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The Trump Tax Scam

| November 30, 2017

trump tax scam

‘They bought it.’ (White House)

By Bob Lord

House Republicans and Donald Trump are ballyhooing the wonders of their new tax plan. It’s called the “Tax Cuts and Jobs Act,” which we’re told will mean “More Jobs, Fairer Taxes, and Bigger Paychecks.”


Hallelujah! We can see the Promised Land!

But before we pop the champagne corks, let’s double-check the sticker price: $1.5 trillion over the next decade. That’s just shy of $5,000 for every man, woman and child in America. For a nation over $20 trillion in debt, that seems pricey.

But that’s only the beginning. The deeper costs of their tax plan are so large and so obvious that the failure of Republican leaders to disclose them is, for all practical purposes, a lie.

The premise of the House plan is, in fact, a $170 billion lie.

The vast majority of these proposed cuts — some 80 percent — go to the top of the income ladder. But to sell the plan as beneficial to the middle class, Republican House leaders included a tax credit of $300 for each family member, plus a larger credit of $1,600 for kids under 17.

Without that “Family Flexibility Credit,” the House plan would be a net benefit to far fewer families. Remarkably, however, the House Republicans crafted the Family Flexibility Credit to expire after only five years — after which middle-class families with college-aged kids will see a big tax hike.

other-wordsSo will the break be extended? Republican leaders promise it will be. But the $170 billion cost of extending the Family Flexibility Credit through 2027 isn’t included in the stated cost of their plan.

It’s worse than just that. The repeal of the federal estate tax, which is exclusively paid by a handful of multimillionaire families, will indirectly allow ultra-wealthy Americans and their heirs to avoid tens of billions in income tax. That lost income tax revenue isn’t reflected in the stated cost of the House plan either.

Nor are the tens, perhaps hundreds, of billions in revenue that will be lost when tax lawyers develop structures to squeeze tax savings out of the new 25 percent tax rate for so-called “business income” — a big discount from the otherwise applicable top rate of nearly 40 percent.

Amendments to address the concerns of powerful interest groups will likely raise the cost further. One example: A concern raised by multinational corporations regarding an excise tax provision was addressed by the House Ways and Means Committee, increasing the cost of the plan by $60 billion.

Even regular people will make adjustments that drive up the cost of the plan.

To minimize the impact of rules reducing the tax benefits they get from charitable contributions, some will bunch several years’ worth of gifts into a single year. If they no longer get a tax benefit from paying mortgage interest, some will forgo other investments that generate taxable income to pay their mortgages down at a faster rate.

None of this is news to Republican House tax writers.

But if their plan becomes law, you can count on those same Republicans to tell us how Social Security and Medicare benefits are driving the national debt too high and must be cut. In reality, they caused the problem themselves, by lying about the costs of their huge giveaway to the rich.

And that stinks.



OtherWords columnist Bob Lord is a veteran tax lawyer who practices and blogs in Phoenix, Arizona. He’s an associate fellow of the Institute for Policy Studies.

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34 Responses for “The Trump Tax Scam”

  1. Patrick williams says:

    Once a con, always a con. Trump has been a liar his whole despicable life. God help America

  2. Stanley Wolak says:

    You people are a joke! Your going to worry about 1.5 trillion dollars over a decade.Obama wasted over 8 trillion in 8 years and wasted another 150 billion to the Iranians on another joke and all you anti-Trump snow flakes did nothing!!! Can’t be to bad if John McCain is for it!!

  3. I be Erudite says:

    Show me the text and let me make up my own mind. Here is a link to what I believe is the most current House version which is not reconciled with the Senate version:

    https://waysandmeansforms.house.gov/uploadedfiles/bill_text.pdf

    I do have to question why with record low unemployment and a record high stock market, low interest rates, etc that we need to do a tax cut at all. Normally a tax cut should be reserved for an ailing economy that needs a shot in the arm. What is the likely result of this tax cut other than creating an economic bubble, particularly in the stock market? The other most likely scenario is higher inflation. Better to do a tax cut only for those under perhaps 120k of annual income. Lower and middle class folks tend to spend the money they have and then some. Putting more money in their pockets buys the most votes as most politicians are trying to do anyway. I have nothing against the wealthy but I think they are already doing ok. Better yet, rather than inflating the national debt as this tax cut will do, why not make a serious effort to balnce the budget and start paying off the national debt? Feeling sorry for future generations!

