THE TICKER

President Trump took pains Wednesday to emphasize that the wealthy won’t benefit from the tax plan that Republicans just debuted. The plan begs to differ. 

Indeed, the proposal — though still light on many details that will help number-crunchers determine precisely who wins, who loses, and by how much — offered enough to indicate that a tax code overhaul along its suggested lines would yield a windfall to Trump and his family.

Let’s count the ways this could potentially happen:

1. First, the blueprint would cut the rate paid by the approximately 27 million U.S. businesses organized as pass-throughs, meaning they pay their taxes on the individual side of the code. Where those firms now face up to a 39.6 percent rate, the Republican plan proposes trimming that to 25 percent. House Speaker Paul Ryan (R-Wis.) said the provision is aimed at providing relief to “small and family-owned businesses.” 

But the bulk of such benefits wouldn’t accrue to mom-and-pop outfits. An analysis by the Tax Policy Center this spring found that 85 percent of such a rate cut would go to the top 1 percent of earners. And the Trump Organization is a thicket of these partnerships. A letter the Trump campaign released last year from the tax firm Morgan Lewis said the then-GOP candidate's business empire consisted of more than 500 separate entities, operating “almost exclusively through sole proprietorships and/or closely held partnerships.”

It’s worth pointing out again, as my colleague Phillip Bump does here, that we still don’t know Trump’s effective tax rate, because he bucked 40 years of tradition during the campaign and declined to release his returns. That will make it impossible, even when the details are clearer, to calculate the precise impact on Trump’s personal burden. But we can draw some informed inferences based on the broad strokes. 

2. For example (and secondly), the Republican plan proposes repealing the alternative minimum tax, a decades-old provision that limits deductions for wealthy filers to ensure they pay their fair share. In recent years, it has ensnared more and more Americans, compelling Congress to pass short-term patches exempting earners below the ultrarich. But repealing it altogether would cost an estimated $413 billion — probably to Trump’s benefit. A summary of Trump's 2005 tax filings that leaked during the campaign revealed he paid $38 million, $31 million of which he paid under the AMT. 

3. And then there’s the estate tax, which the Republican plan also proposes to scotch. The tax applies only to individual estates worth more than $5.45 million, or $10.9 million for couples, a threshold that exempts all but .2 percent of them. Estimating Trump’s net worth at $3 billion, Bloomberg News calculated that a repeal of the tax would save his estate $564 million. Using Trump’s own assessment that he’s worth $10 billion bumps that savings up to as much as $1.9 billion. 

Many observers on Twitter posited that the plan, as we know it, would benefit wealthy folks like Trump. Wall Street Journal's Richard Rubin: 

The New York Times's Binyamin Appelbaum:

Republicans argue the estate tax menaces family farms and small businesses, forcing families to break them up when an elder dies. Promoting the tax plan in Indiana on Wednesday, Trump called out Kip Tom, a “family farmer from Leesburg” in attendance whose family’s “farming heritage” he said “could come to an end because of the death tax, or the estate tax, or could make it impossible for him to pass that legacy to his wonderful family.”

See highlights of Trump's speech here: 

Tom is the chief executive of one of the largest agribusiness farm operators in Indiana, with operations across the state and in Argentina. He served on a Trump campaign advisory committee and visited Trump Tower after the election, stirring talk that he was in the running for agriculture secretary. During an unsuccessful bid for Congress last year, he reported a net worth of at least $3.9 million and as much as $14.2 million. 

There are other, less direct ways Trump would make out well under his tax plan. One of the few revenue-raising measures it named would limit the deduction that companies take for interest they pay on debt. But the plan narrowed an earlier, House Republican proposal to scrap the break, apparently leaving it in place for businesses — such as real-estate developers — that file on the individual side of the code. 

4. And the plan calls for cutting the corporate tax rate from 35 percent to 20 percent — a move that would end up primarily boosting worker wages or lining investors’ pockets, depending on which economists you believe. It’s tough to know how heavily invested Trump is in the stock market. 

But if a corporate rate cut rebounds mostly to investors, Trump’s ilk will only put more distance between themselves and average Americans. A Federal Reserve report on Wednesday found that the country’s top 1 percent now control nearly 39 percent of the wealth, a historically high number. The Fed ascribed the yawning wealth gap in part to the stock market. It’s booming, with the value of the average portfolio rising dramatically over the past few years to $344,500. But average workers aren’t enjoying the gains, since only a third of those in the bottom half of earners own any shares. 

