Dr.Doom Exposes Trump's Tax Plan As "A Plot Against The 99%"

Tyler Durden's picture

Authored by Nouriel Roubini via Project Syndicate,

US President Donald Trump, in partnership with congressional Republicans, is pursuing tax cuts that will blow up the fiscal deficit and add to the public debt, while benefiting the rich at the expense of middle- and working-class Americans. Once again, Trump has not hesitated to betray the people he conned into voting for him.

After multiple failed attempts to “repeal and replace” the 2010 Affordable Care Act (Obamacare), US President Donald Trump’s administration now hopes to achieve its first legislative victory with a massive tax giveaway that it has wrapped in the language of “tax reform.” To that end, Republicans in the US Congress have just unveiled a bill that, if enacted, could vastly widen the deficit and increase the public debt by as much as $4 trillion over the next decade.

Worse still, the Republican plan is designed to funnel most of the benefits to the rich.

It would lower the corporate tax rate from 35% to 20%, reduce the tax on capital gains (investment profits), eliminate the estate tax, and introduce other changes that benefit the wealthy.

Like the Republicans’ health-care proposals, their tax plan offers little to struggling middle- and working-class households. Trump continues to govern as a plutopopulist – a plutocrat pretending to be a populist – who has not hesitated to betray the people he conned into voting for him.

Before releasing the current plan, congressional Republicans passed resolutions to reduce taxes by $1.5 trillion over the next decade. But the actual tax cut will likely be much larger. The proposal to lower the corporate tax rate to 20%, for example, implies a $2.5 trillion tax cut, once other tax cuts in the plan are considered. To keep the tax cuts below $1.5 trillion, one would have to keep the corporate rate at or above 28% and broaden the tax base.

To make up for this difference, the bill proposes a cap on the mortgage-interest deduction for homeowners, and on the deductibility of property tax, as well as eliminating other tax benefits for the middle class. It would eliminate or cap the income-tax deduction for state and local taxes – again, squeezing the middle class to cover tax cuts for the rich.

The problem is that eliminating the state and local tax deduction would provide just $1.3 trillion in revenue over the next decade. And because this change would hurt middle-income families, many epublicans in high-tax states such as New York, New Jersey, and California will oppose it. If congressional Republicans and the Trump administration end up keeping the state and local tax deduction, their tax cuts will add $3.8 trillion to the public debt over the next decade.

Moreover, Republicans want their tax cuts to be permanent. Yet they are trying to enact their bill through the congressional budget reconciliation process, which requires any tax cuts that add to the deficit after ten years to be temporary. Even if the Republican plan really did keep the cuts at $1.5 trillion, it still would not comply with this rule.

Trump and congressional Republicans argue that tax cuts will boost economic growth, and thus revenues. But standard dynamic scoring models show that increased growth would offset the cost by only one third, at most: the US would face $1 trillion, rather than $1.5 trillion, in lost revenues.

So, how will the Republicans fudge these fiscal rules? For starters, like President George W. Bush’s administration, they will set the personal income tax cuts to expire after ten years. This will give them plenty of time to enjoy the political gains of tax cuts – starting with the midterm elections in 2018 – long before the bill comes due.

But corporate tax cuts are another matter, because making them temporary would defeat the purpose. Companies operate with a much longer time horizon than households, and are unlikely to boost investment in response to cuts that last only ten years.

To get around this problem, Trump and the Republicans might decide to bend or manipulate congressional rules. Or they might rely on unorthodox and untested economic models to claim that their cuts actually are revenue-neutral, and will have a much larger impact on growth than what standard models project.

Most mainstream economists would estimate that a tax cut of the size being proposed would increase US potential growth by 20 basis points, at most, taking the growth rate from around 2% to 2.2% over time. Yet Trump and his advisers have clung to the false claim that growth will increase to 3% or even 4%.

If this far-fetched projection sounds like voodoo economics all over again, that’s because it is. Voodoo economics came into parlance in the 1980 presidential election, when George H. W. Bush criticized Ronald Reagan for claiming that his planned tax cuts would pay for themselves. Bush was vindicated just a few years later, when the Reagan administration’s tax cuts blew a huge hole in US public finances.

And yet Republican administrations have persisted in pursuing unsustainable and undesirable tax cuts benefiting primarily the rich, leading to ever-larger deficits and trillions of dollars of additional public debt. The Republicans’ eagerness to pass reckless tax cuts once in power gives the lie to their claims of fiscal rectitude.

Making matters worse, America’s pluto-populist president is peddling a tax plan that will further increase economic inequality at a time when income and wealth gaps are already widening, owing to the effects of globalization, trade, migration, new labor-saving technologies, and market consolidation in many sectors.