  4. Daphne says:

    How about we toss another 4000 page healthcare law out there and just figure it out later. Both “sides” totally stink. Middle class is being driven into poverty. There is no fixing this mess. No one except gubment workers wins. Plain and simple. If you are lucky enough to have a job just shut up, go to work, then go to the grave eventually. That’s all we can do. Sad.

  5. Really says:

    Anything short of revamping entire system with a flat user tax and shredding the 10000 plus page nightmare we have created is nothing more than Political Lip service.Or scam whatever one would like to express.

  6. Stranger in a strange land says:

    I am getting to the point where I think Americans get what they deserve. If you only watch CNN or Fox News You aren’t getting to see the problem. I will often watch one network while DVRing the other when there is major news. Only then can you see the spin put on stories, or, by the selection of what is reported on, how people are not getting to hear what is going on. Like a congressman in a “safe” district, the networks are only interested in capturing the eyeballs of their loyal viewers, not being “fair and balanced”. If they were fair and balanced they might lose viewers. This is fanning the flames of partisanship.

    Ultimately, it is the laziness of the American public that is destroying us. If “our team” supports it, it must be good. I don’t need to do any research to see the true impact of proposed changes. That would be too much like homework and Lord knows, we all hate that! Where is the outrage of the Tea Party regarding this Bill? Ron Desantis, who rode into office with Tea Party support is all gung ho for this deficit bomb. Frankly, I think Desantis is much more interested in Joining the White House “Swump” than draining the Congressional swamp! I will see how Alabama goes, I will see how the 2018 election goes, but sadly, I think by the time people realise where this “us vs. them” mentality is taking us, it will be too late to save this country. We are all in the same boat, and it is taking on water.

  7. PTC Trader says:

    Not correct to title this article “SCAM”. There is no illegal activity here. The outcome of this legislation will be a concurrence of elected officials.

    This is one analyst’s opinion of what he believes will be the downrange deficit. All downrange views are speculative and are a function of the implementation of a plan and the responses to the plan.

  8. Edman says:

    Congress just doesn’t get it… their ratings are historically low because they are out of touch. They keep trying to push legislation that polls show are unpopular with citizens because they keep some insane promises made to themselves or that will curry favor with donors or some ill-defined base. I’m a well-off retiree and could benefit from the tax cut proposals but I am strongly against them. I love this country and want to see it get better before I die; I want my children and grandchildren to have a better life and world than I did. Don’t you? The GOP, however, keeps trying to support an Ill-advised Trump agenda. How insane is it that they ignore science and allow us to be the only country in the world to not be in the Paris climate accord? How can we allow our environmental protections to be eroded? Why are we a country that does not seem to want health care for it’s citizens and allows the costs to run out of control to protect big pharma?

    Congress should not support the current tax cut proposals and, instead, do what the people want… make the tax structure simpler and fairer. They shouldn’t use this bill to provide cuts to the rich that don’t need them or to allow corporations to reap larger profits that will go to their management and not the workers. Cut out the insane loopholes in our system and craft real tax reform that will help everyone.

  9. Florida voter says:

    I’m extremely disappointed in what I’m hearing about the tax plan … or rather what I’m NOT hearing.

    PAYROLL TAX
    1) Why is nobody talking about payroll tax? If a “middle class” family has an effective tax rate of about 12%*. more than 3/4 of that is in payroll tax. Their employer also pays as much in Social Security and Medicare as what they pay (thus it’s not part of their salary). If we want to have “fair” taxes, why not remove the cap on those taxes? Most people pay 7.65% on ALL of GROSS UN-ADJUSTED income, nearly every person earning less than roughly $125,000. Most of the tax burden of the “low and middle class” is in these taxes, but we are hearing nothing about them. It’s taken straight out of the paycheck, not subject to deductions or credits, so even people who “don’t pay taxes” usually still have a effective tax rate of 5% – 7% (maybe a bit less if they get several refundable credits).

