Two biggest reasons Trump tax plan deeply disappoints

The tax reform plan President Donald Trump touted Wednesday is so vague it is difficult to evaluate — and easy to doubt — one of its central claims: that it’s a “middle class miracle” because of a combination of new tax credits, rate cuts and deduction changes. Given that Trump proposes to eliminate the federal tax deduction for state and local income and property taxes, California’s heavily taxed middle class seems unlikely to end up a net winner. Nevertheless, the fact that Trump and at least some congressional Democrats are interested in bargaining suggest that this policy debate could yet end up producing actual smart, bipartisan reform. But for two reasons, Americans — or at least Americans who aren’t very wealthy — should be profoundly disappointed with the president’s plan.

The first reason? The Trump plan is premised on the most enduring canard in Republican politics: the historically discredited assertion that tax cuts pay for themselves with higher revenue. A case can be made that cuts in capital-gains taxes might increase revenue. And a case can be made that there’s a payoff in reorienting tax codes to reward investment and to discourage companies from sitting on profits. Michigan’s record since 2011 shows how much reforms can spur growth and job creation.

But the claim that broad cuts in corporate and individual tax rates will not reduce revenue is not borne out by history. Conservative economist Douglas Holtz-Eakin, who worked for President George W. Bush, scoffs at Trump’s claim that a $1.5 trillion tax cut eventually will pay for itself. So does veteran GOP consultant Bruce Bartlett, who, in his own words, helped create “the Republican tax myth.”

The second reason is that the Trump plan builds off another GOP canard: the idea that the very wealthy should always benefit the most from tax cuts because the trickle-down effects on the economy of letting them keep more of their money are so positive. The proposal reduces some of the itemized deductions that tax attorneys for the wealthy use to keep money from the IRS. But the revenue these changes would create is swamped by the revenue lost because of the elimination of the estate tax and alternative minimum tax; the reduction of the top income tax rate from 39.6 percent to 35 percent; and the imposition of a maximum 25 percent tax on pass-through businesses, such as partnerships and sole proprietorships, which are now taxed based on their owners’ income.

This tax plan’s cuts read as if they were crafted by a committee of self-serving billionaires. To say the cuts are tone-deaf in an era in which millions of people in both parties worry deeply about income inequality doesn’t begin to convey their obtuseness. It’s as if Trump wants to pour gasoline on the populist fire that lifted him to the White House and very nearly won Vermont Sen. Bernie Sanders the Democratic nomination.

This is not what Americans want. A Washington Post-ABC poll show big majorities oppose tax cuts for the rich, think the tax code favors the wealthy more than the middle class and don’t support lower corporate taxes. After eight months in which Trump has repeatedly shown he cares more about keeping his base happy than the Republican establishment, the president’s tax plan assaults his base and caricatures the view that the GOP establishment is obsessed with keeping rich people happy.

Or at least it does in present form. For the good of the American economy — for the health of our democracy — for a future without trillion-dollar-deficits as far as the eye can see — here’s hoping the president’s proposal eventually morphs into something that qualifies as reform. Helping the mega-rich get mega-richer doesn’t qualify.

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