Friday, September 29, 2017

Trump's tax plan is a huge gift for the wealthy, and a disaster for everyone else

WASHINGTON, DC - JANUARY 20: President Donald Trump singing along to "My Way" dances with first lady Melania Trump while attending the Freedom Inaugural Ball at the Walter E. Washington Convention Center on January 20, 2017 in Washington, D.C.  Trump will attend three inaugural balls.   (Photo by Kevin Dietsch - Pool/Getty Images)
For the middle class ... like me.

While Donald Trump is pitching his tax plan as something that benefits the middle class, even a cursory glance at the ill-defined plan shows that in truth it’s a windfall for the extremely rich.
The administration and its congressional allies are proposing to sharply reduce taxation of business income, primarily benefiting the small share of the population that owns the vast majority of corporate equity. 
And not only will there be no benefits to the middle class, even the Trump White House admits that their taxes may actually increase.
President Donald Trump's top economic adviser, Gary Cohn, said today that he can't guarantee that taxes won't go up for some middle-class families under the administration's sweeping tax overhaul. …
Cohn, the director of the White House Economic Council, said Trump's plan is "purely aimed at middle-class families." But he acknowledged that "it depends which state you live in."
The reason for that caveat is that, like the failed Graham-Cassidy healthcare bill, Trump’s tax plan isn’t aimed at just robbing any old middle-class family. It’s designed to especially punish blue states and force a race to the bottom. 

Experiments like those of Sam Brownback in Kansas may have turned out to be notorious failures. But Trump’s tax plan is aimed at making every state a Kansas.

Right now, the most dependent states on federal dollars are all red states. The highest amount of federal benefits received per tax dollar paid? All red states. And the states with the lowest gross domestic products? All red states. If the states are the laboratories of the economy, Republicans have brewed up a batch of failures.

Despite being able to deduct state income taxes from federal taxes, blue states are still paying more taxes, and getting fewer benefits, than red states. By wiping out the state income tax deduction, the Trump plan sweeps in money from populous, high GDP blue states and has little effect on states that either have low income tax due to building their economy on extraction industries, or on those states that have swapped out progressive income taxes for regressive sales taxes.

Trump’s plan also completely avoids those changes that would help low-income workers.

The president is not proposing measures like a reduction in payroll taxes, which are paid by a much larger share of workers, nor an increase in the earned-income tax credit, which would expand wage support for the working poor.
Lower income Americans get nothing. Middle-income Americans in blue states take a bath. 

So who does benefit?

“We have also said that wealthy Americans are not getting a tax cut,” Cohn said Thursday on ABC’s “Good Morning America.” 
Well that’s a relief … except it’s an absolute lie.

The lack of details in the plan make it difficult to estimate how the cuts would be distributed across income levels, but Mr. Trump and the wealthy would “almost certainly benefit,” said Roberton Williams, an analyst at the Tax Policy Center. …
Trump’s plan would eliminate the estate tax—a tax paid only by the top 0.2 percent of estates. It would eliminate the Alternative Minimum Tax, a tax designed expressly to keep the wealthy from skating out of paying taxes by manipulating their returns.

Without this tax, Mr. Trump would have paid $31 million less in taxes in 2005, according to his tax return that year, which was disclosed on the “Rachel Maddow Show” in March.
Donald Trump is planning a barnstorming tour, bragging to his supporters about the scope and importance of his “once in a generation” tax plan that’s good for the middle class.

Trump pitched his tax reform plan Wednesday in a speech in Indianapolis, painting it as a benefit to middle class and working class Americans. 

Not so good for the 1 percent.

White House economic adviser Gary Cohn insisted Thursday morning that “the wealthy are not getting a tax cut under our plan.”

And certain to create jobs. 

He has long said that his goal is to push the U.S. economy towards a 3 percent growth rate, a number at which he and other Republicans have said the nation will truly feel the benefits of their policies.
There’s only one thing wrong with this statement: Everything.

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