    PERSONAL EXEMPTIONS
    2) We hear that the “standard deduction” is doubling. Not quite. For married filing jointly, it’s going from $12,600 to $24,000, a difference of $11,400. BUT, the $4,050 in personal exemptions is going away. This means that the deductions for a family of three (for example, Mom, Dad, Child) is actually WORSE under this plan. Yes, there is some offset by increasing the child tax credit, but even so, to say the standard deduction is doubling is lying by omission by not saying that with the loss of personal exemptions, any family of three or more will be paying taxes on a larger share of their income.

    DEBT OR DEFICIT
    3) The media seems to confuse the deficit with the debt. I hear the $1,000,000,000,000 (or half again as much) as adding to the debt and I also hear that number adding to the deficit. There is a big difference. Unfortunately, they are used interchangeably by nearly all news outlets that I’ve seen (NPR, CNN, FOX, Washington Post, multiple “this is the proposed tax plan” analyses).

    Payroll tax and the personal exemptions might get mentioned in passing, but it’s usually limited to one sentence or less.

    see the middle quintile tax rate at:
    https://www.pgpf.org/budget-basics/how-much-do-americans-pay-in-federal-taxes
    http://www.taxpolicycenter.org/taxvox/federal-taxes-are-very-progressive

  10. Chris A Pickett says:

    I NEVER got a job from a poor person………

  11. Edith Campins says:

    The proposed tax bill, including the last minute changes being done to it, is a nightmare for the majority of Americans. Read the proposal. It will increase the debt, raise taxes on many low income and middle class Americans and will be a mess to implement.

    All it accomplishes is stroking Trump’s ego and making the rich, richer.

  12. Pogo says:

    @Calling it a scam is a vast understatement – but it will do for a title.

    “If a free society cannot help the many who are poor, it cannot save the few who are rich.”

    JFK – Inaugural address, 1961
    https://www.buzzfeed.com/terripous/inspiring-jfk-quotes?utm_term=.pay0oEVaw#.uaPwL1opD

  13. mark101 says:

    Regardless what Washington does, the debt will rise. The tax cut is yet again a smoke and mirror write up to protect the wealthy and further impact the hard working middle class.

  14. Pogo says:

    @Chris A Pickett

    “I NEVER got a job from a poor person”

    And any employer – and many an employer remind their employees of this basic fact – will verify that all jobs owe their existence to customers. Americans are loosing their jobs to robots, tax cheats, and the selfish greed of their so-called fellow Americans who send the jobs to countries where the new workers make things most of them can’t afford to buy – just like more and more Americans.

    Republicans preach that overfeeding a pig will benefit the rest of a farm. It never was, and never will be true. When enough people realize the difference between a rain that falls on all, and Republicans trickling on them, there is going to be one hell of a reckoning.

  15. Anonymous says:

    For all of you complaining, if you do receive a tax cut, your opinion was ignorant. Be sure to refuse it and continue to send all monies to the federal government. If you take the cut, then you are a bunch of hypocrites.

  16. smarterthanmost says:

    For those of you complaining, if the law passes, and you do receive a cut, your opinion was meaningless. Also, be sure to refuse the cut and continue to send all monies to Washington. If you do accept the cut, then you’re nothing but a hypocrite.

  17. Just the truth says:

    How can Republican Senators vote yes for something that most of them don’t even know what it says? All they care about is that the Republican can say they passed something before the end of the year
    They don’t care if it hurts the middle class people as long as it increases their own pockets. But when it is time for them to be elected again, they will want to be all Americans best friends to get our vote. Sorry, we aren’t as
    stupid as they may think.
    Why is it that no US Banks will lend money to The Donald? Why is it that no contractors will do work for The Donald? Because he is a liar, cheat, con artist, rude, nasty, selfish,self center despicable person.
    The walls of the White House are closing in on the Russian scandal. The truth always comes out in the end, Just watch, sit back for the movie to end soon.

  18. Sherry says:

    Great post “Just the Truth”!

