Trump and Cruz's tax plans would redistribute historic wealth to the rich(Read article summary)
Bottom line: If either of these men is elected president, we could see the largest redistribution in American history from the poor and middle-class of America to the rich. This is class warfare with a vengeance, Robert Reich argues.
The tax cuts for the rich proposed by the two leading Republican candidates for the presidency – Donald Trump and Ted Cruz – are larger, as a proportion of the government budget and the total economy, than any tax cuts ever before proposed in history.
Trump and Cruz pretend to be opposed to the Republican establishment, but when it comes to taxes they’re seeking exactly what that Republican establishment wants.
Here are 5 things you need to know about their tax plans:
1. Trump’s proposed cut would reduce the top tax rate from 39.6 percent to 25 percent – creating a giant windfall for the wealthy (at a time when the wealthy have a larger portion of the nation’s wealth than any time since 1918). According to the Center for Tax Policy, the richest one tenth of one percent of taxpayers (those with incomes over $3.7 million) would get an average tax cut of more than $1.3 million each every year. Middle-income households would get an average tax cut of $2,700.
2. The Cruz plan would abandon our century-old progressive income tax (whose rates increase as taxpayers’ incomes increase) and instead tax the amount people spend in a year and exclude income from investments. This sort of system would burden lower-income workers who spend almost everything they earn and have few if any investments.
3. Cruz also proposes a 10 percent flat tax. A flat tax lowers tax rates on the rich and increases taxes for lower-income workers.
4. The Republican plans also repeal estate and gift taxes – now paid almost entirely by the very wealthy who make big gifts to their heirs and leave them big estates.
5. These plans would cut federal revenues by as much as $12 trillion over the decade – but neither Trump nor Cruz has said what they’ll do to fill this hole. They both want to increase the military. Which leaves them only two choices: Either explode the national debt, or cut Social Security, Medicare, and assistance to the poor.
Bottom line: If either of these men is elected president, we could see the largest redistribution in American history from the poor and middle-class of America to the rich. This is class warfare with a vengeance.
This article first appeared in robertreich.org.