Fake math fuels Trump’s lopsided, lousy tax reform
10/13/2017, 7:12 p.m.
Trice Edney News Wire
“Rightful taxation is the price of social order. In other words, it is that portion of the citizen’s property which he yields up to the government in order to provide for the protection of all the rest. It is not to be wantonly levied on the citizen, nor levied at all except in return for benefits conferred.” — Journal of the Senate of the State of Ohio, December 6, 1847
Hard on the heels of yet another failed effort to repeal and replace the Affordable Care Act, President Donald Trump and some congressional leaders have swiftly pivoted to another top legislative agenda item on their shared wish list: Tax reform. Regardless of your political stripe, tax reform enjoys near universal support — but, as we all know, the devil is in the details.
Like most public positions or legislative efforts endorsed by President Trump, comprehensive tax code reform is heavy on hype and light on details. Given what we do know of the president’s work-in-progress proposal, it is lopsided. The vast majority of its benefits, including “historic” tax cuts and a repeal of the estate tax, will fatten the pockets of the wealthiest one percent of Americans. And that’s a lousy deal for low-income and middle class families—including President Trump’s working class supporters—who will ultimately foot the bill and bear the brunt of enriching the already rich.
To hear Trump tell it—or sell it—any payouts to the top 1 percent, of which he is a card-carrying member, would be incidental to nonexistent. During Trump’s announcement of his skeletal nine-page framework to rewrite our nation’s tax code, he insisted that his proposal included an, “explicit commitment that tax reform will protect low-income and middle-income households, not the wealthy and well-connected,” adding that, “They can call me all they want. It’s not going to help. I’m doing the right thing. And it’s not good for me. Believe me.” Perhaps it would be easier to believe the president if he had released his own taxes during his 2016 presidential run?
We have no way of knowing how Trump’s tax code revisions would benefit him, his family, his associates and his global network of businesses, but virtually every non-partisan analysis of his still-in-development framework arrives at the same conclusion: The plan profits wealthy Americans and barely tips the scale for low-income and middle class families.
The Tax Policy Center, a think tank of nationally recognized experts in tax, budget and social policy, estimates that the top 1 percent of households would get close to 80 percent of the framework’s tax cuts, adding up to an annual, after-tax boost of close to $200,000. The top 0.1 percent of households would receive 40 percent of the framework’s tax cuts, giving our nation’s wealthiest Americans an annual $1 million boost in after-tax income. Middle class and lower earning families in the bottom 80 percent would get almost 13 percent of the tax cuts and see less than half a percent increase in after-tax income.
Tax cuts sound appealing, but the reality is that there is no free lunch. Tax cuts are not free and cannot pay for themselves. Traditionally, tax cuts are paid for through a combination of spending cuts—think Medicaid. The president’s outline includes the elimination of personal tax breaks and itemized deductions (excluding mortgage interest and charitable deductions) that have likely benefited you in the past. And think tax increases. For many middle class Americans who are supposedly a protected class under Trump’s tax code rewrite, an analysis by the Tax Policy Center predicts nearly 30 percent of those in the middle class could see their taxes increase. Bottom line: Fake math only arrives at unequal outcomes.
Marc Morial is president and chief executive officer of The National Urban League.