Are There Democrats Who Want To Help Trump And Ryan Rob From The Needy And Give To The Greedy? You Bet There Are!
Yesterday, after reading the Trump Regime's blueprint for for what they're calling "tax reform," Caifornia Congressman Ro Khanna issued a statement to his constituents explaining that "Trump’s plan takes money out of the pockets of working families to pay for a tax cut for the wealthiest individuals and corporations. Any tax reform plan must focus on closing loopholes that allow companies to avoid paying taxes. This one does the opposite. The United States could collect billions of dollars in new revenue and discourage companies from going offshore. Tax reform proposals must also recognize how to keep companies and jobs in the U.S. I encourage my congressional colleagues to engage in a thoughtful debate on how to change tax laws to incentivize corporations to create jobs here at home.” This morning's NY Times was even more direct: "a laughable stunt by a gang of plutocrats looking to enrich themselves at the expense of the country's future."
Neil Irwin, writing in last night's NY Times, took a look at who the losers and who the winners are in the Trump Regime's tax plan. The winners:
• Businesses with high tax rates. The plan would cut the 35 percent corporate income tax to 15 percent. While few businesses pay the full 35 percent rate, those that pay something close to it are in line for a huge tax cut.And the losers... most everyone else, especially upper-middle-income people in blue states like California and New York since the plan would eliminate the federal tax deduction for state and local income tax.
• High-income earners. The plan would reduce the top rate on individual income tax-- now 39.6 percent for income over around $470,000 for a married couple-- to 35 percent. But that’s only part of the gain for high-income earners. It also would eliminate a 3.8 percent tax, used to help fund Obamacare, that applies to investment income over $250,000 for a couple.
• People with creative accountants. The 15 percent business tax rate could open a huge loophole for people to receive business income through a limited liability company or other pass-through entity instead of as wages. Depending on how the law is drafted, that could enable some people to pay that low 15 percent rate on their earnings instead of an individual income rate up to 35 percent. People who already receive their income through investment vehicles wouldn’t have to change anything for a windfall.
• Multimillionaires who want to pass money to their heirs tax-free. The plan would eliminate the estate tax, which currently applies to individuals with estates of $5.5 million or couples with estates worth $11 million.
• People who still fill out their tax returns by hand. Administration officials said the plan would simplify paying taxes, particularly emphasizing plans to eliminate the alternative minimum tax. The A.M.T. can definitely be annoying, and costly, but if you use an online tax preparation service, the software does most of the work.
• Retailers and other companies that feared a “border adjustment tax.” The Trump administration did not embrace House Republicans’ big strategy to pay for the tax cut, which was strongly opposed by the retail industry and others that thought they would be losers.
• Donald J. Trump. It is striking how many of the categories listed above affect the president and his family. He is a high-income earner. He receives income from 564 business entities, according to his financial disclosure form, and could take advantage of the low rate on “pass-through” companies. According to his leaked 2005 tax return, he paid an extra $31 million because of the alternative minimum tax that he seeks to eliminate. And his heirs could eventually enjoy his enormous assets tax-free.
Carol Shea-Porter (D-NH) had a similar message for her constituents after she read the blueprint yesterday. "While our broken tax code badly needs reform, today’s White House proposal misses the mark by slashing rates for the biggest corporations and creating even more ways for the wealthiest Americans to avoid paying their fair share. This proposal would be a corporate giveaway, plain and simple, slashing rates for the wealthiest while preserving unfair loopholes and lucrative deductions written by lobbyists that allow huge corporations like Exxon Mobil to pay zero in federal taxes and instead claim millions in rebates. I continue to advocate for an honest, bipartisan discussion on tax reform that prioritizes tax relief for working families and small businesses in order to address our nation’s income inequality crisis. But I will not support any plan that exacerbates income inequality by giving away even more to the wealthiest 1% and the biggest corporations already favored by our tax code, while asking working Americans to bear the brunt of draconian budget cuts in the name of deficit reduction. I am deeply concerned by reports these corporate giveaways may not even be paid for, and I will insist that Congressional Republicans walk the walk on responsible deficit reduction in any tax plan."
