Trump says he may pay more under new tax bill … Not likely
JOSH BOAK | 12/11/2017, 2:09 a.m.
WASHINGTON (AP) – President Donald Trump keeps telling voters that he stands to pay more under the Republican tax legislation. But the evidence suggests otherwise.
Details of the House and Senate tax bills show that an extremely wealthy elite – including the president, his family, many in his Cabinet and members of his golf resorts – would enjoy a bonanza of lavish tax cuts unavailable to the vast majority of taxpayers.
Trump’s businesses would likely face lower rates. He’d pay lower personal income rates. He could avoid the alternative minimum tax, which is designed to ensure that rich households that receive many breaks and deductions pay at least some tax. And his heirs could possibly avoid the estate tax entirely.
It’s an awkward reality for a president who pledged to rebuild the U.S. economy for the forgotten men and women in industrial cities and towns. Yet Trump portrays the tax overhaul as cracking down on millionaires and billionaires because it’s intended to limit itemized deductions for state and local taxes and mortgage interest payments, among other changes.
“We’re also going to eliminate tax breaks and complex loopholes taken advantage of by the wealthy,” he said in a speech last week in Missouri. “I think my accountants are going crazy right now. It’s all right. Hey, look, I’m president. I don’t care. I don’t care anymore. I don’t care. Some of my wealthy friends care. Me? I don’t care. This is a higher calling.”
It’s possible that Trump and other ultra-wealthy taxpayers could lose certain itemized deductions under the legislation. But those losses would almost surely be dwarfed by the benefits they would enjoy.
It’s hard to say precisely how much the president would profit from the proposed changes. The legislation remains in a state of flux, and some provisions are slated to expire. Also, the president broke decades of tradition by refusing as a candidate and president to release his personal tax returns, so there is no baseline of comparison. But Trump would clearly be defying the odds if he were to face a tax increase.
When the nonpartisan Tax Policy Center reviewed an early version of the Senate tax bill, it found that the proposed changes would steadily favor the top 0.1 percent of earners with incomes above $5 million. Nearly 71 percent of this group would get a tax cut in 2019 and 2025; that figure would climb to 98.1 percent by 2027.
The average tax cut for this group in 2027 would be $223,970 – roughly four times the current median U.S. household income.
So, how exactly would Trump benefit?
Lower tax on business profits
At least temporarily, the Senate bill would slash the tax paid by companies with profits that double as the owner’s personal income. These are known as “pass-through” companies. Trump controls about 500 such entities, according to his lawyers. These companies collectively make up the Trump Organization. Instead of paying at a top rate of 39.6 percent, Trump would likely be taxed on these profits at closer to 30 percent.