Donald Trump has a tax plan for you, and it’s going to be “amazing” – especially if you happen to be a billionaire like Trump, or even a mere millionaire.
Yes, his tax plan will take millions of lower-income people off the tax rolls. Married couples earning less than $50,000, or single people earning less than $25,000, pay no federal tax. “Those who would otherwise owe income taxes will save an average of nearly $1,000 each,” the campaign’s fact sheet says. (That figure contains some spin, as you will later see.)
That’s a big deal, but not nearly as big a deal as the plan would be for the top 1 percent. For those households, they will each get a tax break that averages $184,000, according to Citizens for Tax Justice. The impact on the federal government is that it would lose $10 trillion in revenue over 10 years, the organization estimates.
Before today’s announcement, Trump promised a plan in which wealthy Americans would pay more. “I don’t mind paying a little more in taxes,” he said in August, and he especially singled out hedge-fund managers and other investors who derive their income from investments rather than from wages.
What Trump actually delivered is not substantially different from what I called the “voodoo economics” tax plan of Jeb Bush, which likewise offered huge tax savings for the wealthy, negligible savings for those near the bottom, and the illusory promise of “trickle-down” economic benefits to working people.
What people lose in both plans is a government that has the resources to function on behalf of its citizens – by improving our national infrastructure and helping citizens prosper.
Here’s how Robert McIntyre, director of Citizens for Tax Justice, analyzes the tax plan:
“Yet another presidential candidate is making a mockery of populism by trumpeting a massive tax break for the rich as a plan that will benefit average Americans. The top one percent of Americans will receive an average tax break of $184,000 per year while the bottom 20 percent will receive an average tax cut of only $250.
“Trump claims the plan will be revenue neutral, but he has made bombastic exaggerations before and this time is no different. In fact, there is no possibility that this plan would not be a gigantic tax cut for the rich and a gigantic revenue loser for the government.
“Trump claims he will pay for the plan by closing tax loopholes for the rich. But in truth, his plan would expand loopholes for the rich and cut their tax rate by 40 percent. His plan also would cut the corporate tax from 35 to 15 percent, which also would mainly benefit the rich. And his plan repeals the estate tax, a tax that the very richest of the rich pay.
“The most widely-promoted tax hike in Trump’s plan, closing the “carried interest loophole,” would barely amount to a slap on the wrist for the hedge fund millionaires Trump says should pay more. The top tax rate on carried interest would increase only from the current 23.8 percent to 25 percent. Even this small tax hike would be dwarfed by the impact of dropping the top regular income tax rate from 39.6 percent to 25 percent on regular income.
“Trump has made many false claims about his tax plan. Of course, he’s been known to say many other things that aren’t true, too.”