NEW YORK–(ENEWSPF)–August 9, 2016. Donald Trump tried to frame his speech yesterday as a reset of his economic policies, but in reality, he doubled down on more of the same: an approach to the economy that would cost jobs with massive tax breaks for the wealthy and corporations. Let’s take three examples:
On Closing the Carried Interest Loophole
TRUMP SAYS: “As part of this reform, we will eliminate the Carried Interest Deduction and other special interest loopholes that have been so good for Wall Street investors, and people like me, but unfair to American workers.”
IN REALITY, WALL STREET MONEY MANAGERS WOULD GET A SIGNIFICANT TAX CUT: “Some analysts have noted that Trump’s proposal to end the special tax treatment of carried interest—the portion of investment gains paid to fund managers—might mean lower taxes for members of partnerships, which is how many private-equity funds are organized. Carried interest is currently taxed as capital gains, meaning the income qualifies for a tax rate as low as 23.8 percent. Under Trump’s plan to cut business taxes, though, members of partnerships who get carried interest might be taxed at a 15 percent rate.” [“Trump’s Tough Talk On Hedge-Fund Taxes Doesn’t Match His Plan,” Bloomberg, 8/8/2016]
TRUMP SAYS: “My plan will also help reduce the cost of childcare by allowing parents to fully deduct the average cost of childcare spending from their taxes.”
IN REALITY, HIGH-INCOME FAMILIES WOULD RECEIVE MORE THAN TWICE THAT OF MIDDLE-CLASS FAMILIES, AND LEAVE OUT TENS OF MILLIONS MORE WHO DON’T QUALIFY:
“On surface, this sounds like a good idea. Since the cost of daycare can be a huge cost for many families, the plan has the potential to help many Americans. But Trump is proposing a tax deduction, not a tax credit—and that’s a problem…To benefit from the vast majority of tax expenditures, people must have taxable income. Americans cannot apply a deduction to their taxes if they pay no taxes. And that’s the problem with Trump’s plan: Millions of low-income Americans—the families most likely to be unable to afford child care—don’t pay any taxes. They won’t see any benefit from Trump’s new proposal. Furthermore, high-income people benefit the most from tax deductions, since they pay the highest marginal tax rates. [Politico, 8/8/2016]
“‘I’m most concerned about a single mother who doesn’t earn a lot of money and who has a couple of kids at home,’ said Michael Strain, an economist at the conservative American Enterprise Institute. ‘The benefits of this policy will not accrue to the people who most need help…Combined with Mr. Trump’s tax plan, his child-care plan just makes his overall fiscal policy that much more irresponsible.'” [The Washington Post, 8/8/2016]
On His Plan to Cut Business Tax Rates to 15%
TRUMP SAYS: Under my plan, no American company will pay more than 15% of their business income in taxes. Small businesses will benefit the most from this plan… No one will gain more from these proposals than low-and-middle income Americans.
IN REALITY, THIS PROPOSAL WOULD CREATE A NEW 15% TOP BRACKET FOR THE VERY WEALTHY—A MORE DRASTIC TAX CUT FOR THE RICH THAN EVEN REPUBLICANS IN CONGRESS HAVE PROPOSED:
“Mr. Trump says it’s designed to help small businesses, which he contends shouldn’t pay a higher tax rate than large corporations. Mr. Trump, who has proposed a 15 percent corporate tax rate, proposes a pass-through rate of 15 percent as well. The Trump pass-through proposal would be an expensive tax cut that would flow primarily to the wealthiest Americans. That’s because more than two-thirds of pass-through business income flows to the highest-income 1 percent of tax filers.” [Center on Budget and Policy Priorities, 8/8/2016]
“The trouble is that Trump has set his top business tax rate at 15 percent and there is nothing stopping wealthy hedge fund managers from reclassifying their income to take advantage of the far lower tax rate. His attempt at closing a loophole would wind up being a massive tax cut.” [Economists: Trump tax plan offers almost nothing for the middle class, Washington Post, 8/8/2016]
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