Trump’s tax plan would reward the wealthy and balloon the federal debt
The Trump administration announced a major tax reform plan on Wednesday, except it isn’t much of a reform (merely another massive tax cut for the very wealthy) and it isn’t much of a plan (just a one-page list of ideas that have yet to be developed into a legislative proposal). In other words, it is much like Donald Trump’s “plans†for healthcare, trade, a border wall and North Korea: lots of salesmanship with no actual product to sell.
When it came to repealing and replacing Obamacare, Trump latched onto a half-baked House Republican bill that couldn’t even be brought up for a vote. On trade, he has backed away from his pledge to kill NAFTA. He has let the border wall be postponed, and it seems to shrink with each passing day. He had the entire United States Senate bused to the White House for a top secret briefing about North Korea, and even Republican senators came away from the session saying it was little more than a publicity stunt.
That Trump, in his first 100 days, has done very little that he promised to do on the campaign trail is not necessarily a bad thing. A reworking of American healthcare should not happen until Trump can actually deliver what he promised — good care at lower cost for everyone — which is likely unobtainable without moving to a single-payer system like that enjoyed by citizens in Canada, Europe and Japan. NAFTA should not be jettisoned, it should be improved. Billions should not be wasted on a border wall when there are smarter, cheaper options for dealing with illegal immigration. And North Korea needs to be addressed by someone who doesn’t think blustering tough talk is the same as a real strategy.
And it is not bad that the tax plan is, at this point, little more than a ploy to give the illusion of action. It is a rehash of the voodoo economics that have clouded Republican minds since Ronald Reagan. It is built on the theory that huge tax cuts for big corporations and billionaires will create so many jobs and so much economic activity that the dramatic drop in tax rates will magically produce a gush of revenue for the government, thereby avoiding an increase in the federal debt. Treasury Secretary Steven Mnuchin made this discredited claim when he presented the skeleton of the “plan†on Wednesday.
Not many fell for it, including Republican budget hawks who remember what happened when President George W. Bush dramatically cut taxes and failed to make the budget cuts needed to make up for the lost revenue: skyrocketing deficits and debt. Trump is no better witch doctor than Bush; the voodoo doesn’t work.
The Trump administration’s proposed federal budget would make draconian cuts in many government programs and agencies, but all that money is not saved — it gets shifted to the military. Then Trump wants to throw in the escalating cost of the border wall and a major new infrastructure spending program. Top that with big tax cuts and, within a decade, another $7 trillion will be added to the federal debt. That level of government borrowing would be a drag on the economy that would stifle business and kill jobs, not encourage growth.
Allowing business tycoons to pay a low 15% corporate tax rate instead of a significantly higher personal tax rate — one of the elements of the administration proposal — would be great for rich guys like Trump, but that is not exactly what the president’s loyal followers were hoping for when they decided to take a chance on a celebrity real estate mogul with zero experience in government. The plan’s elimination of the estate tax would help out the extremely tiny percentage of Americans whose net worth is greater than $11 million, but the other 99.8% of us might be better off if the government kept that tax money to pay for pure air, water and food or for medical research that will keep us alive a bit longer or for a State Department robust enough to keep our kids out of future wars.
The sketchy tax plan is further proof that Trump’s expressions of empathy for the struggling working men and women of the country are the cheap words of a perpetual salesman. Still, we can be grateful that a man with so many bad ideas is mostly talk and no follow-through.
Follow me at @davidhorsey on Twitter
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