In yesterday’s posting I correctly criticized Donald Trump’s economic advisory team for being glaringly weak and almost devoid of knowledge in certain economic areas. Monday he gave what his campaign billed as a major economic address to the Detroit Economic Club. During it he made a grandiose announcement that his daughter Ivanka Trump was supplementing the team and helping helped him put his plan together. Ivanka Trump? That makes me feel better; no it doesn’t!
Trump’s “plan” – what there was of it – showed me nothing and his attempt to make it somehow more legitimate by adding his daughter to the list of advisors would be hilarious if the American economy wasn’t so important. Let’s take a brief look at both.
Ivanka tries to portray herself as a working mom like so many others in America. To paraphrase many, she is more like her father; born on third base and thinks she hit a triple. (They also both feel the third base coach was an incompetent fool who should have waved them home.) Ivanka has a fashion line. In 2012 she signed a six year agreement with G-III Apparel Group to design and distribute her dresses, shirts and jeans. G-III employs well over 7,000 people. It is not some small storefront operation. Its maternity policy is zero paid leave. Not exactly the family and female friendly atmosphere Ivanka portrays and would have us believe her father champions.
It also appears the apple didn’t fall far from the tree. Most of her clothes are manufactured in Vietnam and China. Patriotism is great as long as it doesn’t interfere with the bottom line. Somehow it must be Hillary’s fault.
Time and space will not allow me to do a complete analysis of the Trump economic plan. Let me just point out a few things.
It was an obvious attempt to extend an olive branch to House Republicans, including Paul Ryan. It also gave several huge tax and regulation breaks to the donor class which Trump could desperately use some funding from. It is basically the tired old trickle down, cut taxes and regulations on the very wealthy and large corporations junk that the GOP has been peddling for decades.
This is also the Party that is constantly invoking the Tenth Amendment and runs around saying the states should be the laboratories of experiment. Under Sam Brownback and Kris Kobach Kansas cut taxes with a chainsaw. That was supposed to start a rush to the Sunflower State by businesses and they would more than make up the revenue with economic growth. In the process jobs would be so abundant that every Kansan would be on Easy Street. Right now Kansas is close to bankrupt and cannot keep its school open. Guess that didn’t work out too well. I’m sure that somehow Hillary is at the bottom of that one too.
Trump’s original tax plan was to go to three brackets of 10, 20 and 25%. Monday the rates changed to 12, 25 and 33%; interestingly the same as Ryan and company have been touting. Assuming someone is making $1 million a year the difference between the current 39.6% top rate and the new 33% rate represents a tax savings of $66,000. That is considerably more than most Americans make in a year. Who is really getting the break?
Staying with GOP tax orthodoxy Trump said he would eliminate the Estate Tax. There is a very good chance that you are not affected by the tax and that you don’t even know anyone who is. Currently the tax kicks in for a couple at the $10 million inheritance level. How many of your friends are inheriting that much this year? By the way if you have even a marginally talented tax advisor (and almost everyone at that wealth level does) there are many ways to get around the tax even at those numbers. The best estimate I have seen is that less than two-tenths of one percent of American estates reach that level in the first place. Who is Trump helping except the already super-wealthy?
The “new wrinkle” unveiled on Monday was a child care tax deduction. Now remember this is a tax deduction not a tax credit. It is being marketed as helping the working poor. In order to take advantage of a tax deduction you first have to make enough money to be subject to federal income tax; some 44% of American workers don’t meet that standard. Second you have to itemize your deductions instead of taking the standard deduction. The “break-even point” for doing that is currently around a family income of $70,000, well above the median family income in America. While it may help some working families it does nothing for the working poor.
Trump proposes to get rid of the carried interest provision. In principle I certainly agree with that. The problem is that in Trump’s plan it means nothing because he has left a loophole wider than Kansas. He proposes lowering the corporate income tax rate from 35% to 15% (needless to say a great gift to the deep pockets he is courting). Carried interest is little more than an accounting shenanigan – the details of which I can’t get into here. Under Trump’s plan the big boys would simply declare the income as corporate income and pay a maximum of 15% on it. Trump’s move sounds good but really accomplishes nothing. He trade one shenanigan for another.
Trump’s plan does nothing for the poor and very little if anything for the average Joe and Jane. It is more of the same Republican malarkey: cut taxes on the rich in anticipation of some miraculous trickle down. Gut government regulations. Enact drill, baby, drill environmental regulations. In addition it would repeal and replace Obamacare. I’m certain it would get the repeal part done; replace is another matter. It reminds me of the old separate but equal under Jim Crow. They got the separate part fine; equal was quite another story.
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