Donald Trump's bad ideas come so fast and furiously it's sometimes hard to keep track of them all. So in case you missed the release of his revised tax plan earlier this month, below is a quick primer on its five most objectionable features.
All of the proposals are demonstrably bad for the country, as they would widen income and wealth gaps while risking the funding for important public services. Some of them are, in true Trump style, very lucrative for him and his family. (These proposed tax breaks to him and his family are highlighted in bold italics.) Trump's plan:
1. Gives multinational corporations with profits stashed offshore a tax cut of up to 550 billion. Big American corporations hold 2.4 trillion in earnings overseas on which they owe up to 700 billion in U.S. taxes. Trump would cut the tax rate on those offshored profits from 35% to just 10%, raising only about 150 billion. This would hand tax-dodging multinational corporations an undeserved tax break of more than half a trillion dollars.
2. Cuts taxes on hedge funds and other wealthy partnerships by billions of dollars--personally benefitting Trump. Many Wall Street partnerships, private equity firms, real estate and law firms and other big-money outfits choose to incorporate as business partnerships. That lets them pay taxes as individuals not corporations. Trump's tax plan cuts the tax rate on these so-called "pass-through" entities from currently as high as 40% to just 15%. These businesses already dodge hundreds of billions of dollars in U.S. taxes by exploiting the pass-through loophole intended for small businesses. Trump's tax cut will help them avoid billions more. The owner of several hundred pass-through entities himself, Trump will personally benefit from a massive tax giveaway that's been appropriately dubbed the "Trump Loophole."
3. Slashes the corporate tax rate by nearly 60%. Corporations are already dodging their fair share of taxes at a time when they are enjoying record profits. Only one in ten dollars of federal revenue now comes from corporate taxes, compared to one in three dollars 65 years ago. Rather than fix the problem of rampant corporate tax dodging, Trump's plan would make it worse by cutting the corporate tax rate from 35% to just 15%. This would lose 2.4 trillion over the next decade.
4. Reduces individual income tax rates on the wealthy. Trump adopts a House GOP proposal to cut the top tax rate to 33% (from about 40%), as part of a general lowering and consolidation of tax brackets. Even the conservative Tax Foundation estimates these overall rate reductions will lose almost 2 trillion in revenue over 10 years. And since richer people pay a higher share of their income under the current tax system, a good chunk of that2 trillion will go to them. If Trump is as wealthy as he says he is, he could benefit handsomely from this big tax cut.
5. Eliminates the estate tax to boost the inheritances of millionaires and billionaires--which will give his heirs a 7 billion tax break. Trump would eliminate the federal estate tax, which is only paid by very wealthy families. Just one in 500 estates is affected today, those worth at least 5.5 million. The estate tax is a small curb on the accumulation of dynastic wealth, and is a key tool in reducing economic inequality. Eliminating the estate tax would lose 270 billion over the next decade. Assuming Trump is worth 10 billion and allowing for expected growth of that fortune, his heirs could gain 7 billion if the estate tax is repealed.
Like so many of his other ideas, Trump's tax plan is unjust, ill-informed, and dangerous. It gives more to those who already have a lot, squandering resources we could use to strengthen our communities through public investments in safer roads, better schools, new medical cures and more secure retirements.
Trump's tax plan ignores the well-established evidence that trickle-down tax policies like he proposes have failed to raise working families' stalled incomes and have instead increased economic inequality over the past 35 years.
Americans' patience with public policy that benefits those at the top at the expense of all the rest of us is exhausted. By pushing an extreme example of such policy, Trump once again threatens the social cohesion of our nation.