially offering them some cover to engage in politics without risking their tax-exempt status.
He also wants to impose a one-time tax on companies hoarding cash overseas. Many American companies do this — Apple has almost enough stashed away to buy Disney outright — and that proposal would encourage them to bring the money back to the U.S. and invest in here. But unless the sort-of-moldy carrot is paired with something resembling a stick, why would anybody take the offer to pay extra taxes? Trump himself clearly wouldn’t.
The big things that could affect the average consumer are Trump’s changes to tax brackets and deductions. He wants to shrink the number of income tax brackets (currently 7) to three: at 10, 25 and 35 percent. Those numbers aren’t very useful without knowing the income thresholds they would apply to, which Trump hasn’t given us. But we know the current brackets look like this:
Fewer brackets means all the in-between people have to worry about whether their taxes might go up or down. The 15 percent tax bracket, which would disappear under Trump’s proposal, has the largest number of Americans in it — more than 42 million.
Trump’s deduction changes might help anchor people in lower brackets — he wants to more than double the standard deduction, which would exclude more of your income from being counted as taxable. But coupled with that change, he wants to remove the personal exemption people claim for themselves. It gets tricky, and without real numbers from Trump, it would be hard for even a CPA to give straight answers.
The best case would seem to be that the average American saves a few hundred bucks thanks to the bracket consolidation and higher deduction. But people on the upper side of a bracket might be in for a tax hike. Meanwhile, Trump will definitely make out like a bandit.
Will it stick?
None of this matters unless Trump gets his way — and he hasn’t very often so far, despite a Republican-dominated Congress. Unless Obamacare repeal 2.0 succeeds and Republicans get the trillion dollars in federal savings that would come with it, they will have much less leeway to cut taxes to Trump’s liking. The plan can’t be made permanent if it increases the federal deficit over 10 years, and this plan definitely would. So tax cuts have to be paired with cuts elsewhere.
Trump’s advisers argue the tax cuts don’t need to be made up with revenue because they’ll boost the economy and ultimately pay for themselves.
Only 5 percent of economists believe that, and there’s no evidence it worked when Reagan or Bush cut taxes. But hey, if he can just hoodwink us all big league one more time, maybe he’ll call it quits. That would certainly be enough to get me to vote yes on his tax proposal. (And then change it later, once he’s gone.)
Article last modified on August 8, 2017. Published by Debt.com, LLC . Mobile users may also access the AMP Version: Who Is Going to Get a Big Trump Tax Cut? - AMP.
Article last modified on August 8, 2017. Published by Debt.com, LLC .