Given that the rich tend to save more than middle- and working-class people, who must spend a larger proportion of their incomes on basic necessities, the Trump tax plan will do little for economic growth; it may even decrease it. And it will add far more to the US’s excessively high public-debt burden. It is fake reform, brought to us by an alt-fact administration and a party that has lost its economic bearings.

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Mzhen's picture

Roubini exposed with pants down --

"On Saturday, economist Nouriel “Dr. Doom” Roubini — equally known for his model-packed hot-tub parties at his East Village bachelor pad as his economic theories — is hosting another Clinton fundraiser."

pagesix.com/2016/10/21/even-hillary-clintons-birthday-party-is-a-fundraiser/

Apeon's picture

The only realistic tax plan is to Give more deductions to the bottom 75%, and offset that with removing and equal monetary amount from the top 25%-----keeep that up until we all pay the same rate with no special deductions.

 

Families get to distribute all income over all members until age 18---then they are on their own.

Robert A. Heinlein's picture

All I know is we have to pass the Tax bill to find out what's in it.  If the left is agin' it , I'm for it.  F'k em all and lets pass something. 

glitzcity's picture

I could hardly believe that Trump is the stupidest President in US history. He's like a puppet to Paul Ryan who plays him like an orange buffoon.

To Hell In A Handbasket's picture

Errrr McFlys? Still arguing over Obummer and what Trump is doing? GOP and Dems? How many fucking times will a few of us diehards, have to repeatedly remind the retards, its a uni party system?

I suppose reality will just have to play out again, as the Trump base simply does not get it and will irrespective of fact, defend the indefencible. At least Killary is not president, is not a fucking defence. 

Anyway, like dogs, the USSA tax payer is sitting in front of master, licking their lips in anticipation for some grizzle. **WINNING** MAGA!

KillCroesus's picture

Dump is an idiot.  Peple that support him are even more stupidest

Umh's picture

You should go back to ESL class.

Tachyon5321's picture

Thank! Being an idiot makes everyone twice as smart as you...

Fireman's picture

Maybe Chump meant he was going to swamp the drain and not drain the swamp!

USSA got screwed again but don't expect the mutts to grasp it as long as the Chump women are strutting their stuff and making Merica "grate again."

More nachitos, Don!

https://pics.onsizzle.com/ban-pre-shredded-cheese-make-america-grate-aga...

DFCtomm's picture

Trump is going to cut out the tax deduction for state and local taxes. Which states have the highest state and local taxes? The blue states. That is a dagger pointed at the heart of every blue state, and I'm willing to sacrifice that deduction just to fuck with all those smug assholes from the NE.

Dr. Acula's picture

Good idea, USSA comrade. This will further weaken the States.

 

DFCtomm's picture

I hope you live in California and get a nice 10% increase in taxes.

Dr. Acula's picture

Because you want the States to abandon their own taxes and become totally addicted to the Fed teat.

 

DFCtomm's picture

You're actually going on about state's rights? News flash but it's not 1861. That battle was fought and lost over 150 years ago. You're so out of touch that you're actually comical. Isn't it time for you to hit a all you can eat buffet before you go to bed at 8:00 PM, old timer?

Dr. Acula's picture

Your hero, dotard Trump, is the one who swore to defend and protect the Consitution.

Too bad he treats it like a nutrag.

He shouldn't be allowed to hang Jackson's portrait.

 

Tachyon5321's picture

Like the teacher unions did... 

IProtectYou's picture

Only delusional morons can still believe Trump cant keep his campaign promises because the fake news media or whatever non-sense his voters love to believe is holding him back.

Tachyon5321's picture

Trump is held back by the elites that control both the Republican(Bush ....)  and Democrat(Clinton and Obama) party.  It is funny that the Bush's and Clinton's vacation together.... Yet pretend they represent someone different when if fact they both represent the top .05%.

 

Only delusion moron is you!

 

 

nevertheless's picture

bull shit, Chump is heald back by the facct he has no morals and is a zionist bitch. 

 

Chump was elected to deal with mass migration, but zionists want the borders wide open, mass immigration is their weapon of choice.

 

Chump could have killed DACA all on his own, but instead kicked it to congress?????????????

 

Chump has full control of ICE, HE ALONE COULD CRACK DOWN ON ILLEGALS, BUT HAS DONE NOTHING!!!!!!!!

 

Your just parroting the zionist bull shit, meant to keep just enough cover for chump...did the same shit for obama.

Tachyon5321's picture

It should be pointed out that 95% of the small businesses would convert to an LLC and see their taxes drop to 20%....  Dr. Doom should actually think about changing his name to Dr. Stupid.

Singelguy's picture

The income tax rate might be 20% but don't forget to add in all the employment taxes which is another 15%.

Angry White Guy's picture

People waste time with this BS left vs right, neo-cons vs libtards crap.  It's a one party system.  THE party system.

