President Trump wants you to know that his push for tax cuts isn't about him. As he said during his big unveiling on Wednesday, the new tax proposal is only to help "low-income and middle-income households, not the wealthy and well-connected. They can call me all they want. It's not going to help. I'm doing the right thing, and it's not good for me. Believe me."
If you've been paying close attention for the last couple of years, you know that when Trump says the words "believe me," it is a clear signal that he's lying. This is no exception.
Trump has been adamant that he won't profit from his tax plan. Asked by a reporter whether he'd benefit from the plan, the president responded, "No, I don't benefit. I don't benefit. In fact, very, very strongly, as you see, there's no — I think there's very little benefit for people of wealth."
There is one way that might possibly be true: if Trump pays no taxes at all, in which case his taxes can't go down any further. Of course, it's impossible to know for sure, since unlike every president in the last half-century, he refuses to release his tax returns. But if we set aside that no-tax possibility, we can look at the plan to see the ways Trump and other rich people would get a windfall from the changes he wants to make to the tax code. And there are plenty.
The top rate comes down from 39.6 percent to 35 percent. That may not seem like a huge cut, but the more you make, the more it's worth. If you're a corporate CEO with a $10 million salary, you get a tax break of hundreds of thousands of dollars, which might just be enough to buy that Rolls-Royce Phantom you've had your eye on.
Still, Trump might be right that this particular tax cut won't benefit him — but that would only be true if he instead benefits from other parts of his tax plan, as we'll outline below.
The Alternative Minimum Tax disappears. The AMT was put in place so rich people couldn't use a bunch of fancy loopholes to get out of paying taxes; if your income is over about $200,000 and your tax liability is unusually low, you might have to pay the Alternative Minimum Tax. And Donald Trump has in the past. Remember back in March when reporter David Cay Johnston got a hold of the first two pages of Trump's 2005 tax return? They showed that in that year, he had to pay an AMT of $38 million. If he killed the AMT, he wouldn't have to worry about that again.
Pass-throughs get special status. Many businesses are organized as "pass-through" entities, which means that any profits the business makes flow to a person or persons, who then pay taxes on that income at regular income tax rates. Some of those businesses are small, like the corner hardware store. But some of them are quite large, and most pass-through income goes to people paying income taxes at the top rate of 39.6 percent. Since the Trump tax plan taxes all pass-through income at 25 percent, that would represent a huge tax cut for them.
And guess who owns a collection of over 500 business entities, nearly all of which are pass-throughs? Can you guess? I'll bet you can.
The estate tax disappears. Republicans will insist that eliminating this tax (also called the inheritance tax) is about helping small businesses and farms, which is utterly bogus. Heirs pay zero tax on the first $5.49 million of an estate, which is why it is only paid by one in every 500 estates. If you know any farms that are worth more five and a half million dollars, that's no family farm, that's a conglomerate — which is why tax getting assessed on farms is vanishingly rare.
But Donald Trump's estate would most certainly be one of those one in 500. In practice, wealthy people often take advantage of various loopholes and schemes to shield their estates from the tax, but since we know so little about Trump's finances, let's assume that his entire estate would be subject to it. He claims to be worth $10 billion. That number is almost certainly wildly inflated. Forbes pegs the actual figure at $3.5 billion. At the 40 percent estate tax rate, Trump's proposal to eliminate the inheritance tax would save his family $1.36 billion in taxes on that $3.5 billion.
Let's spare a moment's consideration for poor Ivanka, Don Jr., Eric, Tiffany, and Barron, forced to divide a mere $2.14 billion between them when The Donald departs this mortal coil. Will Ivanka stay up nights darning their moth-eaten socks so they can avoid frostbite in the winter? Will Eric beg for alms on Fifth Avenue? Will Don Jr. go on African safari not for the sheer joy of putting a slug through the brain of a rare and exotic animal but so the family can have food to eat? Will they have to sell all those gold-plated toilets? If the plan passes, they won't have to worry, thank goodness.
The president himself and the people who work for him could have done what Republicans in earlier times did, patiently explaining that tax cuts for the rich are necessary so those noble job-creators can go out and spread their largesse on the rest of us. They've decided instead to just lie about it, claiming that the rich are getting nothing at all. As chief economic adviser Gary Cohn said on Good Morning America on Thursday, "The wealthy are not getting a tax cut under our plan." But of course, they are, and it'll be a big one. And that includes the president himself.