President Donald Trump unveiled his latest giveaway to corporations and the ultra-wealthy on Wednesday, with a tax plan that would, according to one analyst, “personally help Trump enormously.”
The proposal, as outlined by Goldman Sachs alums and Trump administration officials Gary Cohn and Steven Mnuchin at the White House, would cut tax rates for businesses from (a rarely paid) 35 percent to 15 percent—a plan described this week by former Labor Secretary Robert Reich as “truly dumb.”
Trump’s package would also involve a “pass-through” tax cut on business income that is currently taxed at the business owners’ individual income tax rates rather than the corporate rate. Such a tax cut is also a centerpiece of House Speaker Paul Ryan’s (R-Wis.) “Better Way” plan, and as the Center on Budget and Policy Priorities (CBPP) notes, “would overwhelmingly benefit high-income people and create a costly loophole.” (Trump himself is said to have 500 pass-through arrangements.)
Eileen Applebaum, a senior economist with the Center for Economic and Policy Research (CEPR), further explained:
Decrying Trump’s proposal as “a very big step in precisely the wrong direction,” the Economic Policy Institute’s Josh Bivens and Hunter Blair wrote of the pass-through tax cut that “it will help private equity managers and people like President Trump: wealthy people who will now be able to reconfigure their taxes by reclassifying themselves as independent contractors. This isn’t theory, this is exactly what happened in Kansas.”
In that state, Blair elaborated in a separate post on Wednesday, establishing a pass-through loophole led to “even more lost tax revenue.”
Another aspect of Trump’s plan would eliminate the alternative minimum tax, or AMT, which was established to ensure that the super-rich are not able to use loopholes to escape their tax liability altogether. Trump’s 2005 tax return showed that for that year, “he paid 25 percent of $153 million in taxable income instead of the less than 4 percent that he would have paid without” the AMT, as the New York Times reported when the return was released last month.
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