Trump tax plan provides glimpse of his populist appeal
Donald Trump's tax plan isn't too different from other Republican tax plans out there, and it helps the rich as well as the less wealthy. But he pitched it very differently from typical Republican tax gospel.
When he unveiled his plan for reforming the United States tax code on Monday, Donald Trump followed a now-familiar pattern in his insurgent campaign for the White House: He tried to tap into what appear to be strong currents of populism within the Republican electoral base.
His plan wasn’t as populist as expected, and in some ways what he offered looked much like tax-cut plans offered by some other Republicans in the presidential field, with help for the rich as well as for those of more modest means.
But Mr. Trump’s sales pitch was different in tone and emphasis. It catered in key ways to an electorate that’s primed with antiestablishment passion and economic anxiety.
Trump’s core themes:
- Average Americans deserve a tax break and a radical simplification of the tax code. Trump vowed to move millions of moderate-income Americans into a tax bracket where they’ll owe no federal income tax. Instead, they’ll get to send an “I win” letter to the Internal Revenue Service.
- The tax code needs to be revised to bring jobs home from overseas. He touted the idea that $2.5 trillion or more would flow back to the US by changing rules so corporations are encouraged to repatriate profits from abroad and to keep their headquarters in the US.
- Hedge fund income known as “carried interest” should no longer get a tax break. He railed against giving preferential tax rates to investors who did not “create jobs and are not risking their own capital.”
- Business taxes should be cut in a way that helps mom-and-pop retailers and freelancers along with larger corporations. He called for cutting the corporate tax rate from 35 to 15 percent, while saying that many deductions should be eliminated as obsolete.
And he punctuated these points by saying “it’s all about jobs,” not just about leaving more money in people’s pockets. Trump called the officially reported unemployment rate “the biggest joke in this country.” Masses of people are not counted as unemployed because they’ve grown discouraged and have stopped looking for work, he says.
With all this, Trump is hewing to a message that’s been central to a voter appeal that has surprised pundits throughout the campaign. He has consistently connected his message to voters who are frustrated by slow wage growth and the perception that Washington policies are doing more to enrich elites or other nations than ordinary US workers.
MSNBC reported that about 7 in 10 Americans responding to an online poll Monday thought Trump's plan would help his campaign.
While that's not a scientific poll, it hints at a generally positive reaction. Yet Trump's proposal went in the opposite direction as some conservatives who have been arguing that too many Americans pay no taxes.
Conservative pundit Stephen Moore, in a statement on the FreedomWorks website, called it a "a pro-growth plan" for the economy, but lamented that "it's not good that 70 million people, that's two thirds of households, are taken off the income tax and have no skin in the game."
Others on left and right said Trump's revenue math doesn't add up.
Trump said that his plan would be revenue neutral and would not expand the national debt, but many outside analysts were deeply skeptical of that claim. Instead, they say his simplification of the tax code would cut taxes for the rich in general and cost the government lots of revenue. (He would eliminate lots of deductions used by the wealthy, but the top tax rate – for individuals making more than $150,000 – would fall from 39.6 percent to 25 percent.)
So Trump certainly could have gone more populist, by some definitions. His rhetoric in recent weeks had led some pundits to expect a plan that hiked taxes on the rich.
In fact, although Trump's messaging thrust may generally appeal toward the disenchanted center, in its details his plan is a more traditional tax-cuts-for-all Republican plan.
Governor Bush and Senator Rubio have offered tax-reform plans of their own, which have some parallels to the Trump proposal. All say they would make the tax code flatter (lower tax rates) and simpler, and boost economic growth.
Trump himself demurred from the populist label, saying his plan is just about “common sense.”
But the core of his message is more populist than that of his Republican rivals generally. And it appears to be one reason behind his big following.
In a new NBC News/Wall Street Journal poll, he leads the field of potential presidential nominees with support from 21 percent of Republican primary voters. Next behind are two fellow outsiders to politics, neurosurgeon Ben Carson (20 percent) and former high-tech CEO Carly Fiorina (11 percent), along with Sen. Marco Rubio of Florida (tied with Fiorina at 11 percent) and former Florida Gov. Jeb Bush (7 percent).
In part, Trump’s success hints at how many rank-and-file Republican primary voters are open to things like steering the tax code away from favoritism toward the rich, or taking a tougher stance on protecting US jobs from flowing overseas.
In a 2014 Gallup poll, for instance, more Republicans said that upper-income Americans pay too little in taxes (45 percent) than said upper-income people pay too much (21 percent) or their fair share (31 percent).
Trump didn't frame his plan as a tax hike on the rich, but said, "It's going to cost me a fortune." He didn't discuss how his proposal to end the estate tax bears on this assessment.
He says that other presidential candidates must cater to a donor class that Trump, thanks to his personal wealth, can shun.