This country so badly needs a BLOODY revolution.  Violent, messy examples need to be made of .gov stooges.

Dr. Acula's picture

>People waste time with this BS left vs right, neo-cons vs libtards crap.

The Trumptards' version of WWE is Trump vs. the Deep State.

 

shimmy's picture

1+ mil mortgages are common among the middle class? 10k+ property taxes are common among the middle class? In typical dumbocrat fashion, he conveniently ignores the interest and tax deductions are still in the plan yet capped at a lower rate. 

I like how dumbocrats just keep spouting forth the same shit over and over. The republicants could unveil a tax plan that has a 5% tax rate for everyone not making over 500k and they'd still do the mental gymnastics to say it is just giving to the wealthy.

Mind boggling how dumbocrats just never learn and keep acting the same way that people are getting sick of. 

BustedUpBiker's picture

I guess you would rather the U.S. keep the corporate tax rate the 3rd highest in the world at 38.92% not 35%, which helps keep trillions of dollars overseas.

nevertheless's picture

nonsense, stop shoveling that wall street shit.

NickPeeMe's picture

You can fool some of the people some of the time. You can fool a trump voter 8 days a week. Bwaaaaahahahahaha

SRV's picture

Globalist swine

To Hell In A Handbasket's picture

How is this corporation tax going to be paid for? What cuts? Probably the poorest in society will have their welfare transferred to corporate welfare and the Trumptards will call it  **WINNING** Mary, mother of Jesus, save us please.

PS: Do you know Hollywood did a Gala last night and raised $33-53 million(depending on the source) for Jewish IDF soldiers in need? Hollywood have yet to do the same for USSA soldiers in need. All the usual super-rich/hollywood Gentiles came out and the sycophantic GOYS had their tongues out.

I wonder if Trump will make an issue of that? You know if niggers, or Muslim actors, did a fund raiser for a foreign fighters in need, Breitbart, Bannon and Trump would have gone all Southern-Strategy. But when the Jews do it? OY VEY, OY VEY, OY VEY!   https://www.alaraby.co.uk/english/society/2017/11/7/hollywood-stars-hold...

Infinite QE's picture

Now are you getting it? Drumpf is simply a con man. A broke con man who needed $$$ from the kosher nostra who then egged his ego on to run for president. Make Israel Great Again was and is his driving desire. Oh, and land some good hotel property deals in China too.

 

nevertheless's picture

Right on. I note that no one that votes you down have the chops to say why...they think this is facebook, where a down votes means something.

 

Trump is 100% owned by the Zionists, and many on here you say otherwise are likely paid to do so. 

yellowsub's picture

Are you sure it's for fighters in need or for a war that's about to start?

The Trumps have been pro-Israel and look who surrounds him and in his Cabinet...

https://www.breakingisraelnews.com/78896/trump-family-50-year-history-do...

https://www.timesofisrael.com/when-it-comes-to-jewish-ties-no-gop-candid...

 

besnook's picture

what i don't understand is the supply side theory of gdp growth has failed. giving money directly to the already wealthy does not grow a healthy economy. the money does not trickle down. a theory proven to work is a huuuge tax break fior the middle class. it helps the multiplier and money velocity, and ends up in the .1%ers' pockets in the end anyway.

 

onwisconsinbadger's picture

I am waiting for my tax postcard from IRS. Drumpf is a loser ! Sad !!!!

GunnyG's picture

It must be hell on earth to be "stuck on stupid." We should pity you.

Umh's picture

It looks like many people posting on this thread have never had to fill out a long form.

http://thehill.com/opinion/finance/359374-gop-tax-bill-good-for-business...

ludwigvmises's picture

Here are some facts: The top 1% have a measured IQ of 119. The middle 60% have a measured IQ of 102. The bottom 20% have a measured IQ of 83.

So let's think about this for a minute. The smartest and hardest working people in our economy are at the top. Good. That's what we want in capitalism. Now, the top 1% also pay the most taxes. The bottom 20% pay the least! So a tax reform that benefits free enterprise and a good economy reduces taxes on the top 1% and increases taxes (or removes deductions) for less qualified people like the middle and lower classes. We want the most qualified people to retain the most earnings so they keep investing in new ideas and businesses. This is exactly what Trump is doing and it will proper growth to 4%+. It's just good economic common sense!

DFCtomm's picture

God save us from the lunacy of Libertarians. It's all fun and games to sit around and talk "shop" in the comment section of an economic conspiracy blog, but let's not have any delusions of gradeur. Nobody gives a rats ass about tax policy. The Democrats will continue to lose because they have chosen to ally themselves with every type of deviant freak on God's green earth. The rest of this shit is just old timers talking about things that mattered when they were young.

yellowsub's picture

Great, let's see how many more ways the "smartest" and "hardest working" people in the economy are going to screw us.

