Trump Poised To Save Billions With New Legislation Despite Public Promises.
When Donald Trump ran for president, he promised a “big, beautiful tax cut” that would not benefit billionaires like him. “I’m doing the right thing and it's not good for me, believe me.” He went on to say, “There’s very little benefit for people of wealth.” Has he kept his word?
Tax experts and pundits are now mulling over the details of the just-released 400-page Republican proposed tax cut plan, and the disagreements and spin on both sides of the political aisle over winners and losers are well underway. However, one aspect of the President’s proposal is very clear and not subject to multiple interpretations: Trump’s family, and families like his, will save billions.
The reason is simple. The proposed tax legislation does away entirely with the estate tax. The tax, however, is commonly misunderstood. It applies to very few Americans, only the top .2 percent (2 of every 1000 estates) of the richest among us. It does not tax, in any way, the middle-class inheritances, or, indeed, even those of the upper class. It impacts only the ultra-rich. And as to them, the value in tax has steadily declined and is now, on average, reported to be at 16.6 percent.
First enacted in 1862, and updated when the federal tax code was promulgated in 1916, the tax only applies to inheritances in excess of $5.4 million per individual or 10.9 million per married couple. The purpose of the tax is one well rooted in our Republican form of government, that intended to reduce inequality. By preventing a small number of extraordinarily rich families from passing on immense wealth from one generation to the next, America insulates itself, at least in part, from a small collection of individuals who become so powerful they are able to control the actions of the nation. Indeed, the need for such a tax was well understood by most Americans during the period when “robber barons” dominated our nation. They were deemed to be a ruthlessly powerful group of 19th-century industrialists who became extraordinarily wealthy by creating monopolies, exploiting natural resources, using their wealth to corrupt legislators, and suppressing living wages of those they employed. Today, some view modern day robber barons as making a comeback as the accumulation of extreme wealth are increasingly common, while the middle class shrinks. Individuals such as the Koch Brothers (fossil fuel billionaires who finance coal favoring politicians), Robert Mercer (hedge fund billionaire behind Breitbart News), and Sheldon Adelson (casino billionaire and Republican financier) are often cited for the outsize control they exercise in American politics.
While some billionaires like Bill Gates and Warren Buffet have famously pledged to give away much of their massive wealth to benefit American society, Donald Trump has disavowed any such intention. Instead, he has made clear that he intends to pass on his wealth to his Donald, Jr., Eric, etc., as of course is his right. Yet if his proposed tax cut passes, he will be able to do so without any of the estate tax that has been a hallmark of our nation for most of the past 150 years. And indeed, the largest estates in our nation largely consist of mostly unrealized capital gains that have never been taxed. Trump’s proposal encourages dynastic wealth and breaks his promise to voters. As it happens, when our President says, “it's not good for me, believe me,” you now have billions ($$) of reasons to doubt him.
(The author of this article is Craig Benedict, a retired federal prosecutor.)