It’s also that in so doing, Trump fully embraced conventional GOP plutocracy after strongly suggesting that he was decidedly not a Paul Ryan-style Republican, vowing major public spending on infrastructure, universal health care and a strong stance in defense of social insurance.
Now a new report underscores yet another way in which Trump’s tax law represents a profound betrayal of that spirit. And it gives Democrats a new opportunity to undercut Trump’s populist aura, or whatever is left of it, anyway. Jeff Stein and Christopher Ingraham report:
About 400 of America’s largest corporations paid an average federal tax rate of about 11 percent on their profits last year, roughly half the official rate established under President Trump’s 2017 tax law, according to a report released Monday.The 2017 tax law lowered the U.S. corporate tax rate from 35 percent to 21 percent, but in practice large companies often pay far less than that because of deductions, tax breaks and other loopholes.In the first year of the law, the amount corporations paid in federal taxes on their incomes — their “effective rate” — was 11.3 percent on average, possibly its lowest level in more than three decades, according to a report by the Institute on Taxation and Economic Policy, a left-leaning think tank.From 2008 to 2015, under the previous tax code, the corporations’ effective rate was about 21 percent, according to ITEP’s prior research.
There’s also this, from Stein and Ingraham:
The report also found that 91 corporations in the Fortune 500, many worth billions of dollars, paid no federal taxes last year.
Even before this new report came along, we already knew the tax law had failed to achieve its stated objective of producing an explosion in job-creating corporate investment. As Stein and Ingraham note: “Much of the extra capital went into record stock buybacks, which increase share prices without requiring new investment or hiring.”
What appears new here is that the report also found that the tax law ended up facilitating tax avoidance. As the report puts it:
For most of these companies, their effective federal income tax rate was much lower than the statutory corporate tax rate of 21 percent. This is by design.When drafting the tax law, lawmakers could have eliminated special breaks and loopholes in the corporate tax to offset the cost of reducing the statutory rate. Instead, the new law introduced many new breaks and loopholes, though it eliminated some old ones.
What did these new tax breaks and loopholes do? The report says:
Several breaks and loopholes allow companies to report taxable income that is much smaller than their actual income. Other special breaks allow companies to reduce their tax liability after they apply the rate to their taxable income.
It’s often been observed that Trump’s tax law was not tax reform; it was largely a tax cut. This underscores the point and makes it even worse. The report is unsparing on why the law ended up introducing new tax breaks and loopholes facilitating tax avoidance, chalking it up as “the result of a long-term aggressive push by corporate lobbyists to reduce the federal corporate income taxes their companies pay.”
Swamp, decidedly not drained.
This gives Democrats a major opening, not just to promise to undo Trump’s regressive tax cuts and campaign for a more progressive tax code — something that Sens. Elizabeth Warren (D-Mass.) and Bernie Sanders (I-Vt.) have done most ambitiously, though Joe Biden has been surprisingly good on this as well — but also to vow to genuinely drain the swamp, from a tax-fairness perspective.
Crucially, this comes as Trump has appealed to the Supreme Court to protect him from seeing his own tax returns and finances revealed to the public. Taken together, all these things dramatically escalate the betrayal we’ve seen.
Trump wore his corruption as a badge of honor
It is still not adequately appreciated that in a very important sense, Trump ran on his own corruption — he wore his own corruption as a kind of badge of honor, and this was absolutely central to his economic populist aura.
Indeed, Trump campaigned openly on the idea that his history of self-dealing better equipped him to take on financial elites. As a candidate, Trump advertised the fact that he’d done bad things to make his money. He openly boasted that he bought off politicians. He even claimed that not paying taxes “makes me smart.”
But Trump draped this in a kind of populist traitor-to-his-own-corrupt-class spirit. He vowed to put his inside knowledge of how the “corrupt” system really works — one in which everyone is corrupt, no matter what they tell you — to work in making America, or at least his followers, flush.
At the core of this vow was to unrig the rules to end the very sort of elite gaming of the system that he’d engaged in himself — the gaming that “made him smart.” But as this new report shows, Trump’s tax cut, in addition to failing to unleash a supernova of corporate investment, has only increased all the elite gaming.
We have also since learned that Trump’s inherited fortune rested to no small degree on an extraordinary spree of tax avoidance undertaken back in the last millennium by Trump and his father. And he continues to refuse to release his tax returns, which would no doubt shed light on how much he personally profited off his own tax cut and on how much his relentlessly corrupt self-dealing and profiteering off the presidency has hauled in for him.
Trump might be benefiting from the good economy. But all of that taken together adds up to a very powerful tale of corruption and betrayal that can and should undercut the story Trump hopes to tell about it.
Update: Elizabeth Warren’s campaign sends over the following statement:
There’s no better example of Washington corruption than giant corporations like Amazon and Chevron paying zero taxes on billions in profits while middle-class families pitch in their hard-earned money to keep our government running. Back in April, Elizabeth proposed her Real Corporate Profits Tax and became the first candidate to propose a serious plan to ensure that large and highly profitable corporations pay taxes on their reported profits -- no loopholes or exemptions.
Update II: A spokesman for Bernie Sanders’ campaign sends over this:
When Bernie Sanders is president, corporations will start paying their fair share, whether they like it or not. This new report shows exactly how big the problem really is — as politicians like Donald Trump claim we can’t afford to fight climate change and guarantee health care to all Americans, those same politicians are giving huge tax breaks to large profitable companies that enrich their executives and shareholders. That is going to end under a Sanders administration.