    So, now it seems OK to massively increase the deficit . . . to line the pockets of the wealthy!!!??? This directly from the analysis of the tax bill by the Congressional Budget Office:

    The staff of the Joint Committee on Taxation (JCT) estimates that enacting the legislation would reduce revenues by about $1,633 billion and decrease outlays by $219 billion over the 2018-2027 period, leading to an increase in the deficit of $1,414 billion over the next 10 years.

    Regarding higher wages and more jobs, CEOs do NOT plan to give raises to their employees or to hire more people. Instead they are going to reward their stockholders and buy back stock to increase their own wealth. Take a good read. . . this from Bloomberg:

    Major companies including Cisco Systems Inc., Pfizer Inc. and Coca-Cola Co. say they’ll turn over most gains from proposed corporate tax cuts to their shareholders, undercutting President Donald Trump’s promise that his plan will create jobs and boost wages for the middle class.

    The president has held fast to his pledge even as top executives’ comments have run counter to it for months. Instead of hiring more workers or raising their pay, many companies say they’ll first increase dividends or buy back their own shares.

    Robert Bradway, chief executive of Amgen Inc., said in an Oct. 25 earnings call that the company has been “actively returning capital in the form of growing dividend and buyback and I’d expect us to continue that.” Executives including Coca-Cola CEO James Quincey, Pfizer Chief Financial Officer Frank D’Amelio and Cisco CFO Kelly Kramer have recently made similar statements.

    “We’ll be able to get much more aggressive on the share buyback” after a tax cut, Kramer said in a Nov. 16 interview.

  19. smarterthanmost says:

    Didn’t know it was a crime to be rich, invest well, and have your children pay taxes on money they received from you when you die, which you already paid taxes on. The actual crime is half of you don’t even pay federal taxes.

    On another note, as we discuss taxes, for those in Flagler Beach, you just received a 25% tax increase on you utility bill. My actual use of water & sewer is less than $2, yes that is two dollars, yet my bill is $64. So call it what you want, but I’m heavily taxed for using a service I’m already paying for, from my property taxes. Hopefully, if I do get a tax break, being of the half that does pay taxes, it will cover this new tax.

  20. Sherry says:

    For those who see NO problem with repealing the estate tax for the children of wealthy “multi- millionaires”. . . you do understand that taxes are paid somewhere along the line . . . several times. . . for every penny circulating in our society, right??? Money in estates IS NEW INCOME for the beneficiaries and should be taxed like all other income!

    Please cite your FACTUAL evidence that “half of you don’t even pay federal taxes” and that “use of water & sewer is less than $2”. Please be sure to include ALL Federal taxes and ALL maintenance costs for water and sewer systems.

    Thank You!.

  21. YankeeExPat says:

    Advance warning to the ever faithful Geriatric Trumpniks……… Social Security and Medicare are Next!

    http://www.latimes.com/business/…/la-fi-hiltzik-gop-social-security-20171130-story.html

  22. Terminus says:

    Well, when Medicare and Social Security disappear, food stamps, and welfare too, and you owe on your taxes now instead of receiving a refund – don’t complain. Where were these Trumpettes when he ran all those other times for POTUS? Oh yeah, laughing at him because he’s a phony. He flips opinions and party affiliations more than a dying fish. The man is self-serving and this benefits him and his interests the most. I’d say wake up but the orange haze over his supporters eyes is so thick they can’t see anything else but his fake news, fake concern, and fake intelligence. This entire country and political system is a joke. Both sides. Doesn’t matter – we’ll be at war soon enough because two crazies engaged in a p!$$!ng contest never ends well.

  23. Sherry says:

    Thanks YankeeExPat. . . everyone should read the article to understand the REAL Republican agenda! CUT Medicare and Social Security while giving massive tax breaks to the wealthy!

