Tax Plan Belongs In The Trash Can

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.

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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:

Winners:

  • 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.

Losers:

  • Upper-middle-income people in blue states.
  • Deficit hawks.
  • People who want Congress to pass something.

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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!

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27 thoughts on “Tax Plan Belongs In The Trash Can

    • Yes, it is indeed awful and I am … getting so damn tired of it all!!! Love the sticker, though … might try to get one … or a few dozen … of those. What do you think would happen if I went out in the middle of the night and put one on everyone’s car? 😀 I live in a diverse neighborhood, but a mile away is an upscale, ‘white elitist’ neighborhood … in fact, it is where former Speakder of the House John Boehner resides. Wouldn’t it be fun to go there late some night and put these sticers on their vehicles??? 😀 😀 😀 Yes, the political climate is turning me into a madwoman!!!

      Liked by 1 person

    • Excellent point! That is one of my pet peeves, particularly after he criticized Obama for years about golf, and in 3 months he has spent more time on golf that Obama did in 4 years … maybe 8! And now he has taken to calling his Florida estate the “Winter White House”. Guess we know where to find him in January, huh?

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  1. Oh yeh. A Corporation Tax cut! Oh sure, it’s going to help-create-more-jobs-yadda-yadda-yadda.
    Next rip-off to be sold on the public- A Simplification of the Tax System! Which will cut back-on-people-having-trouble-filling-forms-in-and create-more-jobs-yadda-yadda-yadda.
    Western Govts have been pulling this con on the unsuspecting public for decades!
    (You don’t really want me to launch into my magnum opus on the benefits of a complex-geared-to the individual-personal-tax system, backed up by more aggressive powers for Revenue Units investigating Corporations, it goes on for like hours and veers off on tangents and personal recollection of the good ol’ days on the 1950s-1960s of taxation)😉

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    • Um no, I think your “magnum opus on the benefits of a complex-geared-to the individual-personal-tax system …” would likely be fascinating and educational, but save it for some other day. 😀 That said, yes, this same theory, called by many different names, such as “supply-side economics” and “trickle down economics” has been tried multiple times, and it has NEVER worked, nor will it ever work. Corporate CEOs are greedy … just because they are saving a few million … or billion … on taxes does NOT mean they are going to share it with anybody. They will not raise wages nor hire more people. In fact, they are likely to use it, in addition to lining their own pockets, to develop new, labour-saving technology so that they can operate with fewer humans! But the average citizen does not have much grasp for financial matters, and apparently have short memories also. Personally, I will lose money if they ever simplify taxes, because the only income I have, other than Social Security, comes from doing taxes from January thru April! 🙂

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        • Yeah, I spent some 30+ years as a CPA and though I’m now retired, I have a handful (about 20) of clients for whom I still do taxes, financial statements, budgets, and whatever else they need. I work cheap, and am accurate, detail-oriented, guarantee my work, and bend over backward to help them, so they keep coming back. Keeps my mind fresh and forces me to stay on top of current tax law, since most are LLCs or partnerships. Sometimes I even work pro bono … sometimes by choice, sometimes not … 😀

          Yes, irony … something else we have in common!

          Liked by 1 person

          • Good service Jill, be proud.
            Can’t be avoided, so might as well do the best to help folk.
            (In each on our many Instruction Books- which were distillations of law; the first one in very bold print was that it was our duty to help a member of the public insofar as we could without breaking the law- anyone one with sense used as much wriggle room as they could, anyone else who didn’t ‘get that’…well gee they had a heavy time…..(more fool them, the job was bad enough anyhows) 😁

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            • Thanks! Yes, if I were just starting college, I would NOT choose to be an accountant. I made the choice based on job availability, pay, etc., but after a stint in public accounting, I came to liken it to prostitution. Went into manufacturing accounting, which was some better, and ended up my last 10 years working for a publishing company, which was a great job … until they sold the company. But if I had it to do over again … probably either a journalist or a professor of history. You?

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              • Looking back on the whole ‘thing’ and taking into account my youthful predilections for weird (over and above the norm) I think it would be best to do the whole thing again.
                Only I wouldn’t try so much to try to be accommodating with co-workers and tell a lot for more to either grow up or if they wouldn’t then to go and commit anatomically challenging acts of an intrusively carnal nature upon themselves.😈

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                • As I read the last sentence of your comment, I suddenly burst out laughing … my daughter said to me, “You must be reading something from Roger again.” 😀 😀 😀 However did I manage before you stumbled upon my humble little blog?

