Republican presidential candidate Donald Trump unveiled a tax reform plan that he claimed will “cost [him] a fortune” and that right-wing media touted as “populist.” In fact, like many of his Republican rivals, Trump has offered a tax plan that amounts to a victory for the rich.
Trump Plan Slashes Tax Rates For Top Income Earners And Corporations
Trump Tax Plan Cuts Taxes For The Rich. Donald Trump announced his tax plan at a September 28 press conference at the Trump Tower in New York City. The Wall Street Journal summarized his plan:
Republican presidential candidate Donald Trump unveiled an ambitious tax plan Monday that he says would eliminate income taxes for millions of households, lower the tax rate on all businesses to 15% and change tax treatment of companies' overseas earnings.
Under the Trump plan, no federal income tax would be levied against individuals earning less than $25,000 and married couples earning less than $50,000. The Trump campaign estimates that would reduce taxes to zero for 31 million households that currently pay at least some income tax. The highest individual income-tax rate would be 25%, compared with the current 39.6% rate.
Mr. Trump's plan appears designed to help him, as the GOP front-runner, cement his standing as a populist--though that message is complicated by the fact that the billionaire, like other Republican leaders, would eliminate the estate tax.
For businesses, Mr. Trump's 15% rate is among the lowest that have been proposed so far. Rand Paul has proposed a 14.5% flat-tax rate for all types of income. Marco Rubio, another candidate with a detailed plan, would tax all business income at no more than 25%. Mr. Bush has proposed a 20% top corporate rate. The current top corporate tax rate is 35%, and small business income is subject to rates of as much as 39.6% (although many small businesses pay out a lot of their profits as lower-taxed dividends or capital gains). The campaign argues the rate would be among the lowest among industrialized nations, giving U.S. companies an edge to compete. [The Wall Street Journal, 9/28/15]
Right-Wing Media Praise Trump's “Populist” Tax Plan
Fox Business' Gerri Willis: Trump's Tax Plan Is “Good News For Regular Americans.” On the September 28 edition of Fox News' Your World with Neil Cavuto, Willis hyped Trump's plan as “fantastic,” claiming that it would be “incentivizing growth” since high taxes are “not a big incentive to work”:
GERRI WILLIS: This would promote growth. There's no doubt about it. If there's anything Trump gets right here, it's incentivizing growth. It's incentivizing work. I mean-- let's face it -- if you have about 50 percent of your income taken away in taxes, it's not a big incentive to work. And that's what he's doing here. He wants people to be incentivized to work, spend, invest, sock it away. That's what he'd like you to do and I think that's fantastic. But the devil -- of course -- is always in the details and I think some of us have big questions about that. The big headline for most folks today though, is the “I win” portion of this, right? Half of Americans would pay zero. We are calling “zero” a tax bracket. This is the first time I've realized that “zero” is a tax bracket.
NEIL CAVUTO: Gerri, I always think we need a huge catalyst. And we found that big tax cuts -- they will always play the class warfare game, I can't control that -- do just that.
WILLIS: Absolutely. I mean, lower taxes will spur growth. There is no doubt about that. We've seen it happen before. And two other pieces of really big news in here for consumers. The death tax dies. Alternative minimum tax, AMT dies. That's good news for regular Americans. [Fox News, Your World with Neil Cavuto, 9/28/15]
Daily Caller: “Populist-Sounding Plan.” The Daily Caller wrote that Trump's plan was “populist-sounding” for cutting taxes for “most citizens and businesses,” including top earners:
Republican Donald Trump has released a populist-sounding plan to reform the tax code, saying Monday, if elected president, he would cut taxes for most citizens and businesses while getting rid of deductions and loopholes for the wealthy and hedge-fund managers.
At a Trump Tower press conference, Trump acknowledged his plan to eliminate credits and deductions would likely mean higher taxes for some wealthy taxpayers, but predicted the economy will be stronger because of the changes and, therefore, they will make more money. [The Daily Caller, 9/28/15]
Washington Times: Trump Plan Would Reshape And Simplify Tax Code. The Washington Times characterized Trump's plan to reduce tax brackets for corporations and individuals at the top income level as “simplifying” the tax system:
Donald J. Trump unveiled his plan Monday to reshape and simplify the federal tax code, calling for the elimination of taxes on low-income individuals and families, ending the “death tax” and reducing taxes on businesses. [The Washington Times, 9/28/15]
Newsmax: Trump Plan Would Cost Him “A Fortune.” Newsmax repeated Trump's claim that the plan will cost him “a fortune” without mentioning that it would bring his own personal and corporate tax rates down:
Criticized by Republican presidential rivals as having a loose grip on policy, billionaire Donald Trump laid out a tax plan on Monday that he said will increase the burden on hedge fund managers, cut rates for corporations and the middle class, and eliminate payments for more of the poor.
The plan is “going to cost me a fortune,” Trump said at a news conference at Trump Tower in New York. [Newsmax, 9/28/15]
Trump's Plan Is Actually A Giveaway To Corporations, High Earners
NY Times: Trump “Does Not Live Up To The Populist Language He Has Offered On Taxes.” In a post on The New York Times' Upshot blog, Josh Barro criticized Trump for “not liv[ing] up to the populist language he has offered on taxes all summer,” and for offering a major tax break even to “the hedge fund guys” he demonized on the campaign trail:
When talking about taxes in this campaign, Donald Trump has often sounded like a different kind of Republican. He says he will take on “the hedge fund guys” and their carried interest loophole. He thinks it's “outrageous” how little tax some multimillionaires pay. But his plan calls for major tax cuts not just for the middle class but also for the richest Americans -- even the dreaded hedge fund managers. And despite his campaign's assurances that the plan is “fiscally responsible,” it would grow budget deficits by trillions of dollars over a decade. [The New York Times, The Upshot, 9/28/15]
Wash. Post: Trump's Tax Policies Do Not “Soak The Rich ... Not Even A Little Bit.” In a post on The Washington Post's Wonkblog outlining Trump's tax policy proposal, Jim Tankersley explained why some people might mistakenly consider it “a populist plan” and then explained the major tax policy concessions Trump has promised to corporations and the wealthy:
Donald Trump promised a big middle-class tax cut, and he's delivered it. He promised to tick off some very rich people, and he's delivered on that, too. He did not promise, in so many words, a huge tax cut for those same very rich people, but he's delivered one anyway.
