Donald Trump is a Liar - Tax Reform Edition
Donald Trump is living up to the nickname Liar-in-Chief when he or any of the Republicans doing his bidding in the Congress talk about this new tax reform bill as being a reduction in taxes for the middle class.
The Tax Policy Center issued a report on the proposal on October 27th. It pointed out that the taxpayers in the bottom 95% of income distribution would see tax reductions of roughly 1.2% while taxpayers in the top 1% (earning more than $730,000) would see a cut in their tax bill of 8.5%.
We can make this simpler first and then examine it in more detail. First and foremost tax break being given to the wealthy is the elimination of the Alternative Minimum Tax (AMT). While the Liar-in-Chief doesn't feel transparency applies to his personal income tax returns, we did get to see two pages of his 2005 return.
His adjusted gross income that year was $48.5 million but he claimed itemized deductions (we don't have the details to see what deductions he took) of $17 million to make his taxable income $31.5 million on which he would have paid income tax of $5.3 million.
But because of the AMT, most of those deductions were added back into his income and then the tax recalculated which resulted in a total tax bill of $36.5 million. Now I know what you're thinking. That's a tax rate of 75%, which is outrageous. Then again, the rate on his taxable income under the regular tax system was 16.8%. Too low in the minds of some.
You see, before the Net Operating Loss (NOL) deduction on page 1 of that 2005 tax return, Trump's income was actually $151.7 million. So his AMT tax bill was the prescribed 24%.
Under the new system, on that income of $151.7 million, Donald Trump would pay an estimated $19.2 million in income tax. That's 12.6%.
Fair? Hardly. These tax cuts will primarily benefit the rich and the Liar-in-Chief is at the front of the line in front of the trough where these rich pigs slop up the tax breaks.
* * *
Now let's examine some of the proposals in this bill that would impact the majority of Americans and how fans of the WWE might choose to relabel this proposal the Washington, D.C. Screw Job.
Meet two families. Mr. and Mrs. Smith live next door to Ms Edwards. Both Mr. Smith and Ms Edwards are mid-level managers for a major retail firm and earn $70,000 per year. The Smiths have two kids while Ms Edwards is a single parent with three children.
Under the current tax system, Mr. and Mrs. Smith get to avoid tax on the amount of their standard deduction of $12,600 plus four personal exemptions at $4,050 for a total of $16,200. $70,000 of income less $12,600 less $16,200 = taxable income of $41,200. Their federal tax bill would be $5,269. They would get child tax credits totaling $2,000 for a total tax liability of $3,269.
Under the Trump plan, they would get the enhanced standard deduction of $24,000 but no personal exemptions. So their taxable income would be $46,000. The tax on that amount would be $5,520. They would get child tax credits totaling $3,000 and their tax liability would total $2,520. Not bad.
Now let's examine the bill for Ms Edwards.
Under the current tax system, Ms Edwards gets a standard deduction of $9,300 and four exemptions totally $16,200. So she is taxed on income of $44,500. Her tax liability under the old system is $6,016 and she gets child tax credits of $3,000 for a total tax liability of $3,016.
Under the Trump plan, she gets a standard deduction of $12,00 and no exemptions. Her taxable income would therefore be $58,000. The tax bill on that level of income for Ms Edwards would be $8,650. She would get $4,500 in child tax credits and a total tax liability of $4,150. So under the Trump play, her tax liability is over $1,000 higher.
Sucks to be her.
* * *
A look at the rest of the details of this tax "reform" plan.
Corporate tax rates are cut from 35% to 20%. Permanently.
The Estate Tax exemption will double and eventually be eliminated.
What are known as pass-through entities will be taxed at a top rate of 25%. For a number of partnerships and S-corporations, this is a major tax break.
The deduction of interest paid on student loans is eliminated. That hurts single people paying those loans off whose income is below $80,000 and couples whose income is below $160,000.
While the recipients of alimony will continue to be taxed on that as ordinary income, those who are paying it will no longer be able to deduct it from their income. In essence, a tax increase on those who pay alimony.
It repeals the Johnson Amendment which currently prevents tax-exempt non-profits from making political endorsements. In essence, giving the religious right the ability to endorse from the pulpit.
