The following article by James Hohmann with Breanne Deppisch and Joanie Greve was posted on the Washington Post website September 26, 2017:
Here are key moments from the speech President Trump gave on tax policy proposals in Mandan, N.D., Sept. 6. (Sarah Parnass/The Washington Post)
THE BIG IDEA: Two in three Americans believe that large corporations pay too little in taxes. Only 11 percent of U.S. adults think these businesses pay too much, while 17 percent think they pay their fair share. Even half of Republicans believe big businesses pay too little in taxes, according to a new Washington Post-ABC News poll.
Overwhelmingly, across party lines, people feel that the current tax system is rigged in favor of the wealthy. Over 7 in 10 Americans think the tax system favors the rich. Just five percent think the current code favors the middle class.
But the more details that leak out about President Trump’s plan, the clearer it becomes that the wealthiest are likely to be the biggest beneficiaries. Top White House negotiators and key GOP leaders have reportedly agreed on two targets: lowering the corporate tax rate from 35 percent to 20 percent and cutting the top income tax rate — for those who make more than $418,000 a year — from 39.6 percent to 35 percent.
— Trump is scheduled to fly to Indiana tomorrow to unveil details of the proposal after months of behind-the-scenes negotiations. It’s unclear how specific he will be, and people involved in the process say that much remains fluid, but White House aides insist that selling these cuts will be the president’s top priority in the coming months.
— The new Post-ABC poll shows that Trump is starting in a hole. Before our pollsters asked about any specifics, respondents were asked generally to react to Trump’s tax plan “given what you’ve heard or read”: 28 percent support it, and 44 percent oppose it. The rest — 34 percent — have no opinion yet.
A majority of the country, 51 percent, thinks Trump’s plan will mainly help the wealthy. Just 10 percent think it will mainly help the middle class. A quarter of the country thinks the Trump tax plan will help both groups equally, and the rest are undecided.
There is also intensity against Trump: 15 percent said they support Trump’s plan strongly while 33 oppose it strongly. Only 60 percent of Republicans support the plan right now. Overall, 35 percent of all men support Trump on taxes but just 22 percent of women do.
When asked specifically whether income taxes paid by businesses should be reduced, the country is split about evenly: 45 percent support and 48 percent oppose corporate tax cuts.
— The poll makes clear that the administration will win the tax fight if it can successfully represent the plan as primarily about cutting taxes for middle- and lower- income people. In the survey, 78 percent support such cuts — including majorities in both parties. Just 19 percent oppose reducing income taxes paid by middle- and lower-income people.
Our Damian Paletta reports that Republican leaders, aware the current draft of the plan could be construed as a huge giveaway to the wealthy, are still trying to design some features to the package that would ensure that the rich don’t get too large a share of the benefits: “As it stands, the tax cut is expected to add at least $1 trillion to the debt, and potentially much more. … Republicans plan to push for collapsing the seven income tax rates to three new brackets … External estimates, based on initial reports of the plan and not full details, found that it would cut taxes by $5.5 trillion over 10 years.”
President Trump told reporters on Sept. 14 that the tax reform package being crafted will be revenue neutral if economic growth spurred by the legislation is taken into consideration. (Reuters)
— Trump also understands the optics. Instead of tinkering with the substance, he has flatly insisted that his plan will not benefit the rich. “The people I care most about are the middle-income people in this country who have gotten screwed,” the president insisted this summer.
Speaking to reporters at the White House two weeks ago, Trump insisted that the proposal is “not a plan for the rich” and might even raise their taxes. “I think the wealthy will be pretty much where they are,” he said. “If they have to go higher, they’ll go higher.”
But most tax experts agree the rich, in fact, are likely to benefit bigly. In March, based on a preliminary framework released by the Treasury Department, the nonpartisan Tax Policy Center estimated that half of all the benefits from Trump’s plan would go to the richest 1 percent. The study found that the richest 1 percent would receive — on average — a $175,000 tax cut. Moderate-income households would save only $760.
— This is part of a pattern: Trump campaigns like a populist. He governs like a plutocrat. The dichotomy between what the president promises his tax plan will do and what’s he’s likely to unveil on Wednesday is just the latest example of the president’s actions not backing up his rhetoric.
As a candidate, Trump said hedge fund managers weren’t supporting his campaign because they were “getting away with murder” when it came to avoiding taxes. He said he would stop them and argued during the debates that he was well suited to close loopholes in the tax code because he had taken advantage of them.
Then, as president-elect, he was caught on a cellphone camera reassuring patrons at one of Manhattan’s poshest restaurants. “We’ll get your taxes down, don’t worry about it,” he said at the 21 Club.
— With the Trump administration, always watch what they do — not what they say. After Steven Mnuchin was named treasury secretary, he made a very specific declaration on CNBC that rattled the markets: “Any reductions we have in upper income taxes will be offset by less deductions, so that there will be no … absolute tax cut for the upper class.”
