Wednesday, April 26, 2017

All The Way To The Bank

Today is the day Donald Trump reveals his plan to revamp the American tax code. The Wall Street Journal reports that the cornerstone of his plan will be to reduce the corporate tax rate from 35% to 15%. Dylan Mathews writes:

This will be sold as a boost for small businesses, and it is, but it is mostly a huge giveaway to the rich — including the president himself.

More than two-thirds of income at pass-through companies (so named because their structure makes them exempt from the corporate income tax, and their profits are instead taxed upon distribution to shareholders) goes to the top 1 percent

The plan creates a massive loophole with which ordinary people can evade taxes. Instead of just working for, I could form DylanCorp LLC, contract with Vox to provide writing services, and pay a 15 percent rate on DylanCorp’s earnings rather than my current 25 percent rate. For rich people paying a top rate of 39.6 percent (or the top individual rate of 33 percent that Trump proposed during the campaign), the incentive to do this will be even larger. A new study finds that when Kansas exempted pass-through income, the result wasn't more investment or growth but a surge in this kind of tax avoidance. This is not good policy.

But it gets really interesting when you stop and consider that the Trump Organization is a pass through company: 

It’s also a really, really huge giveaway to Donald Trump, the Trump Organization, and the entire Trump family. The Trump Organization isn’t a “C corporation.” It doesn’t pay corporate income tax. Instead, it’s structured as a collection of pass-through enterprises, so the vast majority of income accruing to Trump and his family is taxed through this system. Trump almost certainly pays the 39.6 percent rate on his earnings, so he’s cutting his own top tax rate by more than half. It’s the most transparently self-interested policy he’s proposed since taking office, and it will likely save him tens of millions of dollars.

Of course, we don't know exactly how much money he will save, because we haven't seen his tax returns: 

Here’s the thing, though. We don’t know exactly how big a giveaway to Trump this is, because we don’t know what’s on his tax returns. We have no idea. We have a few details from his 2005 return, which suggests that he gets tens if not hundreds of millions of dollars in pass-through income annually. That return also implied that without the alternative minimum tax, which Trump wants to repeal, he would have paid less than 3.5 percent of his income in federal income taxes. Cutting the pass-through rate while repealing the AMT would probably reduce his tax burden to roughly half that level. Instead of paying $38 million, he could've paid less than $3 million.

Trump claims he is the voice of the little man. But every day he is president, he laughs his way to the bank. 

Image: Getty Images


the salamander said...

.. Trumph is a trough inhabitant .. he and his family wallow there snuffling and gruntting..
They are The Kardashions on political steroids.. the wondergrunts

This regime will last exactly 4 years.. and then, the Donald will eject
Since he plans to take it all with him.. ie The Final Rapture of Donald Trump
its important that he accrue and spend & deceive to the max in this lifetime

What his beef is with Meals on Wheels remains a deep mystery..
but it signals the border between Donald.. a 70 year old fraud
.. & likely a treasonous indebted sellout.. and reality

Owen Gray said...

"Kardashions on political steroids." Truly an apt phrase, salamander.

The Mound of Sound said...

All things are possible in post-democratic America, Owen. The American public largely ignored the 2014 Gilens and Page study out of Princeton that powerfully demonstrated their government had turned on the rank and file, ushering in de facto oligarchy. This is an act of grievous corruption but it could not happen without an equally corrupt Congress.

Owen Gray said...

Bought and paid for, Mound. The people's representatives are not poverty stricken. I'm given to understand, for instance, that Mitch McConnell is a very wealthy man.

Anonymous said...

We do not know the details of Trumps finances but most of us suspect he is bankrupt.
What an interesting way of avoiding bankruptcy and possibly adding value to the country estate!

At the end of the day the sad fact is ; as the rich become richer so does their influence and power.


Owen Gray said...

When you're rich -- or perceived to be rich -- that's what your money will buy, TB.

Anonymous said...

Mitch McConnell? Uh Huh.
And his wife is in Trump's cabinet. Top drawer.

Owen Gray said...

The Trump Administration is a family business, lovingit.