Reading Donald Trump’s outlined goals of his tax reform plan was painful. Without any concrete steps of action, his ideas were tantamount to bubbles floating through the air – they had absolutely no backing or explanation as to how they would be accomplished. The four goals of Trump’s tax plan are as follows: tax relief for middle class Americans, simplifying the tax code, growing the American economy by “discouraging corporate inversions and increasing jobs” and ensuring that the U.S. debt and deficit does not grow. How exactly does he plan to do this? Trump outlined four lofty ideas. Specifically, according to Trump’s plan, “if you are single and earn less than $25,000, or married and jointly earn less than $50,000, you will not owe any income tax.” Additionally, instead of the current seven tax brackets, Trump’s tax code will split America into four tax brackets: 0 percent , 10 percent , 20 percent and 25 percent. Trump’s plan also guarantees that “no business of any size, from a Fortune 500 to a mom and pop shop to a freelancer living job to job, will pay more than 15% of their business income in taxes.” Lastly, Trump’s plan eliminates the estate tax, which is a tax on the transfer of the estate of a deceased person.
According to the Urban-Brookings Tax Policy Center, the proposed tax code would “cut the top 39.6 percent rate by 14.6 percentage points, or more than one-third.” The plan would “retain current preferential tax rates of 0, 15 and 20 percent on long-term capital gains and qualified dividends.” Also, the Tax Policy Center estimates the proposal would “reduce federal revenue by $9.5 trillion over its first decade and an additional $15.0 trillion over the subsequent 10 years, before accounting for added interest costs or considering macroeconomic feedback effects.” The proposal would cut taxes at every income level, but high-income taxpayers would receive the biggest cuts; according to the Tax Policy Center, “the plan would cut taxes by an average of about $5,100, or about seven percent of after-tax income. However, the highest-income 0.1 percent of taxpayers (those with incomes over $3.7 million in 2015 dollars) would experience an average tax cut of more than $1.3 million in 2017, nearly 19 percent of after-tax income. Middle-income households would receive an average tax cut of $2,700, or 4.9 percent of after-tax income.” In this way, Trump’s plan is skewed to benefit the top one percent. It is problematic that Trump’s tax code would primarily benefit himself and other members of the top one percent, and not necessarily the working class, whom he emphatically prioritized during his campaign.
According to Richard Painter, who served as chief White House ethics lawyer in the George W. Bush Administration, “If he starts screwing around the tax code you have two issues. One is conflicts of interest: Because he’s in the real estate business we know from the 1995 tax return he has a huge tax loss carried forward even though he probably didn’t lose any money.” In this way, it is clear that Trump’s plan is aimed to benefit his empire and other members of the top one percent.
The final question arises: how exactly does Trump plan to finance this new tax code? Prior to moving forward on his tax reform plans, Trump is currently pursuing a reformed healthcare plan. Trump wants to address healthcare first so that he can use the “hundreds and hundreds of millions of dollars” that would be saved by reforming healthcare for tax cuts. “If you don’t do that you can’t put any of the savings into the tax cuts and the tax reform.” If the goal is merely to redirect funds, not to fix health care, the legislation is irrelevant to Trump, so long as it generates sufficient savings. It is clear that Trump’s proposed tax code is aimed to benefit his business ventures and his personal finances. However, until he releases his tax records, the extent of his wealth is still wholly unknown to the public. The first step to a successful tax reform is having a president who is transparent about his own economic ventures. If this first step is not taken, how do we move forward?