It slices, it dices, it makes the economy grow at 3, no 4, no make at that 6 percent. Is there anything President Trump's tax plan can't do?
Well, how about cutting taxes for a family making $50,000.
That's right: The Trump plan, which he said would be a “giant, massive, beautiful, biggest-ever-in-our-country tax cut,” would actually raise taxes for a lot of middle-class, and especially upper-middle-class, families to help pay for some of the taxes it really would cut for the rich and corporations. Indeed, by 2027, the nonpartisan Tax Policy Center estimates, a little over a quarter of households would experience a tax increase under the Trump plan. About 45 percent of parents would. The top 1 percent, meanwhile, would get 79.7 percent of all the Trump tax cuts at that point. To put that in perspective, the even more rarefied top 0.1 percent, who make an average of a few million dollars a year, would receive almost twice as many dollars worth of tax cuts as the bottom 99 percent would combined.
This is what House Speaker Paul D. Ryan (R-Wis.) describes as a plan whose “purpose” is to “help the middle class.”
How is it possible that Republicans would raise taxes on so many middle-class families when they say they'd be doubling the standard deduction? Because, as Business Insider's Josh Barro points out, they'd really be doing no such thing. At least not in anything more than name. Sure, they'd increase the standard deduction, but they'd also get rid of the exemptions you can take for yourself, your spouse and your children. Single people would end up with a 15 percent bigger deduction overall — nowhere near the 100 percent Republicans claim — but parents might end up with a smaller one than they have now.
It's enough that even if Trump expanded the Child Tax Credit by the $500 he's expected to, a lot of families would still owe Uncle Sam more under the Republican plan than they do today. That, according to the Tax Policy Center, includes 34 percent of parents making between $10,000 and $20,000, 45 percent of those making between $20,000 and $30,000, and 41 percent of those making between $30,000 and $40,000. This sure is a strange way to turn the GOP into a “worker's party,” like Trump said he would. Although, to be fair, it is true that he'd increase taxes on even more families making low to mid-six figures, because they'd also lose their state and local tax deduction. That, you see, is the one tax loophole that Republicans might — but only might — be willing to close to pay for some of their big business tax cuts. The result is that 75 percent of parents taking home between $200,000 and $500,000 would see their taxes go up as well.
It's a class war of the super-rich against the merely affluent. Or, more to the point, of Republican donors against Republican voters.
Nobody knew that Trump could make tax cuts so complicated. Why doesn't he just give a lot of them to the rich, but enough of them to everyone else to keep things from looking like Ayn Rand fan fiction? That, after all, is what President George W. Bush did with his plan that looks downright Marxist compared with Trump's. It “only” gave 23.5 percent of its total tax cuts to the top 1 percent, while making sure to give something to everybody. Well, the answer to this question is Republicans only have 52 votes in the Senate but still want to cut corporate taxes.
Here's why those things matter. If you want to pass a bill with only 50 votes in the Senate, instead of the 60 it takes to beat a filibuster, then you aren't allowed to add to the deficit outside the 10-year budget window. Now, this normally isn't much of a problem, since you can always just set your tax cuts to expire at that point. That's what Bush did with his. You can't, though, with corporate tax cuts. They change companies' behavior so much that even doing them for just three years would, according to the nonpartisan Joint Committee on Taxation, lead to a “nonnegligible loss of revenue” after 10 years' time. So if Trump wants to cut taxes for businesses, then he has no choice but to pay for them by raising taxes on individuals.
It's no mistake, then, that Republicans would make the middle class pay more in taxes. That's been their plan all along. It's just not much of one when their middle-class tax hikes still wouldn't be enough to make their big business tax cuts legislatively kosher. The Tax Policy Center estimates that in its second decade — when the Trump plan wouldn't be allowed to add to the deficit — its individual tax increases would raise $1.4 trillion, but its corporate tax cuts would cost $4.1 trillion. (Repealing the estate tax would add another $440 billion of red ink). Treasury Secretary Steven Mnuchin, for one, has tried to get around this by saying their tax cuts would make the economy grow so much that they'd more than pay for themselves, but this is nonsense. That's never happened. Even former Reagan administration official and current Harvard professor Martin Feldstein has found, together with former Congressional Budget Office director Douglas Elmendorf, that the Reagan-era tax cuts had almost nothing to do with the Reagan recovery.
So the only way the Trump plan could work is if its corporate tax cuts go away in 10 years, but its individual tax hikes don't. In other words, if Trump raises taxes on the middle class forever to pay for a few years worth of tax cuts for the Fortune 500.
That's some populism.