  24. Pogo says:

    Salutations and respects to Sherry, Terminus & YankeeExPat

    Trump and the leaders of the Republican party are shameless liars who arrogantly think they are smarter than most people. And why not – they get away with it on a regular basis. The phrase “death tax” wasn’t handed down from the throne of God. It was invented in the 1990s by Republican propaganda experts. Prostitutes don’t just sell sex – tobacco and oil companies have never gone wanting for lack of those willing to prostitute themselves and say anything for a buck:

    luntz + death tax
    https://www.google.com/search?q=luntz+%2B+death+tax&ie=utf-8&oe=utf-8&client=firefox-b-1

    If we listen to Republicans, there’s no sensible opposition to their allegiance to hereditary wealth. Decide for yourself:

    hereditary wealth
    https://www.google.com/search?client=firefox-b-1&ei=pfoiWuq5IIyzmwG-sqzYBg&q=hereditary+wealth&oq=hereditary+w&gs_l=psy-ab.1.6.0l10.85768.96568.0.101976.21.13.0.4.4.0.671.2682.0j6j2j5-2.10.0….0…1c.1.64.psy-ab..8.13.2659…0i67k1j0i10k1j0i131k1j0i46i67k1j46i67k1j0i3k1.0.b88ptEyMAKI

    Ask some wealthy experts:

    bill gates sr on inheritance tax
    https://www.google.com/search?q=bill+gates+sr+on+inheritance+tax&ie=utf-8&oe=utf-8&client=firefox-b-1

    The cruelty and stupidity of the Republican tax legislation is truly grotesque. We can only wonder what new weasel words will be used to explain the worldwide depression caused when the current stock markets bubble explodes after the Republican plan becomes law and the usual suspects rush to take profits.

  25. smarterthanmost says:

    Here you go, Sherry, Almost half of Americans won’t pay federal income tax | New York Post
    https://nypost.com/2017/04/…/almost-half-of-americans-wont-pay-federal-income-tax…

    “Money in estates IS NEW INCOME for the beneficiaries and should be taxed like all other income!”

    Then 100% of estates should be taxed based on your comment, and they are not. I guess you don’t mind your children paying taxes on money you have already paid taxes on, when you die. By the way, be sure and tell them it “is new income”, and they owe the taxes.

    As far as my personal utility bill goes: Water Charges: $0.71
    Sewer Charges: $0.95
    Water Base Fee: $21.63
    Sewer Base Fee: $14.00
    Stormwater Fee: $6.83
    Refuse Charges: $19.80
    Total Current Charges: $63.92
    Current Utility Tax: 2.23
    Total Amount Due: $66.15

    All of it a tax, also a tax on a tax, except for …………….$1.66…actual usage. I await your apology.

  26. Sherry says:

    NO apology forthcoming or appropriate. . . Federal Taxes come in many forms, and so lambasting anyone for not paying taxes is not only unkind but inaccurate as well.

    Regarding “estate taxes”. . . yes, I do believe that 100% of all estates should be considered “new income” to the beneficiaries and taxed appropriately. However at the current time, the first 5.49 million of each estate is tax free. . . which means that those taxes/cuts will not effect most of us “directly”. HOWEVER, when the wealthy get such tax CUTS . . . each one of us is effected “indirectly” because the taxes WE pay are spread thinner and thinner to pay for such “trivial” things as, let’s say, our national defense.

    Regarding payments for water and sewerage. . . the “fees” are used to pay for the creation and maintenance of our water and sewer systems. Perhaps an out house and a rain barrel would satisfy your needs.

    Happy Holidays ALL!

  27. Pogo says:

    @Fits on a postcard

    Senate Tax Bill December 1, 2017
    https://assets.documentcloud.org/documents/4320642/SenateTaxBillDec1.pdf

    Need a little help?

    From The Washington Post

    Business

    Senate GOP tax bill passes in major victory for Trump, Republicans

    “…The most recent review of the bill by the Joint Committee on Taxation, Congress’s nonpartisan tax analysts, found that only 44 percent of taxpayers would see their burden reduced by more than $500 in 2019 but that high earners would fare much better than the poor under the bill…”

    Hmmm, 500 divided by 365. $1.37 every day for a year! Let’s go to Disney!

