 |
| Democrats wish, Republican fear |
Let's take a quick look at tax policies to see why Trump is in fact no threat to the financial elites of the country.
Tax policy is very important to a few people who write checks or write opinion pieces. They pay attention to the fine print of tax policy, although most voters do not. Average voters act on the basis of having a gut sense of whose side the candidate is on. Trump condemns the self serving crony capitalism of business and political elites, taking the side of the average American who has been hurt by their bailouts, their campaign contributions, and their offshoring of factories.Trump is lucky in his enemies. The connection between Trump and the voters is amplified by the condemnation of Trump by the political establishment, most recently by Mitt Romney. Mitt Romney is a gift to Trump. The self-satisfied straight laced self serving political/economic elites, epitomized by Romney, don't like Trump. The people who want to cut or privatize Social Security and Medicare while they enjoy hedge fund tax loopholes condemn Trump. Fine. It helps make Trump's point.
But a close look at the tax plans of the remaining viable candidates show that while the political elites may be unhappy the business and financial elites of the country will be able to work with Trump. If Trump is the nominee, Trump can consolidate the party, because on the big issue of taxes, Trump takes good care of his peers.
Hillary and Bernie: taxes go up a little if you are rich.
Hillary's surcharges kick in at incomes above $5,000,000 a year but Bernie's are pretty much across the board increases of 2.2% in tax rates across the board, with higher rates at the highest levels. Both of them increase capital gain tax rates. Both raise the estate tax rates by increasing the percentage rate while lowering the threshold for when it kicks in down to $3.5 million from $5 million. More people will pay it and they will pay more.
Hillary increases the alternative minimum tax rate to 30% for people earning over $1 million a year. Bernie adds back a 6.2% Social Security tax on incomes over $250,000 a year, which would push marginal rates to well above 50%.
Bottom line: "Middle class" Americans (incomes below $250,000) will see little change by Hillary but Bernie would raise taxes a little. The top 1% would pay rather more, however, especially under Bernie's plan. This all fits with voter's gut feel about Democrats: they will raise taxes a little, especially if you are rich, and that is a fair assessment.
The intention in each of their tax plans is to assist businesses and "job creators" by lowering their taxes, and to allow the tax free inheritance of wealth.
Trump drops tax rates so they top out at 25% (down from 40%), cuts the corporate rate to 15%, and ends the estate tax.
Cruz has a value added tax, which complicates things, but cuts the income tax on everyone to a flat 10%. He cuts the rate on dividends and interest to 10% and ends the estate tax.
Rubio lowers tax rates across the board on ordinary income but leaves the current structure of graduated income tax in place. However, he cuts the tax on interest and dividend income to zero--a big item--and ends the estate tax.
Kasich lowers tax rates on individuals and businesses back to 28%, lowers the capital gains rate to 15%, and ends the estate tax.
Takeaways to remember:
Hillary will raise your taxes if you are seriously rich, Bernie if you are upper middle class or richer. No surprise.
All the Republicans cut taxes for the richest 1% and especially the very richest. The big taxes for the seriously rich are investment income and the estate tax which are cut or eliminated. Republicans cut taxes for the rich, calling them job creators and true American success stories, whose wealth will grow the economy and trickle down. No surprise.
The big surprise is Trump. The wealthiest Americans have nothing to dislike about the Trump tax policy. Trump is creating a revolution in the GOP by breaking the orthodoxy that policies that help the financial elites also help the average American, thus dividing the GOP coalition. But Trump's argument is about crony capitalism, immigration, and trade protection, not taxes or "trickle down." Trump has fanned the flames of distrust of the elites by the middle class, but Trump is not planning on actually taxing away part of their wealth to bring equality. American greatness will come from new trade practices, he argues, not redistributionist tax policies.
The political establishment has a problem: the voting half of the coalition is taught to distrust the money half, and candidates who count on the K Street donations to advertise social conservative messages to the voters have a problem. But it is a campaign and messaging problem for orthodox GOP politicians, not for Trump. Trump's tax policies are orthodox trickle down.
More data for people who want the details on tax policy here: http://taxfoundation.org/comparing-2016-presidential-tax-reform-proposals
Hillary increases the alternative minimum tax rate to 30% for people earning over $1 million a year. Bernie adds back a 6.2% Social Security tax on incomes over $250,000 a year, which would push marginal rates to well above 50%.
Bottom line: "Middle class" Americans (incomes below $250,000) will see little change by Hillary but Bernie would raise taxes a little. The top 1% would pay rather more, however, especially under Bernie's plan. This all fits with voter's gut feel about Democrats: they will raise taxes a little, especially if you are rich, and that is a fair assessment.
Trump, Cruz, Rubio, and Kasich will lower everyone's tax, especially if you are rich, who will see them lowered a lot.
Cruz has a value added tax, which complicates things, but cuts the income tax on everyone to a flat 10%. He cuts the rate on dividends and interest to 10% and ends the estate tax.
Rubio lowers tax rates across the board on ordinary income but leaves the current structure of graduated income tax in place. However, he cuts the tax on interest and dividend income to zero--a big item--and ends the estate tax.
Kasich lowers tax rates on individuals and businesses back to 28%, lowers the capital gains rate to 15%, and ends the estate tax.
Takeaways to remember:
Hillary will raise your taxes if you are seriously rich, Bernie if you are upper middle class or richer. No surprise.
All the Republicans cut taxes for the richest 1% and especially the very richest. The big taxes for the seriously rich are investment income and the estate tax which are cut or eliminated. Republicans cut taxes for the rich, calling them job creators and true American success stories, whose wealth will grow the economy and trickle down. No surprise.
 |
| Trump voters in Nevada--the force the GOP must reckon with |
The big surprise is Trump. The wealthiest Americans have nothing to dislike about the Trump tax policy. Trump is creating a revolution in the GOP by breaking the orthodoxy that policies that help the financial elites also help the average American, thus dividing the GOP coalition. But Trump's argument is about crony capitalism, immigration, and trade protection, not taxes or "trickle down." Trump has fanned the flames of distrust of the elites by the middle class, but Trump is not planning on actually taxing away part of their wealth to bring equality. American greatness will come from new trade practices, he argues, not redistributionist tax policies.
The political establishment has a problem: the voting half of the coalition is taught to distrust the money half, and candidates who count on the K Street donations to advertise social conservative messages to the voters have a problem. But it is a campaign and messaging problem for orthodox GOP politicians, not for Trump. Trump's tax policies are orthodox trickle down.
More data for people who want the details on tax policy here: http://taxfoundation.org/comparing-2016-presidential-tax-reform-proposals
No comments:
Post a Comment