Mr. President, yesterday the President released--and this is not as good news, unfortunately--a one-page outline of his plan to change the U.S. Tax Code. Even from the very limited details that were released, the President's priorities are…
Mr. President, yesterday the President released--and this is not as good news, unfortunately--a one-page outline of his plan to change the U.S. Tax Code. Even from the very limited details that were released, the President's priorities are clear: Give massive tax breaks to folks like himself--the very, very wealthy in America.
The top rate would come down; taxes that disproportionately affect the very wealthy would go away, while middle-class and working families would be denied some of the most useful deductions. This isn't simply the Trump plan to lower taxes. It is the plan to lower the taxes of Trump and those with enormous wealth, similar to his.
The prime beneficiaries of the Trump plan would be his Cabinet. Secretary Mnuchin, one of the architects of the plan, could not guarantee this morning that the middle class will not pay more under the Trump tax plan. If, on one sheet of paper, you can guarantee that corporations pay less and you can guarantee that the wealthiest Americans pay less but you can't guarantee that hard-working, middle- class Americans pay less, you don't have a good recipe for changing our Tax Code. And, for the good of America, you are to go back to the drawing board.
This proposal falls short, far short of the mark in several ways: First and foremost, it mostly benefits the very wealthy. In the Trump tax plan, corporations and the very wealthy get a huge tax break through lower rates and the elimination of things like the estate tax. In fact, the proposal the President put out yesterday is actually even more of a giveaway on the estate tax than his proposal in his campaign. In the campaign, President Trump promised to repeal the estate tax for estates up to $10 million, retaining it for the wealthiest of estates. This proposal would eliminate the tax completely, particularly on those multimillion- and even billion-dollar estates. The result would be that the 5,200 wealthiest families in America would each receive, on average, a $3 million windfall, and many would receive much, much more than that.
Also, because the Trump plan lowers the tax rate on the so-called passthrough entities to 15 percent, wealthy businessmen, like President Trump, will be able to use passthrough entities to pay 15 percent in taxes while everyone else pays in the twenties and thirties. This has implications for something we don't need--the carried interest loophole. President Trump promised to get rid of this in his campaign. Instead of using the carried interest loophole under the President's bill, Wall Street funds could file their taxes at a new passthrough rate of 15 percent, which is even lower than the present tax on carried interest.
Ironically, the President's tax plan would indeed get rid of the carried interest loophole only by making it lower than the present rate and making it permanent--a total, total reversal of what he pledged in his campaign.
It all goes to show that those who stand to benefit most from this proposal are folks like the President and those at his level of wealth, while tens of millions of American middle-class, working families are hurt and could very well pay more.
This brings me to my second point, which is that the Trump plan hurts middle-class and working Americans by eliminating their most popular and useful deductions. Take the elimination of the State and local tax deduction, for instance, which is used by so many middle-class families in my home State of New York. As it was cited in the Syracuse Post Standard: ``The loss of the deduction will cost New Yorkers an average of $4,500 per year for those who file itemized returns, totaling about $68 billion per
year that State residents will no longer be allowed to deduct from Federal returns.''
I saw in Newsday this morning that a number of our Long Island Republican colleagues said they couldn't be for this. We hope they will stand up to anything that gets rid of State and local deductibility because, let me repeat, that is $4,500 a year that New Yorkers would no longer be able to deduct on average--massive tax cuts for the very wealthy, crumbs at best for everyone else.
Third, the Republican plan is steeped in hypocrisy. Even without filling in the details, Trump's plan is already impossible to pay for. The Committee for a Responsible Federal Budget estimates that Trump's tax cuts will cost about $5.5 trillion over 10 years, as much as $7 trillion. That is a huge amount of money in our economy.
CRFB projects that ``no plausible amount of economic growth would be able to pay for the tax plan.'' The Republican plan would explode the deficit.
For the last 8 years, all we heard from our Republican colleagues was that Obama was raising the deficit and we needed to cut programs that benefit the poor and the middle class; cut the entitlements, Social Security, Medicare because of the deficit. All of a sudden, now with a Republican President and a proposed tax cut for the wealthy, we are hearing from the other side of the aisle that deficits don't matter.
Our Republican colleagues certainly believe the admonition that ``consistency is the hobgoblin of little minds.''
Fourth, the Trump tax plan would explode the deficit and, thus, endanger Social Security and Medicare, which may well be the nefarious, ultimate goal of the hard right.
Sadly, I know it can happen. I have seen it before with the Bush tax cuts. President Bush pushed a big tax break for the wealthy. It blew a hole in the deficit and racked up debt, and then he and his Republican colleagues tried to pursue deep cuts to the social safety net to balance the ledger.
If Trump's tax plan were to pass, you can be sure, America, that a few years down the line--maybe even not that long--the deficit will be so large that our Republican colleagues will throw up their hands and say: We have no choice but to come after Social Security and Medicare and other important programs for the middle class as a way to address the deficit they created by showering tax breaks on the very rich.
They will resume the cry they had in the Obama years: Cut the deficit--which seems to apply to the programs that help the middle class but never to the ones that benefit the wealthy.
Just from the bare-bones skeleton the administration outlined yesterday, we can already surmise that this plan is not much more than a thinly veiled ruse to give away trillions to the wealthiest among us, starve the government of resources, balloon the deficit, and then cut Social Security, Medicaid, and Medicare to make up the difference.
This plan will roundly be rejected by taxpayers of all stripes. The American people are once again learning that what President Trump promised to working America in his campaign and what he is doing are totally at odds.