The Post's Heather Long:

MARKET MOVERS

TAX FLY-AROUND:

— The big picture, via Damian Paletta, Mike DeBonis, and Carolyn Y. Johnson: “Republican leaders on Wednesday proposed slashing tax rates for the wealthy, the middle class and businesses while preserving popular tax deductions that encourage buying homes and giving to charity, hoping to unify the party behind a proposal to revamp the U.S. tax code.

But the nine-page framework they released to kick off negotiations left many key questions unanswered, including how they plan to avoid adding trillions of dollars to the government’s debt. The framework leaned heavily on limiting taxes paid by the wealthiest Americans, such as the alternative-minimum tax, and opposition to these changes from Democrats suggest it will be a battleground as negotiations intensify."

Republicans were also careful not to identify numerous tax breaks they might remove, focusing instead on promises to lower rates so much that President Trump estimated the effort would amount to the biggest tax cut of all time." That's because there is a powerful constituency behind nearly every tax deduction and putting potential breaks on the chopping block out in the sunlight will launch such battles.

What we know and what we still don’t, via The Wall Street Journal’s Richard Rubin

Six charts that explain the proposal. A great visual explainer via The New York Times.

— Budget breakthroughs in both chambers. In the Senate, “Republicans are looking to quickly to pass a budget so they can move directly to tax reform, and hope to mark up a budget resolution next week and then pass the resolution the week after that, Sen. Pat Toomey, R-Pa., said Wednesday,” per the Washington Examiner. And in the House, the Freedom Caucus endorsed the plan and a budget resolution to advance it,  per The Hill.

Homebuilders split with industry, endorse the plan. Politico’s Lorraine Woellert: “The National Association of Home Builders split with industry allies to endorse a White House plan that reduces tax breaks for homeowners, increasing the vulnerability of a write-off that was once considered untouchable.

The rift is a first for the industry, where real-estate agents, builders, bankers and others in the homebuying pipeline typically lock arms to defend the mortgage-interest tax deduction as a building block to homeownership and wealth creation. ‘We think it’s time for creative thinking,’ NAHB Chief Executive Officer Jerry Howard told Politico.” 

— Trump’s tax speech was a snooze. The president went to Indiana to sell his tax plan, but his stump spiel was missing all his usual zeal, The Post’s John Wagner writes.  

Investors are starting to believe again. Bloomberg’s Lu Wang: “A Goldman Sachs basket of companies that pay the highest rates just beat the market for a fifth straight day. The rally reincarnates a trade that ascended after the November election and then died.”

Drudge hates it. Matt Drudge personally attacked the plan for raising rates on the rich. He must have been reading a different plan. The Hill reports

 

Here's how some Members of Congress weighed in:. House Minority Leader Nancy Pelosi (D-Calif.): 

Sen. David Perdue (R-Ga.): 

Sen. Elizabeth Warren (D-Mass.): 

Senate Majority Leader Mitch McConnell (R-Ky.): 

How do you reduce the rate on pass-through businesses without also creating a wide-open lane for wealthy Americans to drastically reduce what they owe the government?
The New York Times
President Donald Trump and congressional Republicans are making a politically convenient case to financing tax cuts with deficits, but it’s a risky reversal, Greg Ip writes.
Wall Street Journal
A global bond rout deepened amid growing optimism over the health of the U.S. economy and President Donald Trump’s tax-cut plan. Stocks were mixed as investors began to assess the implications of the much-anticipated tax proposal.
Bloomberg
TRUMP TRACKER

RUSSIA WATCH:

Zuck responds to Trump. The Post’s Hayley Tsukayama: Facebook chief Mark Zuckerberg responded to accusations from President Trump that the social network has always been "anti-Trump," defending the company he founded while acknowledging that he shouldn't have shaken off concerns about Facebook's influence. Trump said on Twitter Wednesday that Facebook and news media — including The Washington Post — had always been opposed to him. Zuckerberg said that the fact that Facebook fields criticism from Trump as well as liberals shows it's ‘a platform for all ideas.’”

Russian trolls stoke divisions over NFL.  The Post’s Devlin Barrett: “Russian Internet trolls are trying to gin up even more controversy over NFL players taking a knee during the national anthem, a senator said Wednesday — warning that the United States should expect such divisive efforts to escalate in the next election. Sen. James Lankford (R-Okla.) made the assertion in a hearing with the heads of the FBI, Department of Homeland Security and the National Counterterrorism Center.”