But it does not soak the rich in the end, not even a little bit.
It's true that corporate executives won't like Trump's plan to force them to pay a 10 percent tax on cash stashed overseas, or his plan to make them pay taxes immediately on future revenues earned abroad. The hedge fund guys won't like his plan to end some tax preferences that help Wall Street, which, incidentally, is one of many parts of the Trump plan that echo or mimic Bush. High earners probably won't like his relatively vague plan to eliminate most of their existing tax deductions.
You know what they will like? His proposed top income tax rate of 25 percent and his proposed top corporate tax rate of 15 percent, which are both lower than what Rubio or Bush proposed. Those rate cuts will almost certainly offset the extra taxes most high earners and their companies would pay under Trump's plan, and then some. [The Washington Post, Wonkblog, 9/28/15]
CNN: Trump's Tax Plan “A Boon For The Wealthiest Americans.” According to CNN, while Trump's plan does reduce income taxes for millions of Americans across the income spectrum, “the proposal would also be a boon for the wealthiest Americans like Trump.” CNN also pointed out that Trump's proposed rate reductions for corporate and individual income taxes “go even further” than Republican presidential hopeful Jeb Bush's tax plan, which was also hailed as “populist” despite overwhelmingly benefitting the wealthy. [CNN, 9/28/15; Media Matters, 9/10/15]
New York's Chait: Trump's Tax Proposal Is “Extremely Similar To All The Other Republican Plans.” According to New York magazine's Jonathan Chait, Trump's tax plan is “extremely similar to all the other Republican plans” but the candidate still benefits from “pretending to have a populist plan”:
Trump's proposal is extremely similar to all the other Republican plans. He would cut the top tax rate to 25 percent, even lower than the 28 percent rate proposed by Jeb Bush. While Trump would not eliminate taxes on investment income, as Marco Rubio proposes, he likewise plans to eliminate the estate tax, which currently applies only to inheritances over $10 million.* Trump says he will pay for all this by eliminating “loopholes,” but fails to identify these loopholes. Even if he cleaned out every deduction in the tax code, there is not enough revenue to make up for the enormous tax cuts he would supply to the rich.
Who'd have guessed -- the rich Republican who inherited an enormous real-estate empire from his father wants to cut taxes for rich people in general and wealthy heirs in particular! Trump seems to have reached the same conclusion as all of his opponents: Actually running on a populist tax plan in a Republican primary has the benefit of appealing to a popular position, but the cost of making Republican power brokers apoplectic, whereas merely pretending to have a populist plan has most of the same benefits and none of the costs. In retrospect, taking Trump's rhetoric at face value was an extremely terrible idea, and we should feel bad. [New York, Daily Intelligencer, 9/28/15]
Vox: Tax Cut For The Wealthy “Even Larger Than Bush's.” According to Vox's Dylan Matthews, Trump's tax reform proposal “promises cuts for the rich even larger than [Jeb] Bush's” plan does, and is basically “an orthodox supply-side conservative tax plan in a middle-class tax cut's clothing. [Vox, 9/28/15]
ThinkProgress: Eliminating The Estate Tax Is Trump's Biggest Giveaway To The Very Wealthy. According to a review of Trump's tax policy details by ThinkProgress, in addition to lower taxes for corporations and the rich, Trump's promise to eliminate the estate tax is a major “giveaway” to the wealthiest 0.14 percent of the population:
Trump's plan would also get rid of the estate tax, which only affects the wealthiest 0.14 percent of Americans. Thanks to reductions in the rate over the years and creative methods of getting around it, those who owe it only pay an effective 16.6 percent rate, and less than 10 percent of the $60 trillion that will get passed down to wealthy heirs and charities over the next half century will be paid in estate tax. Nevertheless, it is a significant and progressive source of government revenue, since it only impacts those most able to pay yet will generate $246 billion over the next decade. [ThinkProgress, 9/28/15]
Wash. Examiner: Trump Only Raises Taxes On Hedge Fund Managers By 1.2 Percentage Points. According to a review of Trump's plan by the conservative Washington Examiner, the plan would only raise effective tax rates on what the candidate often refers to as “hedge fund guys” by 1.2 percentage points -- “from 23.8 percent today to 25 percent.” [Washington Examiner, 9/28/15]
CNBC: Trump Plan May Be Bigger Kickback For The Rich Than Bush Plan. A CNBC article detailed how Trump's plan benefits top income earners over all other income brackets:
Yet a close look at his proposal -- which still lacks many basic details -- suggests that similar to the Bush plan, the majority of the benefits would flow to the wealthy. In some ways, it could be even more generous.
The biggest benefit for the top 1 percent would be the proposed reduction of the highest income-tax rate, which Trump said he would cut from 39.6 percent to 25 percent. Bush's proposal is 28 percent.
And like Bush, Trump would also cut the tax rate for long-term capital gains -- which flow mainly to the wealthy -- to 20 percent, from the current 23.8 percent. [CNBC, 9/28/15]