Trump’s Tax Plan Is a Confidence Scam

by Robert Borosage –

Donald Trump traveled to Springfield, Missouri to kick off the administration’s next big initiative: cutting taxes. Here was the essential Trump, the confidence man, peddling a plan that does not yet exist on paper. Populist bluster was deployed to cover for what will be a one-percenter’s elixir.

Each of the four principles Trump claims will inform what he calls “tax reform” is actually mocked in the plans the administration is cooking up behind closed doors.

The only question is whether Americans are gullible enough to buy what Trump, House Speaker Paul Ryan and Republicans are selling. And whether Democrats will unite to expose the con and demand progressive tax reforms that are long overdue.

Simplicity?

Trump’s first principle is simplicity: the tax code should be “simple, fair and easy to understand.” But Republicans aren’t interested in simplicity. They are interested in cutting taxes. particularly for the wealthy and the corporations, and starving the government of revenue.

This sets up their argument for the necessity of slashing popular government programs – from Medicare, Medicaid and Social Security to disaster relief, investment in education and environmental protections.

Were simplicity the actual goal, Trump would promise a plan that was revenue neutral, or given the current deficits, produced more revenue, by closing loopholes and shutting down tax dodges. The words never crossed his lips.

Cutting Corporate Taxes

The second “principle” is to cut corporate taxes. With corporate profits a record percentage of the GDP and revenue from corporate taxes at record lows, this isn’t exactly a compelling cause. So, this goal is spun as a way to make corporations competitive, creating more jobs and higher wages.

Every part of this argument is a lie. Corporations pay far lower effective tax rates than the nominal rate. And as a new study by the Institute for Policy Studies shows, the corporations that already pay at the lower 20-percent rate Republicans are peddling have cut, not created, jobs over the last nine years.

And while cutting corporate taxes lines the pockets of shareholders and CEOs, workers suffer job loss and pay stagnation.

Tax Relief?

The third principle is “tax relief for middle class families.” Whenever politicians start talking about cutting taxes on the middle class, hold on to your wallet.

In every version of Trump tax plans that have been made public, the richest 1 percent pocket nearly half or more of the tax breaks. In the most recent plan, the top one-tenth of 1 percent would enjoy a tax break of over one million a year.

The average taxpayer in the middle would pocket about $1,000. Trump argues that these “forgotten people” will get the pay raise they’ve been waiting for, and “do lost of things with their paychecks.” Yeah, like making a nominal payment on the record credit card debts, and auto and school loans that burden them. This is a heist. The Trump tax cuts will overwhelmingly benefit the few and the corporations. The middle class is offered a pittance simply to make the dish palatable.

“The American Model”

The fourth principle is the most outrageous: Trump promises to create “the American model” by bringing back trillions in wealth parked overseas. Large corporations have indeed booked trillions of profits overseas to avoid paying U.S. taxes. The numbers are staggering: an estimated $2.5 trillion, with $700 billion in owed taxes.

But does Trump’s “America Model” require these corporations to pay the taxes that they owe?

No, he offers them a massive tax break – taxing the money at 5-10 percent — to reward them for their tax avoidance. This, he claims, would “return trillions” to invest in our country and rebuild our communities.

All this is simply nonsense. The money isn’t stashed off shore; it is a bookkeeping entry. The corporations already have use of it if they so choose, simply by borrowing against it and writing off the interest rates.

The last time the U.S. offered”repatriation” of overseas profits,  U.S. companies used the tax giveaway to accelerate mergers, raise dividends, and buy back their own stock.

This pumped up stock prices, and CEO and executive bonuses. There was no jobs boom. And of course, the success of the scam encouraged far more companies to start rigging their books to report profits overseas to line up for the next sting.

If Trump were serious about his “American Model,” he would simply make corporations pay the American taxes that they owe, not lavish rewards on multinationals gaming the tax code.

Real Tax Reform

No one likes taxes. The subject is boring, painful and complex. But there are a few simple realities that shouldn’t be forgotten. The U.S. pays among the lowest taxes in the industrialized world. One result is that our infrastructure is crumbling; our schools are aged and inadequate; our shared security – from health care to retirement security – inadequate.

In a time of obscene inequality, tax reform should raise rates on the wealthy. It should make the corporations pay their fair share. It should tax activities we want to discourage –like financial speculation and fossil fuels. It should tax the income of investors at the same rates as the income of workers. It should crack down on tax dodges, close loopholes and tax havens.

And yes, it should allow the IRS to automatically fill out the tax forms for the 60 million Americans who do not itemize deductions. That sensible reform is blocked by the lawyers and tax preparation companies who profit at tax time.

Trump’s plan will do none of these.

The Pied-Piper of Plutocracy

Senate Democratic leader Chuck Schumer and 45 of 48 Democratic Senators have put forth principles for bipartisan cooperation: no tax breaks for the richest 1 percent, no increased burden on the middle class, taxes should be done in “regular order” requiring bipartisan cooperation and reform must result in the revenue needed to fund the government adequately. Trump’s tax plans will violate each of these.

Trump says he wants bipartisan support. But his plan is being cooked up behind closed doors in meetings only with Republican congressional leaders. He offers not an outstretched hand, but a clenched fist. In Missouri, he urged supporters to demand that Democratic Senator Claire McKaskill vote for his tax plan or be voted out of office.

Peddling a plan that doesn’t yet exist on paper. Promising jobs and raises while pushing tax cuts for the rich and corporations. Puffing an “American Model” that rewards global corporations for their tax dodges. Trump, the pied piper of the plutocracy, would lead us into another round of privileged pillage. He won’t change; he must be stopped.

 

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Reprinted with permission from OurFurture.org