Tuesday, April 18, 2017
Hiding his taxes doesn't help
The Republicans much ballyhooed "tax reform", originally an excuse to slash taxes on the wealthy so the rest of us could support them, has grown to include many changes that need to be made, if not necessarily in the form suggested. And it turns out that Donald Trump who should be the biggest booster behind the change may be the greatest obstacle at this time.
As a candidate, Mr. Trump declared that he understood America’s complex tax laws “better than anyone who has ever run for president” and that he alone could fix them. But it is becoming increasingly unlikely that there will be a simpler system, or even lower tax rates, this time next year. The Trump administration’s tax plan, promised in February, has yet to materialize; a House Republican plan has bogged down, taking as much fire from conservatives as liberals; and on Monday, Treasury Secretary Steven Mnuchin told The Financial Times that the administration’s goal of getting a tax plan signed by August was “not realistic at this point.”Without any idea how the current tax code benefits Cheeto Mussolini, it would be easy to craft a reform bill that would be a massive windfall for the Trump cartel at the expense of those who voted for him. But without some Democratic support, that will never happen.
A tax overhaul could be the next expansive Trump campaign promise that falters before it even gathered much steam.
“If they have no plan, they can’t negotiate,” said Larry Kudlow, the economist who helped Mr. Trump devise his campaign tax plan. “In that case, tax reform is dead.”
The first pitfall for Mr. Trump was the debacle of his health care plan, which burned political capital and precious days off the legislative calendar. But his administration saw repealing the taxes imposed by the Affordable Care Act as an important step that would allow for deeper tax cuts later. Mr. Trump even suggested last week that he might return to health care before tax cuts.
Republican leaders in Congress also failed to create momentum. Speaker Paul D. Ryan built a tax blueprint around a “border adjustment” tax that would have imposed a steep levy on imports, hoping to encourage domestic manufacturing while raising revenue that could be used to lower overall tax rates. But it has been assailed by retailers, oil companies and the billionaire Koch brothers. With no palpable support in the Senate, its prospects appear to be nearly dead. Heading into a congressional recess, Mr. Ryan admitted that Republicans in the House, Senate and White House were not on the same page.
The president’s own vision for a new tax system is muddled at best. In the past few months, he has called for taxing companies that move operations abroad, waffled on the border tax and, last week, called for a “reciprocal” tax that would match the import taxes other countries impose on the United States.
But it is Mr. Trump’s own taxes that have provided the crucial leverage for his opponents. More than 100,000 of his critics took to the streets over the weekend in marches around the country, demanding that the president release his returns. Tax legislation, they say, could be a plot by Mr. Trump to get even richer.
“When they talk about tax reform, are they talking about cutting Donald Trump’s taxes by millions of dollars a year?” asked Ezra Levin, a member of the Tax March executive committee. “We don’t know.”
Beyond the politics of Mr. Trump’s returns, lawmakers do not want to pass an overhaul of the tax code that unwittingly enriches the commander in chief and his progeny. Those who are worried about conflicts of interest point to the potential repeal of the estate tax or elimination of the alternative minimum tax as provisions that would enrich Mr. Trump.
Perhaps the most consequential concern relates to a House Republican proposal to get rid of a rule that lets companies write off the interest they pay on loans — a move real estate developers and Mr. Trump vehemently oppose. Doing so would raise $1 trillion in revenue and reduce the appeal of one of Mr. Trump’s favorite business tools: debt.
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