Trump is already trying to sell the tax cut sort-of plan as a proposal that will benefit the middle class, not the wealthy. This is, of course, a lie, because:
- The increase in the standard deduction is counterbalanced by the elimination of personal exemptions and the increase in the bottom bracket from 10 to 12 percent. I suspect the net impact for most people will be a very small cut that doesn’t stimulate any new economic activity, but grows the deficit.
- The abolition of the estate tax and the AMT will benefit wealthy people exclusively.
- Likewise, the proposed 25 percent rate for small corporations and the reduction of the 39.6 percent rate to 35 percent.
- While the “plan” leaves open the possibility that a higher rate might be created for the truly wealthy, don’t hold your breath on that.
- We don’t have enough details about loophole closing to know exactly what the impact of the corporate tax changes will be. The outcome may be an overall tax cut, or just a shifting of burdens from some businesses to others. If the overall impact is a cut, however (that seems likely), the primary beneficiaries will be wealthy shareholders, not workers, unless you assume that workers carry more clout with management than shareholders, which is rarely true in 2017 America.
- Middle class taxpayers who itemize in a few blue states with high state and local taxes will almost certainly be the big losers with this proposal. Their taxes will go up.
Will Trump and the GOP persuade the country as a whole that this is pro-worker legislation? If so, welcome to Trump University, Part Deux.