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April 27, 2017 at 12:24 PM
(Bloomberg View) — This photograph I’m looking at comes from someone I am friends with on Facebook. What is it? Eight pages of notes on how to speed-run a video game (Resident Evil 4).
And why am I telling you about this photograph? Because it is almost eight times as long as the tax plan just released by the Trump administration.
As Jim Tankersley of Vox tweeted: “It actually removes some details. We know less about this plan than we knew about Trump’s campaign plan.” My spouse put it more vividly: “It’s barely an executive summary! It’s like the notes someone jotted down after a preliminary meeting about whether to have a tax plan!”
(Related: White House Unveils Trump’s First Tax-Cut Bid)
This is the complete list of actual policy content in the one-page release handed out to press:
Reduce the seven tax brackets to three tax brackets of 10 percent, 25% and 35% Double the standard deduction Provide tax relief for families with dependent-care expenses Eliminate targeted tax breaks that mainly benefit the wealthiest taxpayers Protect the home ownership and charitable gift tax deductions Repeal the Alternative Minimum Tax Repeal the death tax Repeal the 3.8% Obamacare tax that hits small businesses and investment income Set corporate tax rate at 15 percent, down from 35% Establish territorial tax system to level the playing field for American companies Charge a one-time tax on trillions of dollars held overseas Eliminate tax breaks for special interests
The first thing to note about this plan is that it would be really, really expensive. According to the Committee for a Responsible Federal Budget, it would cost trillions over a single decade — though no one can say exactly how many trillions, because it’s too darn vague. Call it a half a trillion dollars every year drained from federal coffers, or more than twice the cost of Obamacare. How will the Republicans pay for it? Echo answereth not.
The other thing to note is that most of the specific parts of the plan are the ones that will benefit rich people like … er … Donald Trump. Families with dependent-care expenses get “tax relief” of an unnamed nature, and a higher standard deduction. Wealthy people keep their mortgage and charitable gift deductions, get their inheritances tax-free, see their marginal income tax rate fall, no longer have to face the AMT or the Obamacare surcharge on investment income, and if they own a business, in whole or in part, see their corporate taxes dramatically lowered. (Business owners, in particular, get a bonanza, dropping the tax rate on their business income to 15%, lower than the proposed middle bracket.)
A press conference on the plan somewhat clarified the missing detail: Treasury Secretary Steve Mnuchin said that all personal deductions would go except for the ones specified (and tax-deductible retirement accounts). But the Committee for a Responsible Federal Budget report suggests that this will not be nearly enough to offset the income lost from all the tax cuts. The total effect is probably to blast a hole in the budget, somewhat ramp up the taxes on the blue-state professional class, and massively cut taxes for the Trump class.
