Short on details, big on misleading information, the GOP and No. 45 have found another way to fill the coffers of the ultra rich—and starve everyone else. Again.
We urgently need your help. DAME reports the stories that need to be told, from perspectives that aren’t heard enough. In times of crisis it is even more critical that these voices are not overlooked, but COVID-19 has impacted our ability to keep publishing. Please support our mission by joining today to help us keep reporting.
Well, the Trump tax plan is finally out, and it is exactly as bad as you thought it would be. It’s cruel, short-sighted, and financially disastrous. In short, it is classic Trump.
Trump is selling this tax plan as “tax reform that is pro-growth, pro-jobs, pro-worker, pro-family and yes tax reform that is pro-American.” But of course, it’s really only pro-people just like Trump.
One of the ways in which Trump and his terrible and cruel ideas have gained traction and legitimacy is that the media generally tries to treat him like a rational actor rather than a madman and cover his completely threadbare ideas like actual policy proposals. This tax plan is so bad that even venerable mainstream media institutions were forced to actually confront it. The New York Times wrote that Trump “misleads” on who benefits from his tax plan. CNBC pointed out that the plan “comes up short” on critical details. Even Reuters called the plan out for being exactly what it is: a boon to businesses and to the already-wealthy.
One of the big problems here is that on the surface, the tax plan initially sounds plausible and tolerable if you don’t dig into how the numbers actually play out. Trump proposes to double the standard deduction while eliminating personal exemptions and collapse the existing seven tax brackets into just three. The doubling of the standard deduction sounds great but doesn’t necessarily work out in practice. For example, a middle-class family with two children would see their deductible income actually decrease by almost $4,000, which is basically the opposite of a tax cut.
And what about collapsing those tax brackets? Definitely for the wealthy. Trump hasn’t said yet where the brackets would be drawn, but since it gets rid of the current highest tax rate, there’s just no way it doesn’t benefit the rich. Oh, and in a nice touch, the bottom tax bracket of 10% would actually go up to 12%.
While it is a little hard to figure out how the deductions and brackets help or hurt various groups, there’s nothing difficult about assessing the other portions of the proposed plan, which are pure giveaways to the wealthy and to corporations.
First, the wealthy. The plan proposes to repeal the Alternative Minimum Tax (AMT). The AMT is designed to prevent wealthy people from gaming the system with deductions so much so that they end up paying a very low amount relative to their income. Who would see a huge tax cut if this goes away? People like one Donald J. Trump, who would have saved $31 million back in 2005, the last year for which we have his tax filings available.
The plan also kills the estate tax, which has been hated by Republicans forever. They like to frame it as something that hobbles small businesses—farms in particular. However, the estate tax doesn’t even kick in unless you inherit non-exempt assets that exceed $5.49 million. With Trump’s estimated net worth already in the billions (and he’s earning more every day thanks to his ceaseless grifting) the Trump children would certainly benefit from a repeal of the estate tax, but no one you know will. There are literally only about 5,500 estates in America that are wealthy enough to pay this tax and there are tons of loopholes to help decrease tax liability under that tax.
Corporate tax rates plummet too. The overall tax rate is slashed from 35% to 20%, and a carve-out for what are known as pass-through entities such as LLCs and partnerships gets capped at 25%. Guess who has around 500 pass-through entities that would benefit from this cut? Donald Trump, natch.
Some existing deductions get cut in this plan because things have to be cut to pay for the massive giveaways to the rich. One of those deductions that gets cut just happens to be one that often benefits the people Trump doesn’t like—those who live in blue states. Right now, you can deduct your state and local taxes from your federal tax bill. This is beneficial if you live somewhere with higher local tax rates, like California or New York. Trump’s plan would kill that deduction and saddle Californians with a $101 billion tax increase, while New York residents would absorb a $68 billion hit.
All this slashing comes with a literal cost: the nonpartisan Americans for Tax Fairness estimates that the tax cuts proposed by Trump could total as much as $8.3 trillion. Yes, closing some loopholes or eliminating deductions would cover part of that, but anywhere from $3 to $5 trillion won’t be covered. This blows up the deficit and gives the Republicans more cover to cut things like Social Security, Medicaid, education, and other crucial services. For Trump and his ilk, that’s a feature, not a bug.
This tax plan is just the latest in a series of Republican maneuvers that evince a complete lack of regard for anyone except the rich. Trump’s budget proposal from May proposed slashing the Supplemental Nutrition Assistance Program (SNAP) by 25%, would cut $800 billion from Medicaid, and lop over 13 percent off of the budget for the Department of Housing and Urban Development.
The House of Representatives introduced a budget back in July 2017 that is meant as a companion to Trump’s tax plan: Trump’s plan will utterly starve the government of the money it needs, but that’s fine because the House proposes to massively cut funding—to the tune of $200 billion in 2018 alone—for federal employee benefits, welfare, and enforcement of regulations against financial institutions, among other things. (It doesn’t, however, cut a dime from defense spending. Instead, it projects a steady 10-year increase in military spending.) And the House’s proposed 2018 spending bill, which is mercifully DOA because it can’t pass in the Senate, outlined cuts to climate change research, Planned Parenthood, foreign aid, and more.
The agenda of Trump and the GOP couldn’t be more clear: Starve government. Create financial shortages and chaos that can only be solved by cutting basic services. In short: harm the poor and the middle class and reward only the rich.
We urgently need your help!
Covid-19 has dramatically impacted our ability to keep publishing. DAME is 100% reader funded and without additional support, we can’t keep publishing. Become a member at DAME today to help us continue reporting and shining a light on the stories that need to be told, from perspectives that aren’t heard enough. Every dollar we receive from readers goes directly into funding our journalism. Please become a member today!
(If you liked this article and just want to make a one-time donation, you can do that here)
CONFUSED ABOUT VOTING?
We've got you covered!
Check out our state-by-state map for registration deadlines, early voting dates, and everything else you need to make your voice is heard on November 3rd 2020.