It would appear that Trump’s “top economic advisors” are not too smart. Either that, or they think we are not too smart. Either way, his “tax plan” is a piece of garbage that should not stand a chance of passing in Congress.
When President Reagan did it in 1981, it was called “trickle-down” economics. It looked great on paper … only problem was, it did not, in fact, ‘trickle down’. It did not work then, and it is just as unlikely to work now. Economists outside the White House agree that this tax plan would almost certainly raise the federal deficit by as much as $7 trillion over the next ten years. Gary Cohn and Steve Mnuchin, two of Trump’s top financial advisors (both former Goldman Sachs bankers, as it were) claim that the deficit will be offset by economic growth, but that is a fantasy of their own imaginations. The entire plan is designed to benefit large corporations, such as the ones owned by Trump, himself, and the wealthy, such as Trump, himself, as well as Cohn and Mnuchin.
According to a New York Times article, here are the winners & losers under the plan:
- Businesses with high tax rates.
- High-income earners.
- People with creative accountants.
- Multimillionaires who want to pass money to their heirs tax-free.
- People who still fill out their tax returns by hand.
- Retailers and other companies that feared a “border adjustment tax.”
- Donald J. Trump.
- Upper-middle-income people in blue states.
- Deficit hawks.
- People who want Congress to pass something.
One of the most ironic things to note is that under this plan, corporations would not have to pay taxes on their foreign profits, an unusual proposal for a president who has championed an “America first” approach and railed against companies that move jobs and resources overseas. But then, Trump himself has significant overseas interests, so I leave the rest to your imagination.
Nicholas Kristof’s column today said it best:
“What do you do if you’re a historically unpopular new president, with a record low approval rating by 14 points, facing investigations into the way Russia helped you get elected, with the media judging your first 100 days in office as the weakest of any modern president?
Why, you announce a tax cut!
And in your self-absorbed way, you announce a tax cut that will hugely benefit yourself. Imagine those millions saved! You feel better already!
This isn’t about “jobs,” as the White House claims. If it were, it might cut employment taxes, which genuinely do discourage hiring. Rather, it’s about huge payouts to the wealthiest Americans — and deficits be damned! If Republicans embrace this “plan” after all their hand-wringing about deficits and debt, we should build a Grand Monument to Hypocrisy in their honor.
This isn’t tax policy; it’s a heist.”
Throughout his campaign, Trump swore to bring down the national debt, ranting that President Obama had ‘doubled the debt’, and that he, Trump, would reduce the deficit. Trump’s tax plan comes with very few details, so it is difficult to assess, however a number of leading economists have reviewed the framework and here is what they have said:
“We’ve only done the rough numbers, but this looks like a tax cut of a magnitude of about $5 trillion. That is simply unimaginable given our fiscal situation and the size of the deficit, which is already the worst since World War II.Who doesn’t love a tax cut, especially if no one has to pay for it? This is a free-lunch mentality. ” – Maya MacGuineas, president of the Committee for a Responsible Federal Budget
“Paul Ryan and Kevin Brady must be beside themselves in private. They put in years of work on a tax reform plan that at least tried to be revenue-neutral, and wouldn’t explode the deficit.” – Leonard E. Burman, director of the Urban-Brookings Tax Policy Center
“Mr. Trump’s plan basically is tax cuts for everyone. Real reform, with revenue neutrality, is difficult. There are winners and losers, but Trump apparently just wants winners.” – Steven M. Rosenthal, a business tax expert and senior fellow at the Urban-Brookings Tax Policy Center
“I want a plan that’s focused on growth as much as anyone. But these tax cuts are not going to pay for themselves. If you believe that, you’re kidding yourself.” – Douglas Holtz-Eakin, an economist who served as director of the Congressional Budget Office and is now president of the American Action Forum
The bottom line is that the tax plan as it was presented to Congress, with unrealistic goals and almost no detail, is not going to be passed in either branch of Congress. If Trump was hoping for another “achievement” to add to his “first 100 days list”, he is likely to be sorely disappointed. Mick Mulvaney, Director of the Office of Management and Budget (OMB), Steven Mnuchin, Secretary of the Treasury, and Gary Cohn, Trump’s senior economic advisor, are going to have to do a much better job than this.
I suspect that this ‘plan’, if one can call it that, was a rush job, as Trump has actually spent his ‘first 100 days’ more concerned about getting his travel ban executed, deporting immigrants, destroying environmental protection controls, insulting our allies, threatening our enemies, and erasing all legislation passed under President Obama. This tax plan has no earmarks of a thought process, but merely a fantasy devised in a very short period of time with no link to reality. Back to the drawing board, Donnie … this one stinks!