    Full article
    https://www.washingtonpost.com/business/economy/johnson-to-back-senate-tax-bill-putting-gop-leaders-close-to-securing-passage/2017/12/01/0226ff98-d6a2-11e7-b62d-d9345ced896d_story.html?utm_term=.364dba256c37

  28. Florida Voter says:

    @smarterthanmost (arrogant much?) Sherry, and all others:

    The lowest earning workers pay tax. In fact, not even the lowest quintile get away with no tax:
    SOCIAL SECURITY and MEDICARE

    As you are looking at Federal Income Tax, include PAYROLL TAX.

    You are all igorning F*CKING PAYROLL TAX!!!, the largest part of the tax burden for the lowest ?? percent. Not sure how much, but on average, it’s the major part of the tax burden for the middle quintile (40-59 percentile)

    Again:
    http://www.taxpolicycenter.org/taxvox/federal-taxes-are-very-progressive

    To others posting links: great, but make sure they are actual links, not abbreviated/shortened and not “google” searches that can easily change based on a user’s location, browser, past searches, and so much more that Google tracks.

  29. I Be Erudite says:

    Sherry, if all estates were taxed just think of all the family farms that would have to be sold because the children can’t afford to pay the taxes. It would basically leave all farming to corporations and end the whole concept of generational farming. Is that something you support?

  30. Pogo says:

    @Florida Voter

    I guess I’m others

    When I post a link to a Google search I always place the exact words I googled above the link. I post the search links to provide multiple sources and points of view. I don’t believe the variations in results caused by analytics and ad targeting should disqualify the method. I don’t consider myself smarter than anyone else. As Jim Jefferies (Google him – mate) is wont to say, “We can do better.”

    Since

  31. I be Erudite says:

    @Florida Voter, your argument that payroll taxes for FICA and Medicare amount to the lowest income workers paying taxes is disingenuous. Theses “taxes” support a benefit directly. Therefore, when a work pays FICA taxes which their employer is required to match, they will eventually receive social security benefits. I would add that the benefit payment is heavily skewed in favor of low income workers. For example, if one worker paid exactly twice as Much FICA taxes over the course of their working years that worker would not receive twice as large of a social security check than the worker who contributed only half as much. In fact, the lower income workers receive on average far more in lifetime benefits than they ever contribute. Your argument about Medicare taxes on the other hand is marginally true but the percent or so contributed is a minimal amount in comparison to how much Medicare is on the hook to pay out on their behalf in the future. Federal income taxes are exactly that. Taxes on your income designated as federal income tax that you pay all year and reconcile on your tax return. It is estimated that about half of all adults pay no federal income taxes at all. Many of those are folks who do work but don’t earn enough to have a tax liability. Due to a couple of available refundable tax credits such as the earner’s credit and the earned income credit, many people actually receive more money from the federal government than they pay in. Thus, the lowest income earners do receive more in earned income credit than they pay in payroll deductions for income taxes and payroll taxes combined. Good attempt at trying to muddy the waters!

  32. Sherry says:

    Yes. . . I feel that all estates should be “subject to” appropriate income taxes because it is new income for the beneficiaries.. BUT, my opinion makes no difference at all since the current rules say the first 5.49 million is exempt. Why should the MILLIONS/BILLIONS of new income over 5.49 million be exempt as well. . . especially since income tax deductions for “state” income taxes (DOUBLE TAXATION) some education and medical costs will likely be no longer allowed?

    The wealthy are getting the lions share of the tax cuts. . . while the middle class and poor are getting screwed by the Republican Congress and trump!

    Payroll contributions to Social Security and Medicare will hopefully benefit each one of us directly in the future. . . that is IF the Republicans do not CUT those programs, as planned!!

  33. Pogo says:

    @The Republican noise machine’s “death tax”

    Is hereditary wealth wrong?

    “…Inherited wealth is based on the same logic as inherited monarchy: because your father did something, you must be better than other people: better as nobility (or as money)…”

    “…The Founding Fathers understood that clearly: they believed in success on merit, not on success by inheritance, and they opposed both inherited wealth & inherited aristocracy…”

    “…we can either have a situation where we have a small number of people with a huge amount of wealth or we can have a democracy. But we can’t have both…”

    Full article (includes pro and con on its question)
    https://www.quora.com/Is-hereditary-wealth-wrong

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