Tax Benefits Package for Trump?

By Jaedeok Hong ‘19

“The Republican tax bill looks like it was written by Donald Trump’s accountants and tax lawyers, and I’m not even joking.” Seth Hanlon, a formal special assistant to Obama administration’s White House National Economic Council tweeted his scathing criticism following the new release of the GOP tax plan.

The bill delivers large breaks to high-earning owners of certain businesses, known as pass-through entities, which comprise most of Trump’s business empire, and to heirs of large estates, such as Trump’s children. Actuarially, the bill would result in significant tax reductions from 39.6 to 25 percent.

So-called passive owners of businesses like real estate partnerships and hedge funds, would enjoy the largest tax cut of all individual taxpayers under the bill. That’s because the legislative text allows these earners to maintain their state and local income tax deduction – a benefit individual taxpayers could lose under the bill – while it is also a benefit on which Trump and his business can thrive on.

How about the middle class that Trump and his fellow Republicans have been so eager to represent? In an early analysis of the bill by Congress’s Joint Committee on Taxation and the independent Tax Foundation, America’s highest earners would, as a group, receive at least twice the tax cut that middle-class workers would get, as a percentage of their income. In fact, many working-class households earning under $48,000 would see their tax bill rise!

Republicans might call this tax reform. But it’s really about reducing the tax burden on people just like Trump and dumping it on the middle class. Perhaps this can give us some clues as to why the president is refusing to release his tax returns.

If this bill passes by Thanksgiving as House Speaker Paul Ryan says is “on track” of, Trump will face a substantially reduced tax bill in the years to come, in addition to a major legislative achievement. A perfect win-win situation for Trump?

 

Sources:

https://www.nytimes.com/2017/11/06/us/politics/republican-tax-plan-rich-millionaires-trump.html?rref=collection%2Fsectioncollection%2Fpolitics&action=click&contentCollection=politics&region=rank&module=package&version=highlights&contentPlacement=2&pgtype=sectionfront

https://www.washingtonpost.com/blogs/plum-line/wp/2017/11/06/we-dont-know-whats-in-trumps-tax-returns-but-the-republican-tax-reform-plan-offers-clues/?utm_term=.0bdf606ccd33

https://www.washingtonpost.com/news/wonk/wp/2017/11/06/in-gop-plan-taxes-go-down-for-most-americans-but-wealthy-get-the-biggest-cut/?hpid=hp_no-name_hp-breaking-news%3Apage%2Fbreaking-news-bar&tid=a_breakingnews&utm_term=.cbd5af55018c

https://www.washingtonpost.com/news/wonk/wp/2017/11/04/some-middle-class-americans-would-pay-higher-taxes-under-gop-bill-despite-trumps-promise/?tid=a_inl&utm_term=.6e21f6e572a1

Filed in: Featured content, Politics

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