Jake Tapper asked him about this Sunday on CNN, and Mnuchin walked it back. “I did say that,” he said. “I just want to clarify. It was never a promise. It was never a pledge.”
— One of official Washington’s favorite parlor games over the past few days has been speculating about what exactly Trump is trying to distract people from by launching a culture war against the NFL over the national anthem. Is he trying to get us to pay less attention to the fact that his favored candidate is probably going to lose today in Alabama? Is he trying to divert us from the impending failure of the Cassidy-Graham health-care bill that he pushed hard for last week? Or the worsening humanitarian crisis and the botched federal response to Hurricane Maria in Puerto Rico? Could it be the hypocrisy of Jared Kushner using personal email for official government business at the same time his father-in-law attacked Hillary Clinton for doing the same thing?
Maybe, though, Trump wants limited media scrutiny of the specifics of his tax plan. Perhaps he does not want his core supporters to feel like they’ve been had? Folks in the Rust Belt and Sun Belt have repeatedly proved willing to vote against their economic self-interest when they are focused on cultural concerns, whether opposing gay rights to supporting gun rights. Maybe that’s what going after Colin Kaepernick is really about.
— One of the biggest challenges for D.C. Republicans right now is that they lack credible messengers to persuade people that their tax plan is not a sop to the wealthiest 1 percent. Their argument is that cutting taxes on rich individuals and big businesses will boost economic growth, prevent companies from relocating overseas and eventually trickle down into higher wages for workers.
Trump’s approval rating is 39 percent, with 57 percent disapproval. This makes it hard to scare Democratic senators from red states into backing him up. As the first president since Richard Nixon to refuse to release his tax returns, we don’t have any idea how much the self-proclaimed billionaire will personally benefit from his own plan. Trump has also given no indication that he has the self-discipline to make a sustained or substantive case for massive corporate tax cuts.
Paul Ryan’s approval rating is 31 percent nationally. Among Republicans, just 53 percent think the Speaker of the House is doing a good job. We didn’t ask about Mitch McConnell in our latest poll, but other surveys have shown that the Senate majority leader’s image is even more underwater among rank-and-file Republicans than Ryan’s. Both are members of the “Big Six” that negotiated this tax plan in secret over the past several months. Outside of the GOP donor community, very few people know the two other lawmakers: House Ways and Means Committee chairman Kevin Brady and Senate Finance Chairman Orrin Hatch.
Louise Linton, wife of Treasury Secretary Steven Mnuchin, caused controversy on Aug. 21 when she boasted of traveling on a government plane and tagged high-end fashion designers. (Video: Elyse Samuels/Photo: Jabin Botsford/The Washington Post)
Mnuchin, who wants to be the biggest cheerleader for the plan, is poorly positioned on the issue. The former Goldman Sachs banker, whose net worth is somewhere around $300 million, was badly compromised by the revelation that he requested a military jet to travel to Europe for his honeymoon.
The treasury secretary did take a government aircraft to Kentucky last month on a trip that was nominally about promoting the Trump tax plan. He also viewed the solar eclipse from the top of Fort Knox, which was very near the path of totality. Facing scrutiny, Mnuchin made matters worse by pretending he wasn’t really that into it. “People in Kentucky took this stuff very seriously,” he said dismissively. “Being a New Yorker, I don’t have any interest in watching the eclipse.”
Mnuchin’s wife, the actress Louise Linton, drew comparisons to Marie Antoinette in recent weeks. Joining him at Fort Knox, the nation’s repository of gold, she posted an Instagram photo of herself deplaning and tagged designers like Hermes and Valentino that most Americans cannot afford to buy from. She then attacked an online user who was offended that taxpayers paid for the junket. Linton later apologized — but she did so while wearing a designer ball gown on the cover of Washington Life magazine.
— Another reason it’s hard for the administration to make the case: Neither history nor the smartest experts are on their side. “Without major changes, this deal is looking more and more like traditional ‘supply side economics,’ the theory that tax cuts for the top help everyone else, because the wealthy supposedly turn around and spend and invest more,” Heather Long explained in an analysis published yesterday afternoon on Wonkblog. “After decades of stagnating wages (especially for men) and rising inequality, Americans are growing skeptical of this approach. It didn’t work in Kansas, and most economists predict few economic gains from this latest attempt. … Goldman Sachs put out a report last week saying the tax plan would only add 0.1 percent to 0.2 percent to America’s economy in 2018 and 2019, far less than the extra point of growth the White House has been predicting. The National Association for Business Economics, a group that tends to lean to the right, has a similar prediction: Only 0.25 percent extra growth in 2018 from Trump’s tax package …
“Just about everyone agree something needs to be done to stop U.S. companies from going relocating overseas to lower their tax bills,” Heather adds. “But it’s questionable whether slashing corporate tax rates will actually spur companies to use the extra cash on hand to pay workers more. That didn’t happen after the 1986 tax revision under President Ronald Reagan. Weekly wages for rank and file types (non-managers) barely budged in the years that followed, according to data from the Labor Department.”
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