What this does is offer greater returns to Wall Street.  Businesses are reducing more white collar now workforce via outsource or automation or both not the investment you're believing will happen.

Trickle down economics doesn't work because they don't re-invest in the people just the tech to reduce the need for people.

nevertheless's picture

"Hardest working at the top", FUCK YOU!

 

Most at the top inherited money or are well connected Jews. The middle class are the hardest working, most at the top are open borders traitors. 

 

Your a fucking globalist moron. 

DFCtomm's picture

Your a fucking globalist moron

 

 

No, he's a Libertarian, but that's really a distinction without a difference.

nevertheless's picture

The Zionists globalists have turned every party into Zionist lite.

"Clinton and Obama are liberals", but in reality they are both Zionist shills, pushing for war, wall street and multiculturalism.

"Bush and Trump are conservatives", but in reality they are both Zionist shills, pushing for war, wall street and multiculturalism.

So, now we are going to turn libertarians into zionist tools too?

ludwigvmises's picture

So what's the alternative. Socialist handouts to the "less forunate"? The rich should hand over their millions to the "oh so hard working" middle class? Capitalism works best when there is an incentive to work hard and make the most money. Simple.

nevertheless's picture

Wall Street should be burned to the ground. Money is the root of all evil, and we all know who has all the money...they pick the winners and the losers. 

My household payed way over $50k last year in taxes, and I would not mind it in the least if it were going to make my fellow Americans, college, hospitals, roads...but it's not, it's going to ILLEGALS who need welfare, healthcare and education, it's going to fight wars for Israel, and pay for Israel's weapons, and it's going to pork barrel projects the rich get because they own the politicians, AND IT IS GOING TO THE FEDERAL RESERVE FOR DOING WHAT WE COULD DO FOR OURSELVES. 

DEMOCRACY is the great equalizer, one man, one vote. Capitalism is one over the many. VERY RARELY DO THOSE AT THE TOP WORK HARD. And if you made your money on the American worker, it should go back into society. 

Instead we now have a nation of traitors who only care about themselves. If that is what capitalism brings, it is evil. 

America was far far far greater in the 30's 40's and 50's than it is now. the difference is the rich paid 50% of their income back into society and the Middle Class was the envy of the world. 

But the Zionist bankers and elites can't have that, so they went to work destroying the middle class, open borders, mass migration, moved jobs overseas, and bull shit "free trade". 

Furthermore, I don't mind paying taxes to my local school, does that make me a socialist? Sickens me how the globalists glorify capitalism, even as it ravages the nation, yet demonize any idea that people have a responsibility to their fellow Americans. BUT YOU DON'T MIND WHEN THOSE AMERICAN KIDS DIE FIGHTING IN ISRAEL'S WAR

The rich get richer and America dies. The great middle class IS what made America great. 

ludwigvmises's picture

If the middle class is what made America great, then why is their IQ about 101/102, and why is the IQ of the top 1% above 119. You have all this conjecture that the rich just inherited their money or used illegal means to acquire it. Thomas Stanley found data that supports the assumption that 80% of the richest Americans are self-made. Yes, they actually worked for their money. They have very high IQ. They pay tons of taxes. They work more, they work harder and they are SMARTER than the middle class. These are just the facts, I am sorry if that breaks your bubble of the "great American middle class". Truth is the middle class is unwilling (or unable, if you're a liberal) to take risks, work hard and get ahead in life. The top 1% worked hard, got an ivy league education and became rich. That's how capitalism works. It's not the middle class that made this country great. Capitalism did. And if we don't reform this crazy tax system then capitalism will die.

Singelguy's picture

The alternative is to have a truly capitalist economy where corporations are limited as to how big and monopolistic they can get. Also restrict them from funding political campaigns. The Citizens United decision was the worst decision the Supreme Court ever made. There is no incentive for the little guy to work hard when they are strangled by unnecessary regulation which was pushed through by the big corporations to lessen competition. Capitalism works best when it is unencumbered and government works for all the people, not just for the 1%.

MagicMoney's picture

Actually,  the richest people ever in the USA history were uneducated. Having a higher measured IQ is more than likely coincidental.

Singelguy's picture

The only problem with that theory is that the top 1% are never satisfied. No amount of wealth is ever enough. They want growth but just growth of profits. They will computerize, robotize and automate everything they can to generate another $1 of profit. They don't give a damn about the workers. What they fail to appreciate is that when there are no workers, there are mo wages, and hence no purchasing power. Eventually, there is virtually no one left to sell to and it all collapses. Greed is a kharmic bitch.

DrBrown's picture

Conned into voting for him? Stupid fucker there was no one else to vote for!

nevertheless's picture

You don't have to vote you know. 

 

It's pretty obvious US elections are a total farce, just changing the guard. 

 

The Zionist bankers own our government, you DON'T have to keep buying into their lies.