All of the Democrats I've been hearing from since yesterday have been on the same page as Khanna and Shea-Porter. But there was a lot of anger from people watching MSNBC yesterday who kept seeing a collection of clueless stooges-- their daytime anchors-- referring to the Estate Tax in Republican-talk as a "death tax," exactly what you would expect from Fox News. But why MSNBC?
Gene Sperling, who was was Director of the National Economic Council and Assistant to the President for Economic Policy under both Obama and Clinton, penned a piece for The Atlantic this week that should be mandatory reading for all MSNBC anchors, Don't Cut the Estate Tax-- Raise It.
Repealing the estate tax—a tax on assets transferred from a deceased individual to their heirs—has become a staple cause among conservative Republicans. Eleven Republican candidates explicitly called for its elimination during the 2016 election. By calling it a “death tax,” and implying that it would hurt tens of millions of ordinary families, and force the sale of long-held family farms and family businesses, Republicans have successfully cast the estate tax as a ubiquitous and pernicious burden. That’s helped them win the public-relations battle over it so far.
The problem is that the main talking points that conservatives rely on when making this case are untrue. After years of looking, estate-tax repealers have not been able to come forward with even a handful of farms that, due to the estate tax, were forcibly sold off. And the notion that the estate tax somehow inhibits middle-class Americans from passing down savings to their heirs now, more than ever, falls somewhere between a hoax and a joke: The estate tax today kicks in at about $5.5 million for an individual, or $11 million for a couple. That means that there is a zero percent estate tax for every family estate under $11 million. A married couple that managed to save and leave $10.9 million to their children would not pay a single penny.
Even putting aside the claims used to galvanize support for cutting the estate tax, the Trump administration would be wise to consider that this might not be the time to go through with an expensive tax cut that only benefits a handful of America’s wealthiest families. This tax cut would coincide with the growing awareness of wealth inequality in the United States, where the top one-tenth of 1 percent have as much wealth as the bottom 90 percent. This inequality has only become more skewed in recent years. After substantial declines in wealth inequality from 1937 to 1977, the share of wealth going to the richest 0.1 percent has nearly tripled, from 8 percent in 1980 to 22 percent in 2012—the highest it’s been since 1917. This may not be the best political or economic environment to propose a tax cut that over 10 years gives $269 billion to only 5,000 of the wealthiest inheritors each year.
The facts do not even indicate that the 5,000 estates that pay some estate tax (out of 2.7 million deaths each year) are significantly burdened by it. While this mysteriously remains a top priority from some leading farm and small-business lobbies, the nonpartisan Tax Policy Center estimates that only 50 farms or closely-held family businesses in the U.S. will pay any estate taxes in 2017-- working out to an effective tax rate of less than 6 percent on each of those estates. And while the 40 percent estate-tax rate might seem high to some, it’s only applied to the amount passed down beyond the $11 million per couple, leaving the effective rate much lower. Consider that the Tax Policy Center estimates that the average effective tax rate for estates meeting the tax threshold is 17 percent, and that even the rare $20 million estate that took advantage of no deductions, exemptions, or loopholes would not pay more than an effective rate of 18 percent. If the estate tax is repealed, large amounts of accumulated wealth would go untaxed forever. As Chye-Ching Huang and Chloe Cho of the Center for Budget and Policy Priorities have written, when it comes to the very wealthiest families in the United States, “unrealized capital gains account for a significant proportion of the assets held by estates.” Studies have shown that 55 percent of the value of estates worth over $100 million are never-taxed gains.
There is also is evidence that repealing the estate tax will be a tougher sell as more Americans come to understand how the estate tax really works. A prominent study published in the American Economic Review found that providing Americans with the facts about who actually pays such taxes raises support for increasing it. When the study’s authors told participants the threshold for the tax’s application, the number of Americans currently wealthy enough to have to pay it, and how unlikely they were to ever have to worry about it, support for a higher estate tax more than doubled. This is noteworthy since economists, including University of Michigan’s Joel Slemrod, have found that public opposition to the estate tax can be partially explained by misconceptions about who is subject to it.
The current case for repeal will be weaker if progressives come out in support of an estate tax that leaves the wealth of over 99 percent of Americans untouched and affects only the handful who want to leave eight-figure estates to their heirs. In 2008, as I finished a taping for a cable-TV show, a cameraman told me he agreed with everything I had said, except for my position on the estate tax. He dreamed of leaving his money to his children and didn’t want it to be taxed. I asked whether he would support a proposal that would allow him and his wife to leave up to $7 million to their children without paying any tax, and only tax people on the amount they left that was more than that. He didn’t hesitate to say he would.
