Editorial: Trump tax plan a boon for the wealthy

Saturday, October 07, 2017

President Trump, his team should be selling underwater real estate in Florida. There will be a lot more of it thanks to their reversal of efforts to combat climate change. But at the moment what they’re peddling is so-called tax reform, which it isn’t. Judging by the sketchy plan they claim is a replacement for a tax code that takes 73,954 pages to explain, what they are proposing is mostly more tax cuts for the wealthy. New Hampshire’s congressional delegation isn’t buying it and its governor shouldn’t either.

It’s impossible to know how the president’s tax plan will affect people because he and his backers don’t know what’s in it. They don’t know what the income levels for each tax bracket will be. It’s unclear whether deductions for state and local taxes will remain or, in the interests of offsetting losses from tax cuts, scrapped. Like the Republican effort to repeal the Affordable Care Act, the tax plan is not about reform but about doing whatever it takes to get to 50 votes and keep the president’s campaign promise.

According to the non-profit Tax Policy Center, 80 percent of the tax savings from Trump’s plan would go to the top 1 percent. Less well-off taxpayers, those making between $150,000 and $300,000 would pay more, as would about one-third of those with incomes between $50,000 and $150,000. Middle income taxpayers would save $660 a year while the top 1 percent would pocket $129,000 annually.

But that’s not what the president and his men claim.

The billionaire president says the plan won’t help him. “No, I don’t benefit. I don’t benefit. In fact, very very strongly, as you see, I think there’s very little benefit for people of wealth,” Trump told a reporter.

That’s false. From what’s known about the plan, he and his family would benefit enormously.

The plan would eliminate the alternative minimum tax created to force wealthy taxpayers with lots of deductions to pay their fair share. In 2005, Trump paid more than $31 million because of that tax. His plan also eliminates the estate tax, another potential boon to the president and his heirs, and it lowers the rate on the “pass-through” income taken by many family businesses, including Trump’s.

Trump economic adviser Gary Cohn and Treasury Secretary Steven Mnuchin have been making equally bogus claims. “The wealthy are not getting a tax cut under our plan,” Cohn said. Wrong.

The tax cuts will generate so much additional economic activity that they’ll pay for themselves, Mnuchin claims. It didn’t work that way for Ronald Reagan or George W. Bush. Their tax cuts drove up the deficit.

Republicans appear to be wavering on the planned elimination of the deduction for state and local taxes, not because ending them would hurt taxpayers in primarily blue states, but because it could cost them seats in Congress. If they are eliminated, New Hampshire residents, because the state lacks an income tax, would be hurt less than the residents of high-tax states like California or New York, but many of its taxpayers won’t escape.

New Hampshire residents pay the third highest property taxes in the nation. In Concord the annual property tax bill on a $250,000 home is nearly $7,000. If the household is in the 25 percent tax bracket, losing the deduction could mean paying some $1,600 in additional federal taxes, more than enough to offset savings from the proposed tax cuts.

So back the Trump tax cut and buy some Florida real estate from these guys, but bring a snorkel when you visit your purchase.