The New York Times Editorial Board.
As a rule, Republican presidents like offering tax cuts, and President Trump is no different. But the skimpy one-page tax proposal his administration released on Wednesday is, by any historical standard, a laughable stunt by a gang of plutocrats looking to enrich themselves at the expense of the country’s future.
Two of Mr. Trump’s top lieutenants — Steven Mnuchin and Gary Cohn, both multimillionaires and former Goldman Sachs bankers — trotted out a plan that would slash taxes for businesses and wealthy families, including Mr. Trump’s, in the vague hope of propelling economic growth. So as to not seem completely venal, they served up a few goodies for the average wage-earning family, among them fewer and lower tax brackets and a higher standard deduction.
The proposal was so empty of illustrative detail that few people could even begin to calculate its impact on their pocketbooks. Further, depending on where they live, some middle-class families might not benefit much or at all, because the plan does away with important deductions like those for state and local taxes.
As to the rationale offered up by Mr. Mnuchin and Mr. Cohn, even many conservative economists believe that the argument that tax cuts will pay for themselves, by increasing investment and creating jobs, is the same supply-side fantasy that has repeatedly been proved wrong. This durable nonsense would instead add mightily to a federal debt that Americans will be paying off for generations to come.
Here again, the long-term consequences were hard to figure, because Mr. Cohn and Mr. Mnuchin offered no estimates of the plan’s costs; guesswork by some analysts put the figure in the same ballpark as the tax plan Mr. Trump offered during the campaign, or about $7 trillion in additional debt over the first 10 years and nearly $21 trillion by 2036.
Whatever the number, the outcome cannot be good. There are legitimate reasons to run deficits, including lifting the economy in tough times, strengthening the military against proven threats and building or rebuilding public infrastructure. Borrowing trillions of dollars to provide a huge windfall for people at the top is not one of those reasons.
Mr. Trump’s plan aims to cut corporate tax rates from 35 percent to 15 percent. To hear the administration tell it, the present rate is choking investment and killing jobs. In fact, big businesses are earning record profits, and many of them pay no federal taxes. The corporate income tax brought in just 10.6 percent of the federal government’s revenue in 2015, down from between a quarter and a third of revenue in the 1950s, according to the Pew Research Center. A better approach, as part of broad-based reform, would be to eliminate loopholes that have encouraged businesses to avoid their fair share of taxes.
Mr. Trump would also apply that 15 percent tax rate to pass-through income that business owners get from limited liability companies, a change that would directly benefit real estate developers like him. This would also create a huge incentive for wealthy Americans to turn their earnings into pass-through income in order to avoid paying higher personal income tax rates. This is no idle threat. Many Kansas residents, including the men’s basketball coach of the University of Kansas, have sheltered income in L.L.C.s since that state exempted income generated through such legal structures from its income tax in 2012.
In addition to lowering the top individual income tax rate to 35 percent, Mr. Trump would do away with the alternative minimum tax, which accounted for a vast majority of the taxes he paid in 2005, according to his leaked tax return from that year, and is one way of making sure that most well-off Americans pay a significant tax on ordinary income. He would also get rid of the estate tax, benefiting mainly wealthy families like his.
It is hard to know whether Mr. Trump’s tax plan or some version of it could pass. Republican leaders have said that they want to pass revenue-neutral changes to the tax code that would not explode the deficit. Still, many of these same lawmakers went along with the budget-busting tax cuts offered by President George W. Bush.
Regardless of the plan’s fate, Mr. Trump has already sent a strong message about where his sympathies really lie. They lie not with the working people who elected him, but with the plutocracy that envelops him.