These things do not benefit the middle class. They benefit the wealthy and Trump's base.
The Tax Policy Center issued a report on the proposal on October 27th. It pointed out that the taxpayers in the bottom 95% of income distribution would see tax reductions of roughly 1.2% while taxpayers in the top 1% (earning more than $730,000) would see a cut in their tax bill of 8.5%.
We can make this simpler first and then examine it in more detail. First and foremost tax break being given to the wealthy is the elimination of the Alternative Minimum Tax (AMT). While the Liar-in-Chief doesn't feel transparency applies to his personal income tax returns, we did get to see two pages of his 2005 return.
His adjusted gross income that year was $48.5 million but he claimed itemized deductions (we don't have the details to see what deductions he took) of $17 million to make his taxable income $31.5 million on which he would have paid income tax of $5.3 million.
But because of the AMT, most of those deductions were added back into his income and then the tax recalculated which resulted in a total tax bill of $36.5 million. Now I know what you're thinking. That's a tax rate of 75%, which is outrageous. Then again, the rate on his taxable income under the regular tax system was 16.8%. Too low in the minds of some.
You see, before the Net Operating Loss (NOL) deduction on page 1 of that 2005 tax return, Trump's income was actually $151.7 million. So his AMT tax bill was the prescribed 24%.
Under the new system, on that income of $151.7 million, Donald Trump would pay an estimated $19.2 million in income tax. That's 12.6%.
Fair? Hardly. These tax cuts will primarily benefit the rich and the Liar-in-Chief is at the front of the line in front of the trough where these rich pigs slop up the tax breaks.
* * *
Now let's examine some of the proposals in this bill that would impact the majority of Americans and how fans of the WWE might choose to relabel this proposal the Washington, D.C. Screw Job.
Meet two families. Mr. and Mrs. Smith live next door to Ms Edwards. Both Mr. Smith and Ms Edwards are mid-level managers for a major retail firm and earn $70,000 per year. The Smiths have two kids while Ms Edwards is a single parent with three children.
Under the current tax system, Mr. and Mrs. Smith get to avoid tax on the amount of their standard deduction of $12,600 plus four personal exemptions at $4,050 for a total of $16,200. $70,000 of income less $12,600 less $16,200 = taxable income of $41,200. Their federal tax bill would be $5,269. They would get child tax credits totaling $2,000 for a total tax liability of $3,269.
Under the Trump plan, they would get the enhanced standard deduction of $24,000 but no personal exemptions. So their taxable income would be $46,000. The tax on that amount would be $5,520. They would get child tax credits totaling $3,000 and their tax liability would total $2,520. Not bad.
Now let's examine the bill for Ms Edwards.
Under the current tax system, Ms Edwards gets a standard deduction of $9,300 and four exemptions totally $16,200. So she is taxed on income of $44,500. Her tax liability under the old system is $6,016 and she gets child tax credits of $3,000 for a total tax liability of $3,016.
Under the Trump plan, she gets a standard deduction of $12,00 and no exemptions. Her taxable income would therefore be $58,000. The tax bill on that level of income for Ms Edwards would be $8,650. She would get $4,500 in child tax credits and a total tax liability of $4,150. So under the Trump play, her tax liability is over $1,000 higher.
Sucks to be her.
* * *
A look at the rest of the details of this tax "reform" plan.
Corporate tax rates are cut from 35% to 20%. Permanently.
The Estate Tax exemption will double and eventually be eliminated.
What are known as pass-through entities will be taxed at a top rate of 25%. For a number of partnerships and S-corporations, this is a major tax break.
The deduction of interest paid on student loans is eliminated. That hurts single people paying those loans off whose income is below $80,000 and couples whose income is below $160,000.
While the recipients of alimony will continue to be taxed on that as ordinary income, those who are paying it will no longer be able to deduct it from their income. In essence, a tax increase on those who pay alimony.
It repeals the Johnson Amendment which currently prevents tax-exempt non-profits from making political endorsements. In essence, giving the religious right the ability to endorse from the pulpit.
These things do not benefit the middle class. They benefit the wealthy and Trump's base.
posted by me at 11:56 AM
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