1. When I teach tax reform, I always say there are no lies; just versions of the truth. For example, when GOP leaders repeatedly claim that this a middle class tax cut -- even though there is no evidence to support it after 10 yrs -- it's not because they're lying...
2. ...but rather because they simply believe that workers will benefit more from the 900B tax cut than those who "score" the tax plans do. But...
3. ...when President Trump said yesterday about the plan, "It's going to cost me a fortune, this thing. Believe me, believe me. This is not good for me. I have very wealthy friends. This is not good for them." Well, this is just a lie.
4. What part of the plan, exactly, would hurt the President? Is it the increase in the threshold for the top individual rate from $480K to $1M, which will save him a quick $24K right from the start?
5. Or is it the drop in the rate on S corps and partnerships -- which the President is rumored to own more than 500 of -- from 39.6% to 25%?
6. Or is it the change that says the only way to get the preferential 25% rate on ALL of your rental income is to be a passive investor -- rather than a real estate pro? Strange...the President was a RE pro through 2016, but will now be passive. Good timing.
7. Or is it the elimination of the estate tax under the House bill in five years, which would allow him to pass all of his assets tax-free to his kids, with his kids getting a stepped-up FMV basis in the assets?
8. Or is the elimination of the alternative minimum tax? After all, the ONLY return we've ever seen of the President's was two pages from 2005, and on that return he paid $38M in tax -- and it would have been $7M without the AMT.
9. Or is it the Senate bill's reduction of the depreciable life of residential and nonresidential real estate from 27.5 and 39 yrs, respectively, to 25 years, allowing him to write off the cost of commercial property nearly twice as fast as under current law?
10. Or is it the fact that the bills eliminate al like-kind exchanges -- which allow you to sway one appreciated asset for another tax-free -- EXCEPT for swaps of real estate?
11. Or is it the provision in the bill that would greatly reduce the interest expense deduction for most large businesses, but yet specifically exempt "real property trades or businesses," -- the types the President owns more than 500 of?
12. Add up all these breaks for the President, and sorry...but all of the pay-fors in the bill won't put a dent in the huge windfall. Lost itemized deductions? The PEASE limitation would have likely capped him out.
13. About the only change I can see impacting the President negatively is the House bill's proposal to deny deductions for alimony payments, but hey...even THAT is only for future divorces.
14. Think I'm being unfair? That I'm just cherry picking tax provisions to fit my narrative? Let's look at the math: the JCT says the average taxpayer making more than $1M will save $60K in 2018 under the Senate bill, and $72K under the House bill.
15. The Tax Policy Center says the richest .1% will save $85K in 2018 under the Senate bill and $174K under the House bill.
16. The Tax Foundation says the richest 1% will have an increase in after-tax income of 7.5% under both the House and Senate bills, while the middle class will start at 1-2% and be at 0% after ten years.
17. So were, exactly, are the President and his "wealthy friends" getting punished by the tax plan? I'm not saying you should judge the merits of the plan based on the impact on one man -- that's silly. But a lie is a lie. Don't say you won't benefit when you clearly will.
18. The richest 1% wins, and wins big, any way you slice it. Does that mean these plans are inherently bad? Dunno..that depends on your personal politics. But it DOES mean the President is lying to sell his plans to the public. Don't believe it, though I doubt you do.
Sorry, #2 should have read “900b CORPORATE TAX CUT”
