Day 97: The Trump Tax Plan: Make the Rich Wealthy Again
Donald Trump is set to unveil his tax plan — or at least its sweeping principles — later today. All signs point to it helping the super rich and relying on tenuous economic principles to help everyone else.
If the corporate tax rate is slashed from 35 to 15 percent, as Trump, alleged billionaire, is expected to propose, his tax liability would be slashed in half. NPR reported that Trump stands to gain “tens of millions” of dollars by his own proposal.
In raw numbers, per The New York Times, the corporate tax rate alone would slash federal revenue by about $2 trillion over a decade. “To make up for those losses without raising taxes elsewhere, the economy would have to become 5 percent larger.”
Treasury Secretary Steve Mnuchin, worth a mere half billion dollars, is relying on that level of growth to make up the revenue difference. The problem is that Mnuchin’s math only works if the economy grows at rates not even seen when the economy was at its zenith in the 1960s. CNN couched the plan as relying on “voodoo economics” because such growth is virtually impossible. (Most economists struggle to see sustained growth at even 3 percent.)
Trump and Mnuchin apparently believe in Reagan-era principles like previously-failed trickle-down economics will work. They spout the idea that large tax cuts will spur companies to invest in large-scale growth, hire more workers and pay their workers more as opposed to hoarding the money for themselves and their shareholders.
Without finding a way to make up for the lost tax revenue, basic infrastructure and public programs go by the wayside since there’s no way for the government to fund everything. Alternatively, the government continues to fund most things but the federal deficit skyrockets and the U.S. compounds that growing problem even further.
It’s one thing to see the deficit rise when the economy is in shambles, but quite another to see it rise to give tax breaks to the richest of the rich.
The New Yorker calls the Trump tax plan a “plutocrats’s dream”:
Until we see the final Trump plan, it won’t be possible to estimate the exact scale of these giveaways. But when the Tax Policy Center looked at Trump’s campaign proposal, which seems to be the basis for what the White House and Treasury Department are working on, they found that more than half of the tax cuts would go to the richest five per cent of households in the country; about two-fifths would go to the richest one per cent; and about a fifth would go to the richest 0.01 per cent.
If personal income tax rates are slashed as well, as expected, the top 1 percent are going to substantially benefit again. Total revenue would be slashed about $9.5 trillion over a decade. For perspective, the federal government’s total annual revenue is less than $4 billion. Tax cuts would essentially slash 25 percent or more of the federal government without pie-in-the-sky type growth.
What will be couched as income tax cuts for all will disproportionately hurt the lower and middle class who rely on public programs more and whose taxes are already quite low.
Meanwhile, the wealthy, like Trump and Mnuchin (and billionaire Education Secretary Betsy DeVos and billionaire Commerce Secretary Wilbur Ross and billionaire SBA Administrator Linda McMahon and uber-rich Secretary of State Rex Tillerson and uber-rich son-in-law/adviser Jared “Kush” Kushner and many, many more political and personal cronies) will laugh all the way to the bank.
97 days in, 1365 to go
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