There is increasing angst in the circles of the wealthy about more frequent calls from prominent Democratic politicians to raise taxes on the richest Americans. It’s not just that Sen. Elizabeth Warren (D-Mass.) wants to tax wealth itself in excess of $50 million or that Rep. Alexandria Ocasio-Cortez (D-N.Y.) says the marginal tax rate on income in excess of $10 million should be 70 percent. It’s not simply that Sen. Bernie Sanders (I-VT) would like to roll back the estate tax so that it begins at $3.5 million. It’s that polls show that millions of Americans support hitting the wealthy in the wallet.
How could this have happened? Here’s a thought: Blame Donald Trump. Like no one else, Trump proves that the United States’ 40-year infatuation with tax cuts and trickle-down economics was a sham. Instead of trusting the wealthiest that the money would flow down, the dollars, like heat in an apartment, always went to the top.
Take the 2017 tax reform package. The wealthiest Americans were the recipients of almost all the large and permanent reductions, while the rest of us were left with mere scraps — which will sunset at the end of 2025. The Trump administration promised the corporate tax cuts would trickle down in the form of salary increases — “There really shouldn’t be much doubt about that,” said Kevin Hassett, a chief economic adviser to the president. No such luck.
Trump claimed the tax reform left him a “big loser,” but he almost certainly made out, thanks in no small part to breaks the package handed the real estate industry. Family members such as son-in-law Jared Kushner also almost certainly prospered, thanks to a giveaway known as “Opportunity Zones," which allows investors to delay capital gains payments in return for putting their cash in specially designated neighborhoods. That carve-out is set to benefit Kushner through his stake in a real estate concern moving now taking advantage of this rule. (One other thing about Opportunity Zones: Kushner’s wife/Trump’s daughter, Ivanka Trump, played a pivotal role in promoting them.)
In addition, Republicans weaponized the tax code, seeming to punish voters who disproportionately voted for Hillary Clinton in 2016. The ability to deduct state and local taxes on federal returns was capped at $10,000, something that impacted residents of high-cost metropolitan areas including San Francisco and New York City, while mostly giving those residing in redder areas a pass. At the same time, the 20 percent pass-through rate on business income was worded so that real estate investors qualified but veterinarians did not.
Finally, Trump promised he would not cut Social Security or Medicare. His advisers and the Republican Party are talking about cutting now that the tax cuts that benefited the multi-millionaire class sent the federal budget deficit skyrocketing.
As if all this were not enough, the Trump administration seems intent on proving the truism that no one ever has enough money. Scams large and small proliferate. Millionaire Cabinet members attempt to charge opulent furniture and fancy travel to the public. Corporate giveaways and conflicts of interest are frequent occurrences. Trump himself appears to view the presidency as a just-in-time branding opportunity for his business, scarfing up money as lobbyists and assorted toadies both foreign and domestic make sure to spend prominent time and money at properties bearing his name.
Trump’s greed would stink in the best of times. We do not live in that kind of period. Income and wealth inequality are at levels not seen since the last gilded age. Increasing numbers of college graduates are burdened with college debt. Life expectancy is falling. About 40 percent of the population finds itself unable to come up with $400 out of their own resources in an emergency — a statistic that was brought home to all during the Trump-initiated government shutdown. Workers lined up at food banks and pawned goods online because they missed one paycheck, while Trump suggested they appeal to their grocers for a break.
The result? A Morning Consult/Politico poll released Monday showed 6 out of 10 Americans support Warren’s proposal, while just under 50 percent — and a majority of Democrats — like Ocasio-Cortez’s plan. Another survey, this one conducted by the Hill and HarrisX in January, found a majority wanted to see a 70 percent marginal rate enacted, including a majority of women and independent voters. It’s not a surprise; it’s hard not to suspect future generations will look back at this period and wonder what took us so long to demand the Trumps of the world pay their fair share of the tax bill.