How Trump’s ‘populist’ economic programme obscures a payday for the wealthy

His plan may sound good on the surface, but it ultimately reveals how oblivious he is to his constituencys true plight

Donald Trump does have an economic policy, it seems. But if youre trying to find any hint of ideological coherence in the odd mish-mash of positions that the GOP presidential candidate laid out in his nearly hour-long speech in Detroit on Monday, your quest will be in vain.

Trumps speech was meant to put his campaign back on track and it did briefly, before he derailed it again with his suggestion that gun-supporters might take aim at Hillary Clinton, so to speak.

To many voters, he is stronger on the economy than rival Hillary Clinton, who will speak on the issue Thursday. But while the speech clarified some details of his plans, it also showcased their many faults and their favoring, for this supposedly populist candidate, of the 1%.

Trumps stated objectives range from the outright protectionist (tear up the Trans-Pacific Partnership trade deal) to the business friendly goals of putting a moratorium on new regulations and introducing an energy policy that pays no heed to concerns about climate change or global warming.

Then there are the measures that are downright tricky to evaluate on the surface. It sounds great when a presidential candidate promises to simplify the tax code, cutting the number of tax brackets from seven to three and reducing the tax owed by those in the top tier to 33% from 39.6%.

Its a plan that enables Trump to claim that everyone will be paying less, since individuals earning less than $25,000, and couples making less than $50,000, wouldnt owe any federal tax. The problem, of course, is that while all the attention is focused on the absolute rates, less is devoted to unravelling the complicated question of just how the taxes would be levied.

Trumps new plan includes a big windfall for his fellow billionaires, in the form of the rate at which pass through income will be taxed. This income which earns its moniker by flowing through a separate business, partnership or limited liability company before reaching an individual is now taxed at the individual rate. Trump proposes to tax it at a new, much lower rate of 15%, giving the wealthy individuals who establish these structures a big, big payday.

While camouflaging that payday for the wealthy, Trump trumpeted his populist credentials with two other parts of his economic game plan. The problem? Neither offer the benefits to ordinary Americans of the kind that the candidate suggests they might.

Lets consider the (in)famous death tax.

If you listened to Trumps speech, you might imagine that this is something that the typical American family is up in arms about that we stay up at night worrying about the IRS showing up to take away Grandmas collection of silver and china or Grandpas woodworking equipment to satisfy the death tax.

No family will have to pay the death tax, Trump proclaimed. American workers have paid taxes their whole lives. Its just plain wrong and most people agree with that. We will repeal it.

Well, families like Donald Trumps may have worried about, and paid, estate taxes. But the rest of us? Not so much, unless, that is, our parents and grandparents bequeath us an estate worth north of $5.4m. Thats the current threshold at which the IRS starts to get a share of the proceeds so Grandmas silver is safe. You can probably sell some of her stocks and bonds to satisfy the taxman before you have to worry about family heirlooms.

The estate tax, which affects about 2% of Americans, or about one in every 700 deaths annually, does generate about $25bn a year in revenue for the countrys coffers. Id argue that theres a case to be made for waiving or cutting it when a small business owners death might force his heirs to close or sell that business: that surely isnt the intent of the tax.

On the other hand, repealing it so that wealthy families can simply pass on all their wealth to their heirs, while governments struggle to deliver basic services to families who themselves are struggling in a country where the wealth gap has become a wealth gulf? That idea becomes even more unpalatable when promoted by a billionaire-turned-politician who, along with his family, so clearly will benefit personally from the policies hes promoting.

It becomes even more odd when you consider the fact that many of the countrys wealthiest families are now so rich that they are signing on to the Giving Pledge. Joining an effort launched by Bill Gates and Warren Buffett, its signatories promise to give away at least half of their net worth to philanthropic causes. Obviously, theyd prefer to choose where their money goes rather than have Uncle Sam decide it belongs to the US treasury, but the fact remains that the countrys wealthiest citizens those most likely to be hit by the death tax are spending down their billions already rather than fretting about turning their heirs into next-gen billionaires. The rhetoric about the death tax is squarely aimed at those middle-class Americans who feel financially squeezed and over-taxed and oppressed by government red-tape of all kinds, but who never will have to pay a dime in death taxes in their lives.

Ill give Trump the benefit of assuming that his goal in proposing a childcare initiative was benign; it at least means that he finally is acknowledging that its a topic that he needs to take seriously. In the run-up to his Monday speech, the rumor was that he was about to suggest a new way for families to deduct childcare costs from their taxes.

Unfortunately, the new way wasnt really that new after all. Trump simply proposed that households be able to fully deduct their childcare expenses against their taxes. Thats revolutionary rhetoric for a Republican candidate, admittedly, but it ignores the fact that about 45% of Americans dont pay federal income taxes, and so wouldnt benefit from that deduction.

For them and for that matter, for all working parents the key issue is affordability. For a low-income family, childcare costs can chew up 40% of household income, according to a Pew Research Center report. That means many women are kept out of the workforce altogether by a lack of affordable, accessible childcare options.

Trumps focus on the narrowest part of the childcare conundrum, and the most self-evident solution (the one that benefits the middle class and more affluent families who have already found and can pay for childcare) shows just how oblivious he remains to the real problems that beset his constituency, and how tissue-thin his populism is. Its a solution that he thinks should fit the problem, rather than one that addresses the real issues.

For the GOP candidate to Make America Great Again for those on the wrong side of the wealth gap, hes going to have to try a lot harder than this.

Read more:

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.