Trump’s tax plan: Who would benefit?
During his campaign for president, Donald Trump promised that if elected he’d raise taxes on the rich, himself most definitely included. “It’s going to cost me a fortune— which is actually true,” Trump told reporters in late 2015. Well, guess what? said Jonathan Chait in NYMag.com. It was “not actually true.” Last week, in a scramble for achievements ahead of the symbolic 100-day milestone, the Trump White House released a single-page, bullet-pointed tax plan that is effectively just a “massive tax cut for the rich,” himself in particular. The tax rate on corporations and so-called pass-through businesses (such as Trump’s own) would be slashed from 35 percent to 15 percent, saving Trump tens of millions each year. He would also scrap the Alternative Minimum Tax, which cost Trump $31 million in 2005, and the Estate Tax, which by itself would save the Trump family up to $4 billion, if the patriarch is really worth the $10 billion he claims. If all of his proposed tax cuts are passed, Trump will add an incredible $7 trillion to the deficit over a decade. Even more shocking than the naked self-interest, said E.J. Dionne in The Washington Post, is that Trump campaigned as a champion of the working poor. In reality, Trump’s views on taxation are “about as ‘populist’ as the membership list at Mar-a-Lago.”
When liberals howl this way, said Kimberley Strassel in WSJ.com, that’s when you “know a Republican president has scored big on a proposed tax reform.” What Trump has laid out in this succinct document is a “swashbuckling vision for enacting pro-growth principles.” A steep cut to the U.S. corporate tax rate—currently the highest in the developed world—will open the floodgates to foreign investment. His proposal to double the standard deduction and simplify the personal tax code into three income brackets—10, 25, and 35 percent—will provide tax relief for millions of lower- and middle-income families. And the plan won’t explode the deficit, said John Steele Gordon in CommentaryMagazine.com. These cuts, if enacted, will “supercharge the economy, offsetting much of the revenue lost through lower rates.”
Some myths never die, said Steven Rattner in NYTimes.com. Since the days of Ronald Reagan, the GOP has been in thrall to this “alchemistic belief that huge tax cuts can pay for themselves by unleashing faster economic growth.” There’s little empirical evidence for this “magical thinking”—at most, studies show, about 30 percent of revenue lost in a tax cut will ever be recouped through resulting growth—but there was Treasury Secretary Steven Mnuchin last week again nonsensically assuring reporters that Trump’s plan will “pay for itself.” Even for Trump, the deception and delusion is mind-boggling, said Paul Krugman in The New York Times. Trump “plans to blow up the deficit, bigly, largely to his own personal benefit.”
Republicans “should ignore the debt consequences and pass the Trump tax cuts,” said Ed Rogers in WashingtonPost.com. After “eight years of Obama-era stagnation” we badly need a surge in growth to restore “our nation’s vitality.” Reform of our sprawling, antiquated tax code is long overdue, said Douglas Holtz-Eakin in The Washington Post, and Trump is right to look for ways to jump-start our “anemic” economic recovery. But a “responsible tax plan” would accomplish these goals without ballooning our already unsustainable national debt. If Trump wants to make America great again, he needs to come up with a tax-reform plan “built on realistic growth assumptions, not economic fairy tales.”