In his appearance in Springfield, MO Aug. 30, President Donald Trump outlined some key “principles” about the tax proposals he wants Congress to implement:
• Slashing the corporate tax rate to 15 percent, down from 35 percent, saying that “Lower taxes on American business means higher wages for American workers.” (Want to bet on this too?)
• Eliminating “loopholes and complexity” of the tax code. (Read: primarily benefitting the wealthiest Americans and special interests, a reference to his call to scrap some itemized deductions in the code.)
• “Deliver real tax reform for everyday hard-working Americans.”
Okay, now the reality.
First, his “tax plan” was a one-page bullet pointed summary of a wishy-washy wish list, no specific goals. No charts to explain proposals, no plans for implementation, nothing. But then, would we expect anything less from this president?
THE PROPOSED ‘CONCEPTS’
A quick overview from his advisors of what the plan could look like:
• Cut individual tax rate ceiling from 39.6 percent to 35 percent.
• Corporations would not have to pay taxes on foreign profits, allowing them to bring the billions stashed overseas with no clear-cut guidelines that they would have to invest those funds in America.
• Scrapping itemized deductions such as for state and local taxes.
• Critics worry that lawyers, doctors, consultants and other individuals in partnerships could structure much of their personal income as business income, effectively reducing their tax rate from 39.6 percent to 15 percent.
And what was the response from financial professionals who have been reviewing what little information is being eked out on what little is known to date?
• Bernard Baumohl, chief global economist for the Economic Outlook Group: “The bare bones plan we saw unveiled today is already conceptually flawed and unlikely to go far in Congress. The final product will bear no resemblance to the principal points highlighted in today’s meager release. Certainly, the first step in this process was unimpressive.”
• Alan B. Krueger, chairman of President Barack Obama’s Council of Economic Advisers: “I worry that the Trump proposal would shift a tremendous amount of income abroad.”
• Michael Linden, Roosevelt Institute fellow: “Corporations are sitting on a vast amount of capital. Reducing their tax burden would have absolutely no effect on workers.”
The New York Times summed up his scant “tax reform” speech nicely:
“Many economists … argue that large corporate tax cuts would do relatively little — particularly in the near term — to boost wages or create jobs. Instead, they would boost corporate profits and benefit the wealthiest Americans who own the most corporate stock. There is little evidence that large tax cuts will prompt American corporations to invest more; they are already sitting on nearly $2 trillion in cash.”
‘CRUMBS FOR WORKING PEOPLE’
As expected, the Democrats jumped in:
“This is an unprincipled tax plan that will result in cuts for the 1%, conflicts for the president, crippling debt for America and crumbs for the working people. Instead of providing a real tax reform plan as promised, this administration is offering cakes to the fortunate few.”– Senator Ron Wyden of Oregon, the ranking Democrat on the Finance Committee.
In closing his Springfield reality show, the president said:
“This is our once-in-a-generation opportunity to deliver real tax reform for everyday hard-working Americans.”
Anyone want to take my bet that it never happens? At least not for working middle class families.