— Jared Kushner registered to vote as a woman. Uhhh. We know The First Son-in-Law has a history of trouble with paperwork, but this one seems more easily avoidable than, say, “forgetting” all the Russian operatives you met with during the campaign when you’re filling out an application for a national security clearance. WIRED noticed the weirdness

— Kelly folds Navarro’s trade shop into the NEC.  Politico: "White House chief of staff John Kelly is folding adviser Peter Navarro’s trade office into the National Economic Council – a move that could limit Navarro’s influence in the West Wing. The Office of Trade and Manufacturing Policy, which is run by Navarro, will now be housed within the NEC, four administration officials told Politico. That means Navarro will report to NEC Director Gary Cohn, with whom he has repeatedly clashed in recent months."

He'll oversee the AT&T-Time Warner acquisition.
Brian Fung
"We have an obligation to get out throughout the country,” an EPA spokeswoman said, adding that Pruitt overwhelmingly flies commercial.
Brady Dennis and Juliet Eilperin
The United States commerce secretary said China’s government needed to do more to allow foreign companies to operate freely and close the trade deficit.
New York Times
THE REGULATORS

Equifax and others will face tougher regulation, CFPB warns.  CNBC’s Jeff Cox: “Credit reporting agencies are going to have to get used to "a new regime" in the wake of the Equifax consumer data hack, a top Washington regulator said Wednesday. Consumer Financial Protection Bureau Director Richard Cordray said Equifax, TransUnion and Experian are getting embedded regulators to ensure that similar breaches of private information don't happen again.”

The company will offer free credit checks for life. “The service will be introduced by Jan. 31, Chief Executive Officer Paulino do Rego Barros Jr. wrote in a Wall Street Journal op-ed Wednesday,” per Bloomberg.

SEC hack is a cautionary tale. The New York Times’s Gina Chon: “A botched investigation into a hack at the Securities and Exchange Commission is a warning for other regulatory agencies. The agency’s chairman, Walter J. Clayton, told senators on Tuesday that he did not know the exact timing of a breach from last year and that his predecessor may not have been notified. That is troubling given the sensitive market data kept there.

Agency bosses don’t have to be told about every hack, but the breach of the S.E.C.’s Edgar filing system, which is used by public companies and relied upon by investors, should have been reported promptly to the top.”

Lynn Tilton wins her SEC trial.  Bloomberg’s Bob Van Voris and Matt Robinson: “SEC administrative law judge Carol Fox Foelak ruled in favor of Tilton over allegations that she and her firm, Patriarch Partners LLC, bilked investors out of more than $200 million. The decision follows a three-week trial that ended last November. Tilton, who repeatedly argued that the SEC’s internal legal process is unfair to defendants, went all the way to the U.S. Supreme Court in her unsuccessful efforts to have the case heard in federal court, rather than before an SEC administrative judge.”
 

POCKET CHANGE
Once financial adviser agreed to become an informant, FBI investigators pursued assistant coaches and apparel executive — and they likely won’t stop there.
Will Hobson
Not every Wall Street bank chief is bearish on bitcoin.
Bloomberg
OPINIONS
It’s the latest episode in a failure that at the heart of our democracy.
Norman Eisen and Anne Weismann
On trade, entitlements and immigration, conservatives are losing their traditional understanding of the purpose of economic policy.
Michael Strain, via Bloomberg Views
CHART TOPPER

From The Post's Scott Clement and Kevin Uhrmacher: "Strong. Arrogant. Incompetent. Great. Americans have choie words for President Trump." 

DAYBOOK

Today

  • The National Economists Club will hold an event on “Globalization in Crisis and the Rise of Populism."

  • The Senate Banking, Housing and Urban Affairs holds a hearing on evaluating sanctions against North Korea.

  • The Brookings Institution holds an event on perspectives on securities regulation.

Coming Up

  • The American Enterprise Institute holds an event on how "decade of extreme monetary policy changed the banking system" on Oct. 10.

THE FUNNIES

From The Post's Tom Toles: "There’s only one problem with the pedestal the Republican elite put themselves up on:"

BULL SESSION

What Roy Moore's win means for the GOP establishment:

Sen. Bob Corker (R-Tenn.) opens up on his retirement: "I am in no way frustrated:"

See this toddler sneak popcorn from Prince Harry:

This debate between an African-American pundit and ex-White House aide Sebastian Gorka is something: