Let's Fix This Country

Trump says he signed the most pieces of legislation of any president in recent history. He's actually signed the fewest bills since any president dating back to Eisenhower. But Mr. Trump has the strange and unwell compulsion of having to tell himself, to the point of internalizing the belief, that everything he does is more grand than anything that has gone before.

the whopper

But those examples are not what we mean as his biggest lie. It's what he said about the tax plan in September:

"Tax reform will protect low income and middle income households, not the wealthy and well-connected...And it's not good for me, believe me".

That, of course, reeked of falsehood. He said this at a time when the House plan was to eliminate the estate tax altogether, do away with the alternative minimum tax entirely, and cut the tax on income from pass-through businesses from as much as 39.6% to 25%. Not good for the Trumps? It was a bonanza that we outlined in "A Bespoke Tax Plan for the Trump Family".

He was still making the claim at the end of November before a crowd in St. Charles, Missouri:

"In all fairness, it's going to cost me a fortune, this thing. Believe me. Belief…This is not good for me. Me, it's not so…I have some very wealthy friends. Not so happy with me, but that's OK".

Except for a new limit on state, local, and property tax deductions that will expose more income to taxes in high tax states, the tax bill was designed for the wealthy. Denials by Republicans, contradicted so obviously by the math, hopes to hoodwink the public that the bill is about the middle class. As late as October, Treasury Secretary Steven Mnuchin was still saying, "The objective of the president is that rich people don’t get tax cuts". How did that turn out? A family of four earning $1 million will pay $32,000 less in taxes. The windfall rises as income rises. A family earning $5 million would pay $136,000 less in taxes, almost twice the gross income of the median American family. If the tax plan did not intend major benefits for the wealthy, why was the top rate dropped from 39.6% to 37% and why does it not kick in until income rises above $600,000 instead of the current $470,700? Had they really meant for the rich not to get tax cuts, they would have just left the original bracket untouched.

At Mar-a-Lago over the Christmas weekend, Trump was overheard telling friends dining at his club, "you just got a lot richer".

Paul Ryan energetically sold the theme that the tax cuts will rescue middle class Americans:

“For all those millions of Americans struggling paycheck to paycheck, help is on the way…More than half the people in this country are living paycheck to paycheck. Almost another half are people that are telling us that they're about one paycheck away from living paycheck to paycheck."

(Doesn't that add up to almost everyone?) Not mentioned by him is that all of the reduced tax rates fizzle out beginning in 2025 and what remains by 2027 gives 82.8% of the gains to the top 1% of income earners, according to the Tax Policy Center.

Perversely, Republicans seek not only to add $1 trillion and quite possibly more to the national debt that is, apart from the tax cuts, already projected to rise to over $1.5 trillion in the single year of 2027, but in the process to drastically exacerbate income inequality in the United States, an inequality spread that is already the widest of the 35 OECD countries.

piling it on

Personal taxes are just part of the munificence granted to the richest among us. The value of an estate that can be inherited tax free is doubled once again, to $11.2 million, so that, explained Mr. Trump, "the farmers, the great farmers", the near-mythical farmers, whose actual cases that fit the estate tax saga are so hard to find, "…who were forced to sell their businesses" won't need to, and "…can keep their farms in the family". Easily found examples that Trump could have used instead of farmers are his own family, who will save millions.

More immediate is what the enormous tax cuts for corporations will do for the wealthy. The 40% cut in the rate corporations will soon pay; the Republicans' failure to gut loopholes that will now make the effective tax rate still lower than 20%; the elimination of the alternative minimum tax; and the one-time offer of repatriation of up to $2.6 trillion of foreign profits at as little as 7.5% (14.5% for cash), promises still higher stock prices, lavish stock buybacks, and dividends to the stock owning class, which, of course, is not Trump's working class base, but the wealthiest Americans. The richest 10% hold 80% of the value of corporate stock. Congress's Joint Committee on Taxation calculates that of the $1.5 trillion scheduled to vanish into many pockets, the middle class will see only 10% of it over the 10-year life of the bill.

#corkerkickback

"My accountant called me and said 'you're going to get killed in this bill'" didn't become true, but some of the Trump family benefits did get trimmed in the final tax bill. The estate tax stayed on and so did the alternative minimum tax, the required parallel calculation that eliminates deductions and had cost Trump $38 million in taxes in 2005 instead of $5 million when his taxes were computed the standard way. But at the very last moment, rescue arrived that would revive the biggest lie.

Picking their way through the 1,097-page bill, International Business Times (IBT) reporters discovered that the conference committee — met to reconcile differences between the House and Senate versions of the tax bill — had stealthily inserted changes to the section that governs tax rates for so-called "pass-through" businesses, a form where the business itself is not taxed but its proceeds flow through onto owners' tax returns where they are taxed at personal rates. In the Senate bill, the more wages a pass-through business paid ("job creators"), the greater the tax cut. That shut out architects, doctors, accountants, etc., in small practices with few employees. It also shut out pass-throughs that hold real estate assets but have as few as no employees.

Republican Senator Bob Corker was the only Republican who voted against the Senate bill, ostensibly because of the $1.5 trillion it would add to the deficit. He had early on stated that he would not vote for any bill that added a penny to the national debt. But overnight he decided to vote for it. What changed?

Senator Orrin Hatch of Utah inserted into the bill text that permitted pass-throughs with few or no employees to partake of the tax cuts, too. They can take 20% of the flow-through income off the top and pay taxes only on the rest. Hatch had added his own law to what was in neither the House nor Senate bill.

IBT said the cut-out would benefit limited liability companies (LLCs) with "large amounts of depreciable property assets, namely buildings" and "rent generating apartment and office buildings", namely, real estate businesses. The original plan to bestow the tax cut on businesses that gave people jobs, has been twisted around so that awards go to those who simply own a lot of property. There is no sense to this; it is flat out corruption.

IBT see only 10% of it over the 10-year life of the bill.

#corkerkickback

"My accountant called me and said 'you're going to get killed in this bill'" didn't become true, but some of the Trump family benefits did get trimmed in the final tax bill. The estate tax stayed on and so did the alternative minimum tax, the required parallel calculation that eliminates deductions and had cost Trump $38 million in taxes in 2005 instead of $5 million when his taxes were computed the standard way. But at the very last moment, rescue arrived that would revive the biggest lie.

Picking their way through the 1,097-page bill, International Business Times (IBT) reporters discovered that the conference committee — met to reconcile differences between the House and Senate versions of the tax bill — had stealthily inserted changes to the section that governs tax rates for so-called "pass-through" businesses, a form where the business itself is not taxed but its proceeds flow through onto owners' tax returns where they are taxed at personal rates. In the Senate bill, the more wages a pass-through business paid ("job creators"), the greater the tax cut. That shut out architects, doctors, accountants, etc., in small practices with few employees. It also shut out pass-throughs that hold real estate assets but have as few as no employees.

Republican Senator Bob Corker was the only Republican who voted against the Senate bill, ostensibly because of the $1.5 trillion it would add to the deficit. He had early on stated that he would not vote for any bill that added a penny to the national debt. But overnight he decided to vote for it. What changed?

Senator Orrin Hatch of Utah inserted into the bill text that permitted pass-throughs with few or no employees to partake of the tax cuts, too. They can take 20% of the flow-through income off the top and pay taxes only on the rest. Hatch had added his own law to what was in neither the House nor Senate bill.

IBT said the cut-out would benefit limited liability companies (LLCs) with "large amounts of depreciable property assets, namely buildings" and "rent generating apartment and office buildings", namely, real estate businesses. The original plan to bestow the tax cut on businesses that gave people jobs, has been twisted around so that awards go to those who simply own a lot of property. There is no sense to this; it is flat out corruption.

IBT looked at financial disclosures of 44 lawmakers involved with the tax bills and found that 13 of them have substantial real estate holdings. Bob Corker has the most, and for his sudden change of mind, the Hatch provision became the "Corker Kickback". His entire Senate career may be remembered for nothing else.

The text slipped into the tax bill very specifically enriches the president of the United States and son-in-law Jared Kushner. Trump, because nearly all of some 500 businesses he recorded on his financial disclosure documents are pass-throughs. He will be spared up to $15 million a year in taxes as a result, says an analysis by the Center for American Progress think tank.

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