Tuesday, April 25, 2017

What did Donald Trump do today?

He leaked details about his forthcoming tax plan, which is custom-tailored to lower Donald Trump's tax obligations.

The general contours of Trump's plan have been known since the election: he is seeking to slash the corporate income tax by more than half, lower the rate paid by the wealthiest Americans, eliminate the estate tax for the very wealthiest Americans, and abolish the alternative minimum tax (AMT)--without which the billionaire would have paid only 4.7% of his $153,000,000 income in federal taxes in 2005. (The median American household pays about a 20% rate in federal taxes.)

All of these changes would benefit Trump, but perhaps none more than the detail that was leaked today: that he plans to lower the rates on "pass-through" entities from 39.6% (before deductions) to 15%. Most of Trump's businesses are structured this way, meaning his own tax bill would be greatly reduced. This would, however, be extremely expensive in budget terms: the break for pass-through businesses alone would cost the government an estimated $1.5 trillion over ten years. (To put that in terms Trump might understand, this is enough money to build his "impenetrable, physical, tall, powerful, beautiful, southern border wall" 60 times over.)

Because he refused to put his assets in a blind trust, Trump retains full ownership and legal control of his businesses and can calculate exactly how many millions of dollars per year this will save him.

So what?

  • Tax policy probably shouldn't be built around what will save the president the most money.
  • Situations like this are exactly why presidents before Trump put their assets in blind trusts.