Trump Doesn’t Want Us to See His Real Tax Plan

August 30, 2017, 5:55 PM UTC

President Donald Trump and his allies in Congress are eager to turn our attention to tax changes. This Wednesday, Trump will head to Missouri to promote the supply-side argument for tax cuts. But he doesn’t want us to look carefully at the Republican proposal, because too much public scrutiny would likely deal it a lethal blow.

While the messaging around GOP tax proposals is jobs creation and tax cuts for the middle class, their proposed remedy is tax cuts that largely benefit corporations and the wealthy—ideas that polling reveals the public opposes because most of us know that top-heavy tax cuts will neither create jobs nor benefit the middle class.

Still, voter opinion has not deterred lawmakers’ efforts to garner public backing for tax cuts. Last week for example, House leadership held town hall events with employees of Fortune 500 companies to win their support. Kevin Brady of Texas, who chairs the House tax-writing committee, went to AT&T’s headquarters in Dallas. But the profitable telecommunications company is hardly a stellar example of the need for tax cuts. Between 2008 and 2015, the firm was the largest beneficiary of federal corporate subsidies and paid an average federal tax rate of just 8.1%—less than one quarter of the 35% statutory tax rate.

One day later, House Speaker Paul Ryan visited a Boeing facility in Washington state to talk tax policy. The aerospace giant, too, fails to make a compelling case for corporate tax cuts. For more than a decade, Boeing either paid nothing in federal taxes or single-digit rates. In fact, 2017 is the first time in years that the company paid more than a single-digit federal tax rate.

Yet the public is supposed to believe, without evidence, that cutting corporate tax rates will somehow compel these large firms to create more jobs.

Over the next month, expect the tax-cut drum beat to be unrelenting. It’s important to note that despite all the clamor about reform, the only thing resembling a Republican tax plan right now is the extremely brief sketch released by the White House in April.

Earlier in the summer, my colleagues at the Institute on Taxation and Economic Policy analyzed the proposal. It’s likely that Trump will tell Missourians that his ideas for tax reform will benefit the middle class. But the ITEP analysis found that 45% of his proposed tax cuts that go to Missouri would benefit households making more than $1 million. Millionaires make up just 0.5% of Missouri’s population but would receive an average of $190,560 each in 2018. Households earning less than $45,000 per year account for nearly half (48.6%) of Missouri’s population, but they would receive just 5.7% of the tax cuts that go to the state, averaging $240 each.

The ITEP analysis includes Trump’s proposed corporate tax cuts (which mainstream economists believe mostly benefit the owners of corporate stocks and other business assets) as well as his proposed cuts in the personal income tax. For every state, the average tax cut for millionaires would be in the hundreds of thousands of dollars each year. For those making less than $45,000, the average annual tax cut would be $300 or less.

More importantly, these proposals would inevitably result in cuts to public investments that help working people. This is not just a guess. Earlier this summer, the House Budget Committee approved a budget resolution that would provide a fast-track process to enact a tax overhaul and hundreds of billions of dollars in cuts to entitlement programs. The resolution also targets Medicare, Medicaid, and other programs for trillions of cuts in the future. These programs would quite literally be cut to pay tax breaks that mostly benefit the rich.

In the face of all of this, Trump, Ryan, Brady, and their allies in Congress expect us to believe that the benefits of these high-end tax cuts will trickle down to working families. They argue that the wealthy people who invest in businesses will be able to invest more, that companies with lower taxes will expand more, and the result will be more jobs for everyone.

But how could that be true when the tax cuts are so carefully aimed at those with income to spare and at companies that already pay very little in taxes? AT&T, Boeing, and other Fortune 500 companies are enjoying huge profits, both before and after taxes. If these companies wanted to hire more workers or produce more, the tax system surely isn’t stopping them.

Besides, the nation did not experience jobs growth and an expanded economy at the end of President George W. Bush’s years of tax cuts that were largely aimed at the rich.

As that former president once said, “There’s an old saying in Tennessee. I know it’s in Texas, probably in Tennessee that says, ‘Fool me once, shame on … shame on you. Fool me … You can’t get fooled again!’” He had it right, actually. Americans can’t be fooled again.

Alan Essig is the executive director of the Institute on Taxation and Economic Policy.

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