Just a quick note on the Trump tax return from 2005, the first few pages of which were released by the White House last night in advance of the much touted release on MSNBC.
To me, the thing smells like the dangle-the-key move–“look over here, not over there!”–I’ve come to expect from the Trump admin when things aren’t going their way. The House Republican’s health plan, which Trump was aggressively backing, is looking like a real dud (a “trap,” according to some fellow R’s), and I can see why the White House would like to quickly change the subject, as is their wont.
But isn’t his tax return a politically dangerous subject for President Trump to point at? Not in this case, because the pages he released do not appear to incriminate him much at all. He reportedly paid $38 million on income of $150 million ($185 million in today’s dollars), for an effective rate of 25%. As is typical of returns from people at these income levels, there’s a lot of steps to get to that AGI, including a claim of $100 million in real estate losses (likely a carryover from an earlier loss), along with reported income from business sources, capital gains, royalties, etc.
But the reason this smells funny to me is that most people will surely find “nothing to see here, so move along, folks.” No zero tax rate, no Russian loans/investments, and while 25 percent is below the effective rate paid by those in the top 1%–31% for families with kids in 2005, according to CBO–it’s not far below, and most people who hear he paid almost $40 million in taxes will not see anything like a smoking gun here.
In fact, the most salient part of this episode so far is the point that Trump’s return shows the importance of the Alternative Minimum Taxes for complex returns like his that claim large losses.
The AMT snagged him for $31 million that year; without it, he would have paid a 5% effective rate. The punchline: the president’s tax reform plan gets rid of the AMT. Unless they’re willing to also get rid of all the special privileges that enable wealthy taxpayers to write off much of their liabilities, which they’re not (they may get rid of some, but they’ve also proposed others), that’s a very bad idea.
Anyway, I don’t see why he wouldn’t have released this information to the public a long time ago. I was frankly surprised to see the 25% effective rate, and assumed that he was hiding a much lower rate. I guess the return suggests he’s not the multi-billionaire he claims to be, but various leaks already led me to believe that to be the case. And surely there’s more “interesting” information on the many more pages we’re not seeing.
David Cay Johnston, the tax expert who anonymously received the document and then presented it on the Rachel Maddow show, apparently wondered if it had been leaked to him by the White House in the first place. That sounds plausible to me.
What I’m left with here is something I’ve thought for a long time but haven’t said. Sure, I’d like to see a full release of Trump’s recent returns–I suspect there’s a lot more incriminating stuff in there then we learned about today. But I’m far less worried about Trump’s tax returns than Trump’s proposed tax reforms.
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Would like to see something quite definitive showing “trickle down” just doesn’t work. Or something showing that a dollar of tax relief to a “top one-percenter” has less value to the economy than a dollar going to a middle-class or low-earner. Isn’t there data to say the latter case creates seven more dollars of economic activity?
Pages one and two of a tax return like Trump’s provide a summary and a tax liability “bottom line”. But the interesting stuff would be on later pages and in supporting schedules that could run a hundred pages or more. Those were not provided to Mr. Johnson, so what we saw did not tell us very much. Those omissions add credence to speculation that it was the the White House that supplied the returns.
One the biggest tax dodges is depreciation of real estate and other assets that do not depreciate and which in fact appreciate. Trump’s business model depends in large part on this trick. But we can’t see it in the first two pages of the return that Johnson received.
But, but… Reagan proved you can cut taxes, expand the military, blow up the deficit, and create economic expansion. You may increase inequality because of the way the tax cuts are distributed, you may waste money on planes that don’t fly, and $100 hammers, instead of needed infrastructure, but throwing money at the problem (a slow economy) can be better than nothing (what Republicans effectively contained Obama).
Yellen is wrong about inflation and a 2% target (it’s too low), and growth targets (also too low) and is likely to be removed in two years for all her trouble anyway. The Democrats can not win a battle against tax cuts, no matter how much they point out the benefits to the rich and the additional inequality it promotes. Why? Because when the had control in 2009, they themselves included a significant portion of stimulus as tax cuts to curry favor with voters, These rebates helped ensure a congressional majority in 2010, hardly. Did they campaign at all against the expiration of the Bush cuts in that election? No. Did they allow them to expire or bargain effectively at their termination. Not at all. We have 80% of the Bush tax cuts still in effect. The surcharge for Obamacare is targeted for repeal, rates rolled back towards the ones that Democrats Bill Bradley and Speaker Tip O’Neil engineered with Reagan in 1986. Then of course, Bill Clinton decided capital gains despite any irrational exuberance.
Hypocrisy, thy name is Democrat.
To note, Danielle DiMartino Booth critiques Yellen from a different point of view than mine, but the book “Fed Up” is an interesting read. or for extensive book store reading and skimming, and there is some back and forth in the WSJ, though you have to look hard to google the critique. However, the idea that the recovery is incomplete, and that Wall Street got bailed out, but Main Street didn’t, rings true. The Democrats denial of this is what got Trump elected (admittedly while losing the popular vote, which only makes the electoral Democrats failure worse, less understandable, more unforgivable).
Also book I saw from Tyler Cowen, again often not agreeing with, but many good points. His comment on Obamacare has similarity to my last comment about the Democrats hypocritically complaining about Republicans while their own plan left 11 percent still without coverage (and their candidate HIllary Clinton had no plan, offered no plan, made no plan to cover them, check her still functioning website)
Yet another way Trump and the Republicans win, because the liberal media is too stupid to realize anything about language and framing issues. The New York Times writes under the front page banner online headline “Trump Gambles With Cuts to Programs His Base Relies On”
“The $1.1 trillion spending plan envisions deep cuts to many government programs while leaving entitlement programs like Social Security untouched.”
https://www.nytimes.com/2017/03/16/us/politics/trump-budget.html
What kind of nonsense is this? Why do they write about entitlements vs retirement insurance? Really how many programs are actually entitlements in the true sense? Only Social Security and Medicare. Safety net spending on need based programs are not entitlements at all.
http://www.newyorker.com/magazine/2013/04/08/senses-of-entitlement