                  I was surprised to hear you say you would do the same over again (except for the part about the co-workers) … I somehow thought you might have said you would have wanted to be a writer. You have such a knack for it. Else perhaps a comedian! I can just picture you on late night television, or writing columns & books along the lines of Art Buchwald or Lewis Grizzard. 😀

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                  • Aww shucks m’am! 😌
                    Back in the 60s having absorbed more SF than was probably good for me I have this ‘thing’ about changing history.
                    It might have been fun to have gone down those ways (and I even considered it back in my very late teens), but I wouldn’t have met my dear wife and thus none of my children nor grandchildren…and I just can’t have them ‘winked’ out of existence; so same course, but rougher approach in work.
                    I have written a great deal down the years, but it’s only now things are truly coming together, so the experience of age learning from mistakes????
                    And I’m happy on WP, bouncing between reading blogs and contributing, posting up my own stuff (NB must write one up this week), and working on my two projects…..So it’s cool 😉
                    All the best Jill.

                    Liked by 1 person

                    • Ahhhh … I never considered that aspect, that everything else would be changed also. When you put it that way … yes, I understand why you would take the same path. I do sometimes think that if I am reincarnated … and I don’t know if I even believe in that possibility or not, but it’s fun to think about … I would like to do something more meaningful to humanity than being a ‘bean counter’. Or, I would like to come back as a wolf. Undecided as yet. 😀

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                    • I almost had a wolf … a friend raises them and wanted to give me a wolf pup a few years ago. But, alas, I feared that a wolf might not work out well with a housefull of cats … at that time we had 10, now we’re down to just 7. 😀 But I do love wolves …

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  2. Nice wrap-up, Jill. I always like your posts because I don’t have to figure out who is saying what, the attribution is always perfect. Your own analyses are always good, and I never have to decide where “Jill” leaves off and the NYTimes (or whoever) lets off. This is extremely important to me…the old instructor in me I guess.

    Yes, there is no doubt just who will benefit from Trump’s tax plan. I see it as a good way for him to garner points with the billionaire-class, and in theory….key, in theory…the way he thinks trickle-down works, wherein the rich companies would get a tax break…they use the “windfall” to hire for good jobs…and create prosperity for us all.

    Here in Lorain County, Ohio, we are a text-book case of what happens when the good jobs move out…we used to be able to see the red glow of the fires in the steel mills of Lorain from miles away. There were always jobs at the mills, or the Ford plants. But then the plants and mills shut down…they blamed it on the labor unions…and they moved “down South,” where the unions couldn’t follow. That meant down to Georgia … not Mexico. This area of Ohio is one of the most depressed in the nation.

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    • Thank you so much! I try to be informative, and it’s nice to get feedback on my efforts!

      Good ol’ ‘trickle down’ or ‘supply-side’ economics has been tried more than once, and it has never worked, nor is it likely to … ever. Corporations are more likely to use their additional net profits to invest in technology that actually costs jobs! But do people remember this? Not many, it would seem. Thanks again!

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  3. Dear Jill,
    This is the best blog on the subject of DDT’S Tax Cut’s proposal that I’ve seen and your analysis is so perfect. LOL! And this is the best that 2 Goldman Sachs’ executives can come up with. We are in the wrong business.
    Of course the Goldman Sachs brass may not be used to listening to their clients either.
    Hugs, Gronda.

    Liked by 1 person

    • Thank you so much!!! Yes, the Goldman Sachs execs are no doubt smarter than that, but I think they saw an opportunity and figured it was worth a shot. I’m sure DDT made it clear that he expects a win, and completely on his own terms. I could not work for him more than an hour … one of us would be seriously wounded! 🙂

      Hugs!!!

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  4. one thing that his tax plan would eliminate is the death tax, something that should have never been a part of the tax code in the first place. How is it fair to a grieving family getting an inheritance from their loved one who has died to have to pay any of that back to a government who has proven time and again that they do not, in fact, know how to spend the money it collects in a judicious manner. Tell me how is that fair?

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    • Well, the problem with that is that typically only about 11% of people actually ever get hit with the estate tax, and those are the wealthiest, so I see it as only fair. People like you and I rarely inherit enough for the estate tax to kick in. Otherwise, if everyone were taxed on any inheritence, I might agree with you.

      Good to see you! Been a while.

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