Trump Tax Plan: All that Glitters is not Bold

 Trump's plan is a sham.   Using branded water does not make trickle down better.  Benefits flow disproportionally to the wealthiest.  The plan could cost as much as 10 trillion over the next decade, depending on the scope of, as yet unspecified, reduction of deductions.  If implemented, the plan would be funded through deficits, and reductions in spending.  Spoiler alert:  spending reductions reduce benefits to the lower and middle class.

The marquee feature is no tax below 50,000 for married couples, and below 25000 for singles.  Because of various credits and the standard deduction, many in this segment already pay little if any taxes.  Oddly, a single parent with two children making 35,000 will pay tax but a childless couple will not.   Whether the poor and lower middle class benefit will depend on what, if any, changes are made in the earned income tax credit.  At best, some will see a benefit of a few hundred dollars.

Another distraction is eliminating the carried interest exemption for hedge fund managers  The reduction is almost meaningless from a 23.8% marginal rate to Trump's new top ordinary income rate of 25%.  The few impacted will be mildly annoyed, but the treasury will see little benefit.

Which brings us to the heart of the plan,  three massive tax cuts for the wealthiest.  First, the maximum rate drops from 39.8% to 25%.  Stated simply someone making 10 million dollars a year saves nearly 1.5 million.  Cutting back deductions cannot cover the difference.

Second, the top corporate rate is reduced from 35% to 15%.  Taxing a small business grossing under a million at the same rate as Apple or Exxon is absurd.  A rational plan could provide a revenue neutral combination of rate cuts and elimination of deductions.  But parity cannot be achieved at 15%.

The final cut benefits only the 5,000 richest families in America.  Trump ends the estate tax which only applies to estates over 10 million for married couples and 5 million for singles.  This multi-billion dollar giveaway, ensures that the elite maintain a stranglehold on power and political influence.