Today, President Trump will make a sales-pitch for his tax plan at a White House event with small business owners that really is fake.
Here’s the cold hard truth: Trump’s proposed 15% business tax rate on pass-throughs, slashed way down from 39.6%, will help few small business owners (unless hedge funds are considered “small businesses”). It will create a special “Trump Loophole” for businesses like the Trump Organization, which is comprised of 500 pass-through entities.
Trump’s Tax Plan Will “Decimate Local Economies”
Trump’s proposed 15% tax rate on pass-throughs (learn about those here) is a small business “tax cut” in name only; very few small businesses would actually benefit. Instead, it’s a massive tax giveaway for Wall Street hedge fund managers, big law firms, and real estate developers like Trump. It would only cut taxes for 7% of business owners – most of them wealthy. This self-serving proposal would allow billionaires like Trump to pay the same low 15% tax rate as a small-business owner making $60,000.
Trump’s proposal would have a $2 trillion price tag, and would ultimately lead to cuts in services vital to Main Street. If these cuts move forward, small business owners will be hit hard, not helped.
Trump’s Looking Out For Lobbyists, Bankers, and Lawyers…
We know from Trump’s one-page “plan,” which he released in April, that he is seeking a 15% tax rate on so-called “pass-through” businesses—like the 500 separate legal entities that make up the Trump Organization (what a coincidence!). If he manages to get such a drastic cut, it will cost $1.4 trillion to $2 trillion over 10 years, according to the Tax Policy Center (TPC), and benefit few small businesses.
Rather, Trump’s business tax cut will overwhelmingly benefit the wealthy—hedge fund managers; rich lawyers, doctors and dentists; and of course, real estate developers like Trump.
According to the Tax Policy Center:
- Just 6% of all business owners will get Trump’s business tax cut.
- The top 1% will get three-quarters (77%) of this tax break—an average tax cut of $76,000 each year. That’s because the top 1% gets more than half of all pass-through income (52.3%).
- Less than 2% of business owners even pay the top rate of 39.6%.
- Just 7% of households in the middle of the income distribution will get a tax cut, averaging $370; 3.9% of households in the middle will pay $750 more in taxes.
…and Trump’s Also Looking Out For Trump…
This business tax break is known as the “Trump Loophole” because the president will benefit enormously from it, as he generates most of his income from pass-through businesses.
The Trump Organization, from which President Trump generates his income, is made up of more than 500 pass-through entities, according to his own lawyers. It is not a small business. It was the 48th largest U.S. private company in 2016, with 22,450 employees and $9.5 million in revenues.
With a net worth of at least $3.5 billion, Trump ranks #156 on the Forbes list of the 400 richest Americans. The 400 richest households, which receive an average of $37 million in net income from S corporations and partnerships, would each get an estimated tax cut of $9 million.
…But Trump Definitely Isn’t Looking Out For Us
If the Trump loophole becomes law, the president will pay the same 15% tax rate that a small business owner making $60,000 a year on Main Street would pay. The 15% rate applies to income up to $76,000 for a married couple.
Here’s the kicker: Trump’s $2 trillion business tax cut benefiting the wealthy is almost exactly the cost of the $1.9 trillion cut to Medicaid and other health care services proposed in Trump’s budget.
SOURCE: Americans For Tax Fairness