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The only thing about Donald Trump’s tax plan that fits on a postcard is Trump’s tax plan. Calling it a plan is an insult to plans. Saying that it’s one page is a tribute to white space. There’s not just no there there, there’s no there.
This is a plan whose highlight is that it brings individual tax brackets down to three, but doesn’t even say where those brackets start. It’s a plan that supposedly limits deductions to just mortgage interest and charitable deductions … but seems to have no idea what that would mean. The average person looking at the plan would have no idea how much less, or how much more, they would pay in taxes. But the average billionaire or corporation would make out like bandits.
Mr. Trump’s skeletal outline of a tax package, unveiled at the White House in a single-page statement filled with bullet points, was less a plan than a wish list. …But they offered none of the standard accouterments of such rollouts, such as detailed charts showing the cost of each provision, phase-in periods, the impacts of the proposals on people and testimonials on the program’s potential benefits.
It could have been the world’s first number-free tax plan, were it not for the big number—cutting corporate tax rates to 15 percent. That huge corporate cut, along with eliminating the Alternative Minimum Tax, cutting the top tax rate, and eliminating the inheritance tax ensures that while the 99 percent may be in limbo when it comes to the not-a-plan, the 1 percent can start the celebration without seeing any details. And even though the plan contains less text than the average sweetener packet, it also includes one super bonus for business owners.
Especially notable is that the plan would allow "pass-through" entities, which let business owners treat their revenue as individual income, to qualify for the same 15 percent rate.
Trump’s Goldman Sachs sponsored economic team of Steven Mnuchin and Gary Cohn may indicate that the plan includes three brackets with rates of 10, 25, and 35 percent. But that special pass through provision means that those with enough business savvy to funnel their personal income through a corporation can keep their rate at the bottom, no matter their level of income.
"Pass-through" entities tend to benefit wealthy people like Trump, whose business empire includes a series of pass-throughs in which profits flow to him. The 15 percent rate would give the rich a giant incentive to route their income through pass-throughs to avoid the much higher 35 percent top rate on individual income.
In the few glances we’ve seen of Trump’s tax returns, he’s run into the Alternative Minimum Tax—a system expressly put in place to keep the wealthy from dodging taxes through complex dedications and shuffling funds off to tax havens. To no one’s surprise, Trump’s “plan” completely eliminates the AMT.
The plan repeals the Alternative Minimum Tax, which is designed to ensure high earners pay at least some taxes even if they claim a large number of deductions. Trump's 2005 tax return, which journalist David Cay Johnston obtained in March, shows he paid $38 million in taxes on $152 million in income, but $31 million of his tax payment was due to the AMT.
And, in a move that’s certainly of interest to Ivanka, Donnie Jr. and Uday, the plan also immediately and completely drops the estate tax, which Republicans continue to pass off as something that affects “small businesses” and “family farms” though both the base numbers and special provisions have made the tax significant only on a handful of very large estates.
Trump would eliminate the estate tax, which only affects inheritances larger than $5.5 million for individuals and $11 million for families and could save his children tremendous amounts of money. His plan would also remove a 3.8 percent surcharge on investment income created by the Affordable Care Act that only affects higher income taxpayers.
Put it all together, and Trump’s plan would save tens of millions—for Trump. It would gift the wealthy with trillions in tax breaks over a decade. While those not in the top 1 percent of the top 1 percent would get … maybe nothing at all.
While not a perfect comparison, an analysis by the nonpartisan Tax Policy Center of Trump's campaign plan found that the average gains for the top 0.1 percent of earners would be 14 percent of their after-tax income, versus just 1.8 percent for the middle fifth of earners and 0.8 percent for the poorest fifth.
Under the best assumptions, someone earning $50,000 a year could expect savings of perhaps $350, which Trump hopes would be enough to make them ignore the fact that someone earning $5,000,000 a year would see over $400,000 in gains.
In fact, the “benefits” to the middle class tax payer are so vague, Mnuchin wouldn’t guarantee that most people would not end up paying more. But the form, like the plan, would be shorter. Mnuchin and Cohn seem to think that Americans will cheerfully hand over trillions to the wealthy, or even pay more themselves, in exchange for having a shorter form.
If someone set out to build a plan that would ensure even greater income disparity, and lock in a class of entitled oligarchs whose wealth was protected across generations, they couldn’t have done a better job. And considering who designed this plan, that was exactly what they had in mind.
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