Even if Trump and his team do not share my feelings about the unfairness of cutting the estate tax, pushing for this change could lose the support of voters who recognize that it is being prioritized over health-care protections or other types of tax cuts. For the $269 billion that it would cost the U.S. Treasury to give multimillion-dollar tax breaks to the 5,000 wealthiest estates each year, the administration could give nearly 27 million hardworking families a tax cut of $10,000 over the next decade. How could any member of Congress possibly argue that there was no choice but to cut Medicaid for millions of families, or say that it was impossible to afford the protections for pre-existing conditions or benefits like maternity care available under the Affordable Health Care Act, when they could afford nearly a quarter-of-a-trillion dollars to enhance the wealth of the already wealthiest Americans? On the other hand, if, as Hillary Clinton proposed, the president returned the estate tax back to the 2009 threshold of $7 million a couple-- with a 45 percent rate on anything over that threshold-- he would have an additional $160 billion in revenue to fund his other priorities without intruding on the aspirations of 99.5 percent of Americans to leave a nest egg to their children. Indeed, a September 2016 Bloomberg poll of high-income voters even found that 53 percent supported Clinton’s plan to broaden the estate tax to apply to individual estates worth more than $3.5 million.
Cutting the estate tax would do little to dampen accusations that Trump and his immensely wealthy cabinet are looking out more for the economic interests of their families and their financial peers than for typical working families. The likes of Senators Ted Kennedy and Jay Rockefeller showed that coming from a wealthy family doesn’t mean someone can’t be a champion for working America. But they proved that by fighting for a more progressive tax system that helped fund investments in workers, health care, and poor children. In Trump’s case, Americans would see him cutting investments for urban and rural America and threatening Medicaid, while (if he is as wealthy as he says he is) changing the tax code to save his family $4 billion, not to mention the savings for the rest of his cabinet.
Finally, there is the question of whether passing on huge amounts of untaxed wealth from generation to generation is consistent with long-held American values. President Theodore Roosevelt, in 1906, proposed a progressive tax on “all lifetime gifts and death-time bequests” for the direct purpose of limiting the amount of wealth that one person could transfer to another, thereby breaking up large concentrations of wealth. Three decades later, FDR echoed, “inherited economic power is as inconsistent with the ideals of this generation as inherited political power was inconsistent with the ideals of the generation which established our government.” In 2001, Warren Buffett compared repealing the estate tax to picking the 2020 Olympic team from the first-born children of the 2000 team. Bill Gates Sr. has been one of the most eloquent advocates for the estate tax, recognizing that even those like his son, who’s often the richest person in the world, owe their success in some part to the investment and hard work of generations of Americans before them and thus have a moral obligation to pay forward a return to invest in the success of current and future generations.
In past years, the worst of the corrupt conservative Democrats have voted with the Republicans to repeal the estate tax. Example, on April 16, 2015, Kevin Brady brought up a typical reactionary bill, H.R.1105-- the Death Tax Repeal Act of 2015. It passed the House 240-179. 3 Republicans crossed the aisle to vote with the Democrats against it-- Walter Jones (R-NC), Scott Rigell (R-VA) and David Jolly (R-FL)-- but they passed 7 really slimy right-wing Democrats going in the other direction. Happily one, Brad Ashford, an "ex"-Republican from Omaha was quickly defeated after one ugly term. But the other six are still in Congress, still pretending to be Democrats inside the Big Tent while sneaking out the back door and voting with the GOP virtually all the time. This is congressional slime:
• Brad Ashford (Blue Dog-NE)How can we expect congressional Republicans to watch out for the interests of ordinary American working families if we can't even guarantee that so-called Democrats will endeavor to do so?
• Sanford Bishop (Blue Dog-GA)
• Jim Costa (Blue Dog-CA)
• Henry Cuellar (Blue Dog-TX)
• Collin Peterson (Blue Dog-MN)
• Dutch Ruppersberger (MD)
• Kyrsten Sinema (Blue Dog-AZ)