Donald Trump on Monday offered an extended version of the argument he and his supporters have been making since Sunday morning, following a blockbuster New York Times article showing that he claimed nearly $1 billion in business losses in 1995 ― enough to shield himself from most or even all federal and New York state income taxes over nearly two decades.
Speaking at a rally in Colorado, Trump acknowledged that he had taken advantage of loopholes to reduce his tax liability. But he said voters should reward that behavior, because it made him an expert on the ways the tax code gives unfair advantages to the wealthiest Americans. “I understand the tax laws better than almost anyone,” Trump boasted.
And while in the past he’d exploited those loopholes to get rich, Trump said, things would be different if he became president. “I’m working for you now,” he told the crowd. “I’m not working for Trump.”
The first part of that argument is easy enough to believe. By this point, Trump may be a bona fide expert in the strategies multi-millionaires use to get out of paying taxes. But the second part of the argument, that Trump would use this knowledge to make the tax code more fair, is another story entirely.
Although Trump hasn’t said much about the policies he’d enact as president, he’s said enough to give a good sense of who would benefit the most. And it’s not the middle-class voters he claims to champion.
Here are four basic reasons why:
1. The rich, not the middle class, are the big winners in his tax plans. Tax policy is one of the few policy areas that Trump has actually discussed in the presidential campaign. And while he’s addressed it in quintessentially Trump fashion ― by making proclamations and issuing proposals that frequently contradict one another ― one constant theme has been the way his plans would redistribute income.
Under the most recent iteration of Trump’s tax plan, which the progressive advocacy group Citizens for Tax Justice just analyzed, the millionaires in the top income percentile would get average tax breaks of about $88,000, or roughly 5.1 percent of their incomes. By contrast, Citizens for Tax Justice found, folks in the middle of the income distribution, with earnings of around $50,000 a year, would typically see a little more than $800 in tax relief, which amounts to a 1.7 percent increase in incomes.
The proportion of the total lost revenue in the tax cuts breaks down in a similar way, with that top income percentile gobbling up 44 percent of the total dollars.
Citizens for Tax Justice’s analysis left out some elements, including a provision that would mainly benefit wealthy people who own small businesses. There’s a reason for that. Sometimes Trump has said he’d include the provision. Sometimes he has said he wouldn’t. Howard Gleckman from the Tax Policy Center has the hilarious, horrifying backstory if you want to read it.
But the bottom line on Trump’s income and corporate tax proposals is the same in pretty much any permutation. It’s a windfall for the wealthy, and that includes members of the Trump family.
Or, to put it as The Washington Post’s Greg Sargent has, “the immediate priorities in his tax plan are to dramatically reduce the tax burden on people like himself.”
2. Trump probably wouldn’t make the tax code simpler, either. Simplifying taxes is a genuinely good idea, since a tax code full of special deductions and exemptions creates extra bureaucracy and hassle ― and because, ultimately, it’s mostly the wealthy who have the time to figure out ways of exploiting those frequently obscure provisions, or hiring accountants to figure it out for them. Trump says, correctly, that many of these special provisions exist only because well-connected lobbyists persuaded lawmakers to create and then defend them.
The real estate loophole that Trump found so valuable is, in the broadest sense, a perfect example of this. But Trump hasn’t specifically called for eliminating it, and experts familiar with his statements and proposals (of which, again, there have been several) see no evidence that he wants to do so. And while Trump has frequently cited simplification as a goal, and even suggested a loophole or two he might take out, he’s also proposed a whole new layer of complication.
It’s thanks to some new help Trump has promised on child care costs. That proposal has two separate parts, and each one would require its own set of bureaucratic contortions. The portion for middle-class and wealthy families, for example, would require the federal government to calculate average child care costs in each state ― something it doesn’t do now.
Of course, complications are sometimes a worthwhile trade-off for policy goals, such as equity. But as Elaine Maag of the Tax Policy Center has pointed out, Trump’s child care tax plan would give wildly disproportionate benefits to the wealthy.
Noticing a theme here?
3. Trump would undermine programs for the middle class and poor. Trump supporters don’t seem to care about his specific policy proposals, based on the interviews I’ve conducted over the past year. They simply trust that Trump is on their side. And while there are surely a lot of reasons for this, one is his vow to protect the government programs they like ― including Medicare and Social Security.
But Trump’s agenda would, by any reasonable reckoning, create huge new deficits. The Committee for a Responsible Federal Budget recently determined that Trump’s agenda, in its latest incarnation, would add more than $5 trillion to the national debt over the coming decade. (Hillary Clinton’s agenda, by contrast, would add just $200 billion ― which is not much more than a rounding error in this sort of exercise.)
As it happens, today’s low interest rates make it an ideal time for temporary, time-limited borrowing, for the sake of projects like infrastructure renewal. Trump, however, is talking about something else entirely ― permanent changes to the government’s revenue stream that, if enacted, would drain the federal treasury of money it needs to finance programs.
With Trump determined to protect or even increase defense spending, the likely result would be spending cuts. The likely result would be cuts to popular programs ― quite possibly including Medicare and Social Security, because that’s where so much government spending goes. And any Medicare cuts would likely involve straightforward benefit reductions, rather than carefully calibrated payment reforms designed to make the health care system more efficient.
4. Taxes are one area where Trump and Republicans in Congress agree. The biggest reason not to take Trump’s tax proposals seriously is that he himself doesn’t seem to take them seriously. His big domestic policy priorities, to the extent he has any, seem to be immigration and trade. If he became president, those are the issues where, presumably, he’d want to spend his political capital.
But enacting the kind of tax plan Trump has in mind might not require any political capital at all. In a world where Trump is president, the Republicans almost certainly control Congress. They have the same basic ideas on taxes ― reduce rates on individuals and corporations in ways that mostly benefit the wealthy, paying for them, as necessary, with cuts to spending programs.
Republicans might flinch at passing Trump-style changes to immigration law, because at least some of them worry about the political effects, particularly among Latino voters. And plenty of Republicans would raise a ruckus about changes to America’s trade posture, given that the GOP’s corporate supporters strongly favor freer and more open trade.
But if Trump becomes president, he could expect to see a big, fat tax cut on his desk within a week, or maybe sooner, because Republicans would pass it immediately. Oh, and as Paul Waldman of the American Prospect noted on Monday, House Speaker Paul Ryan’s tax plan would probably be even more regressive than Trump’s.