Trump has a plan to change the tax code to get much, much richer

President Trump plans to include a massive cut in the top pass-through corporate tax rate from its current level of 39.6% to just 15%, the Michael Bender and Richard Rubin of the Wall Street Journal report.

It will be sold as a boost to small businesses, and it is, but mostly it’s a huge giveaway to the wealthy – including the president himself.

More than two-thirds of the income of pass-through companies (so named because their structure makes them exempt from corporate tax and their profits are instead taxed when distributed to shareholders) goes to the top 1 percent.

The plan creates a huge loophole with which ordinary people can evade taxes. Instead of just working for, I could form DylanCorp LLC, contract with Vox to provide copywriting services, and pay a 15% rate on DylanCorp earnings rather than my current 25% rate. For the rich paying a maximum rate of 39.6% (or the maximum individual rate of 33% proposed by Trump during the campaign), the incentive to do so will be even greater. New study finds that when Kansas exempted passed on income, the result was not more investment or growth, but an upsurge in this type of tax evasion. It is not a good policy.

It’s also a really, really huge gift to Donald Trump, the Trump Organization, and the whole Trump family. The Trump Organization is not a “C Company”. He does not pay corporate tax. Instead, it is structured as a collection of middleman companies, so that the vast majority of income accruing to Trump and his family is taxed through this system. Trump almost certainly pays the 39.6% rate on his income, so he’s more than halving his own top tax rate. This is the most transparent selfish policy he has proposed since taking office, and it will likely save him tens of millions of dollars.

Here’s the thing, though. We’re not sure exactly how much of a giveaway this represents for Trump, as we don’t know what’s on his tax returns. We have no idea. We have some details from his 2005 return, which suggest he receives tens, if not hundreds of millions of dollars in transmitted income each year. This return also implied that without the alternative minimum tax, which Trump wants to repeal, he would have paid less than 3.5% of his income in federal income taxes. Reducing the pass-through rate while repealing the AMT would likely reduce its tax burden to about half that level. Instead of paying $ 38 million, he could have paid less than $ 3 million.

These are rough numbers, however, from barely a year into Trump’s life over a decade ago. We know very little about the current state of Trump’s finances. We don’t know exactly how much he earns from wages versus interest versus transferred income. We don’t know how much tax he already pays on it. We don’t know what tax credits and exemptions his companies are enjoying, and how they would be affected by the corporate tax changes passed by Trump and House Republicans.

We don’t know because Trump has refused to release his tax returns.

It is completely new. Trump is not the first Republican president to propose massive tax cuts that explode deficits and increase inequality. Presidents Reagan and George W. Bush have done the same. But they also have released at least partial tax returns for each year they were in office. The public knew how they made money. They knew where the money was coming from. They knew that, for example, Dick Cheney won $ 36 million of the Halliburton oil company when he left to become vice-chairman.

Has knowledge stopped the tax cuts? No. It also didn’t stop Halliburton from receiving preferential treatment of Cheney and the White House once in office. But he has let the public know what his officials have at stake in the policies they are advocating. This helped watchdogs keep an eye out for wrongdoing such as Cheney’s alleged preferential treatment of Halliburton. It helped the public determine whether the president was acting in his own best interest or that of the nation.

It is an important form of transparency. And this is particularly important with this president, on this subject. Corporate tax reform is an obscure issue involving changes to dozens of very specific and complex tax provisions. And Trump’s finances are bigger and harder to disentangle than those of any president before him.

Many concerns about Trump and corruption have centered on egregious violations, such as the use of government resources to promote Trump’s resorts. It is definitely bad and should be controlled. But if you’re a plutocrat keen on making money, there are more subtle, more legal ways to use the privileges of office to make a lot more money. An article by Berkeley economist Stefano DellaVigna and his co-authors revealed that Italian Prime Minister Silvio Berlusconi The Mediaset television network saw its profits increase by at least 1 billion euros during his tenure as prime minister, not necessarily because of corruption, but because companies have moved advertising to Mediaset as a means of lobbying on Berlusconi.

In the tax cut, Trump found an equally legal but still troubling way to use his powers to get rich. It’s unarguably legal, because it requires an act of Congress, and it applies to many other wealthy people as well. But just because Republicans in Congress seem willing to allow this kind of self-serving tax legislation doesn’t make it any less outrageous. Trump is trying to revamp the tax code for personal gain, and if he is successful he will make more money than he could just by using the government to market his resorts.

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