If you were paying attention to what we learned about Donald Trump during the 2016 campaign, then you know that the president of the United States was once the impresario of a student-swindling Trump University, the founder of a Trump Foundation designed for tax evasion and illegal self-dealing, and the chief executive of a The Trump Organization that has long relied on various techniques of grifting, from rip-offs of workers and contractors to serial bankruptcies.
And if you know all that, then you cannot be surprised by the way that he and his family have conducted themselves during the first 100 days of his presidency, which is also the way they will behave until they leave or are removed from the White House. They have misused the office of the president to enrich themselves in ways that none of Trump’s predecessors, not even the most venal, could have imagined doing.
Nor can you be surprised that this grasping figure and his appointed cronies, notably Treasury Secretary Steven Mnuchin, have floated a tax “reform” that will enrich the very wealthiest Americans by trillions of dollars, while decimating necessary government functions and depriving millions of working-class and low-income families of health care.
While Trump has long refused to abide by the customs and traditions that dictate tax disclosure by presidents and presidential candidates, we know enough about his taxes to see that his new plan, although sorely lacking in detail, will serve his personal interest above all. (No, he didn’t put “America first.”) Although tax policy is often complicated and numbingly dull, the changes that Trump is seeking to benefit himself are really quite simple.
The plan’s biggest “reform” is to slash the corporate tax rate from 35 percent to 15 percent – including the rate on so-called pass-through companies. Unsurprisingly, Trump owns more than 500 such firms, which allow his income to be taxed at the lower business rates rather than payroll rates. It also cuts the personal income tax rate on the highest earners, such as Trump, and the 3.8 percent Obamacare tax on unearned income. The reforms eliminate the alternative minimum tax, which required Trump to pay $31 million in 2005, according to a tax return that leaked last year. And the plan establishes a “territorial” tax system leaving all the profits earned by The Trump Organization in foreign countries.
He aims to take care of his children, too, if not yours or America’s – so his plan also eliminates the estate tax entirely, allowing his billions to be inherited absolutely tax-free by Ivanka, Don Jr., Eric, Barron and perhaps Tiffany.
Now if you’re a middle-class or working-class taxpayer, you may recall that Trump promised that as president he would be independent of banks like Goldman Sachs and close the gaping “carried interest” loophole that benefits billionaire hedge fund managers. The author of his tax plan, Treasury Secretary Mnuchin, vowed last winter that Trump’s reforms would not disproportionately benefit the rich. In fact, he went further:
“Any reductions we have in upper-income taxes will be offset by less deductions, so there will be no absolute tax cut for the upper class. There will be a big tax cut for the middle class, but any tax cuts we have for the upper class will be offset by less deductions that pay for it.”
That was then, this is now – which with Trump usually means that he was lying.
He appointed two former Goldman Sachs bankers, Mnuchin and National Economic Council chief Gary Cohn, to write the tax “reform,” which doesn’t mention the carried interest loophole at all. They cut taxes so drastically on hedge fund managers (and every other corporate and finance billionaire) that the carried-interest scam might no longer matter.
As for that pledge repeated so often by Trump, and then Mnuchin, to cut middle-class taxes, the treasury secretary was unable to say this week whether taxation on middle-class and working-class families will go down – or up, as some analysts of his plan say they might. “I can’t make any guarantees,” Mnuchin said when pressed by reporters.
So if you’re a working-class or middle-class taxpayer, this “reform” offers nothing except uncertainty. When the details of the Trump plan finally emerge, you may discover that its collapsing of brackets has actually raised your taxes, and that its elimination of deductions for state and local taxes or student loan payments has left you owing more to the IRS.
But the latest polls indicate that if you’re a Trump voter, you don’t mind being conned – perhaps because you love watching a president who picks on immigrants and refugees, irritates liberals and bombs a Syrian airstrip. Let’s hope you still feel happy when the bill comes due.