Tax & Budget

Trump’s Tax Plan: Corporate Welfare and Tax Cuts for the Rich

During the last week of April, Trump announced a tax plan that is short on details, but long on benefits for the wealthiest among us (including Trump himself), and the biggest corporations. It will deliver minimal relief to working families and drive the deficit sky-high. Congress will try to pass Trump’s tax plan using the same mechanism they tried to use to repeal the ACAbudget reconciliation. This way, they can pass their legislation in the Senate with only 50 votes, avoiding any pretense of bipartisanship.

You can understand Trump’s handout to the rich and big corporations at the expense of everyone else through tax “reform” in three easy steps:

  1. First, cut taxes for the rich and corporations, ballooning federal deficits;
  2. Then, claim that deficits are too high and that cuts to government services must be made;
  3. Finally, cut vital entitlements (like Medicaid, Medicare, and Social Security) to offset growing deficits (which was likely part of Trump’s goals from the beginning).

The upshot: Trump’s tax plan will help the rich and big corporations at the expense of average Americans. His plan would dramatically revise the tax code so that the well-off, whether they’re deep-pocketed individuals or deep-pocketed corporations, will pay even less of their fair share than they do now.

Trump’s tax plan would eliminate the estate tax delivering a huge windfall to billionaires like Donald Trump’s family. 99.8 percent of estates are already exempt from the estate tax, and his tax plan would only help the remaining wealthiest 0.2 percent of estates, those who don’t need it. Simply put, this is a way to keep wealth concentrated in the hands of a small number of billionaire families.

The plan would also eliminate the alternative minimum tax, which is intended to ensure that the wealthy pay at least some taxes, no matter how many loopholes they exploit. According to his 2005 tax return, Trump paid $38 million in taxes on $153 million in income; $31 million of his tax payment was due to the alternative minimum tax. Had it not been in place, his effective tax rate for that year would have been just 3.5 percentfar below what most middle-class families pay.

Trump’s tax plan is a handout to corporations, at the expense of working families. Corporate profits are at record levels, while workers’ wages have stagnated. Rather than helping those left behind, as the Trump administration claims, the tax plan would reduce the corporate tax rate from 35 to 15 percent — more than half the benefits from this cut would flow to the top 1 percent of households. Contrary to Trump’s rhetoric about bringing jobs back to America, the plan would eliminate taxes on the foreign profits of U.S. corporations, giving them a major incentive to move more jobs and profits offshore.

Lower Individual Taxes for the Rich

Unlike the rest of us, most wealthy people get most of their money from “capital gains” (i.e. earnings from stocks or property). The wealthy already pay a lower tax rate on capital gains than most middle-class families pay on their income, yet Trump wants to lower it even further, by eliminating the Affordable Care Act’s 3.8 percent Medicare tax on unearned income, which affects only those with incomes above $200,000 ($250,000 for couples). He also wants to lower the income tax rates for the top 1 percent, from 39.6 to 35 percent.

What About All of Those Loopholes Trump Says He’ll Close?

Trump and Ryan claim they can lower rates for everyone and avoid new deficits by eliminating loopholes in the tax code. Don’t believe them. While there are big tax exemptions that should be done away with, like for corporate jets and oil and gas exploration, those can’t pay for the amount of federal revenue lost by Trump’s tax cut for the top income brackets. They would need to cut popular tax programs, like the deductions for mortgage interest and charitable giving, to get anywhere near their goals without dramatically increasing debt.

Who’s Really Paying for These Tax Cuts for the Rich? Everyone Else.

Republicans try to weasel out of criticisms that they only want to help their wealthy donors by claiming tax cuts help stimulate the economy. Turns out, the evidence undercuts the GOP’s claims. The Congressional Budget Office found that Bush’s 2001 and 2003 tax cuts fueled $1.7 trillion in deficits. If Congress passes Trump’s tax plan, it’ll mean increased hardship for hardworking American families.

During the campaign, Trump promised to bring down the deficit “big league and quickly.” In fact, his tax plan would explode the deficit (by one estimate by $5.5 trillion over a decade). During the Obama presidency, Republicans claimed to care about the deficit. Those concerns vanish now that the GOP gets to talk about cutting taxes. Trump’s plan helps the top 1 percent who would get the vast majority of the benefits, directly or through corporations. This is not fair.

Here's Where You Come In: Tell Your MoC You Oppose Tax Cuts for Corporations and the Rich

Sadly, Republicans in Congress need to be reminded that they weren’t elected to get tax cuts for their rich donors and corporations. And Trump? While we still haven’t seen his tax returns and can’t know for certain, his tax cut proposal appears to benefit Trump and his family personally. We do know that the tax cuts in TrumpCare would have made him at least $3.2 million a year.

Our MoCs must strongly oppose any plan that cuts taxes for the wealthy and corporations. Specifically, they should oppose:

  1. Any changes to the tax code unless and until Donald Trump releases his tax returns;
  2. Elimination of the estate tax;
  3. Taxing capital gains or pass-through business income at a lower rate than income from wages and salaries;
  4. Any other new tax cuts for the rich;
  5. Increasing the deficit to pay for tax cuts for the rich and corporations;
  6. Creating or keeping tax loopholes for corporations or the rich; and
  7. Creating new individual tax loopholes for the rich.

Sample Town Hall Questions:

  1. I don’t believe that cutting taxes for the rich will do anything for the economy, except to make the rich richer. I’m a hard working American and think that you, as my Representative, should be prioritizing me and my family, not the rich. Will you commit to me, your constituent, that you will oppose any additional tax cuts for the rich?
  2. Few corporations actually pay their fair share in taxes. Many pay none at all. It’s unfair that many rich corporations are paying less in taxes than people like me, a hard working American. Will you commit to me, your constituent, that you will oppose any tax plan that cuts taxes for corporations or leaves corporate tax loopholes in place?
  3. I am worried that Trump’s tax plan, and the one I have seen from House Speaker Paul Ryan, would increase the deficit by trillions of dollars. Will you commit to me, your constituent, that you will oppose any tax plan that increases the deficit to pay for tax cuts?
  4. Without his tax returns, the American people have no way of knowing how much the tax plan will benefit Trump and his businesses. The taxpayers deserve to know if our hard-earned money is going to the President’s personal gain. Will you commit to opposing any tax plan until President Trump releases his tax returns so that the American people can fully understand how it will personally benefit the president?