The clearest policy recommendations involved a tax bonanza for the well-to-do. The candidate who didn’t endorse House Speaker Paul Ryan in his primary today before he did essentially copied Ryan’s tax plan. As Kelsey Snell reported in The Post, Trump would replace the current system of seven income tax brackets that has a top rate of 39.6 percent. His new rates would be 12 percent, 25 percent and 33 percent. Notice the big cut in the top rate, which applies only to the very well-off. Trump would also cut the corporate tax rate to 15 percent. It is nominally now 35 percent, though with the various deductions, the effective corporate tax rate is roughly 27 percent.
Trump was especially excited about another old supply-side chestnut, the repeal of the estate tax. “Finally, no family will have to pay the death tax,” Trump said. “American workers have paid taxes their whole lives, and they should not be taxed again at death — it’s just plain wrong. We will repeal it.”
That word “workers” made sense only if Trump was talking about hedge-fund workers, venture-capitalist workers or chief-executive workers. As Binyamin Appelbaum reported in the New York Times, “Only a very few American workers are subject to estate taxes, and those subject to the tax are usually not termed ‘workers.’ Under current law, a married couple can shield up to $10.9 million of their estate from any federal taxation. The estate tax hits roughly two of every 1,000 American estates, according to the Center on Budget and Policy Priorities, a left-leaning research organization.” David Graham of the Atlantic put the matter rather nicely, noting that the proposal “would not help many blue-collar workers, though it might benefit Donald Jr., Ivanka, Eric, Tiffany, and Barron.”
Even Trump’s most progressive-sounding idea, a big tax deduction for child-care expenses, would have a regressive effect. As Appelbaum pointed out, it would benefit only the 30 percent of taxpayers who itemize their deductions. Not surprisingly, they tend to be the best-off taxpayers. If Trump were really trying to help average workers and the poor, he would have offered a child-care tax credit instead and made it refundable for those who don’t pay income taxes.
Two of the most instructive headlines about the Trump plan were on Graham’s piece, “Trump’s Shotgun Marriage of Populism and Supply-Side Economics,” and on Snell’s article, “Economists: Trump tax plan offers almost nothing for the middle class.”
Trump’s wholesale embrace of the old conservative tax religion is splitting the party into two factions. There are those who are willing to settle for big tax cuts for corporations and the wealthy (Ryan seems to be in this group) and those who see Trump’s weaknesses as so glaring that they will not be appeased by lower tax rates. This varied group includes moderates such as Sen. Susan Collins (Maine) and Rep. Charlie Dent (Pa.), some traditional conservatives and a large share of the GOP’s foreign-policy guild.
In the meantime, the blue-collar voters Trump is courting so ardently may well start to notice that while he warms their hearts with his tough rhetoric on trade, he has other interests in mind when it comes to handing out money. You don’t have to have a PhD in political science to conclude that Clinton will be pointing this out in her own economic speech on Thursday.